What to do in negotiations

[lukemg]

As ever with these things it is about how hardball you are feeling. If you are prepared to walk, dig in and take your chances. Very brave in this market, I would probably ask for a 10% rise, which the agency can bear if it doesn't want to hassle the client. Beware the, I will call you back, sorry the client says no more budget available response (agency will not have called the client).
I dug in at a well known Telco, they said no thanks and I walked, but I was happy to go at the time. 4 months later I was still getting splinters and adding up how much money I had missed out on....
In short, ask anyway, but I wouldn't demand/threaten, too many others who can step in and the agency will make sure the client knows it.

[Torrango]

Ultimately in this kind of situation, you need to consider two things - are you genuinely being paid "below market rate", and if so, are you prepared to walk if you don't get the required rate? (Which you should be able to do if it is indeed below market)

Next you need to see if the client is being charged below market rate. With this information you will know where to concentrate your efforts (client, agent or both). If your aim is to squeeze the agent, the client can probably help and vice versa.

[nomadd]

Nomadd,

I do appreciate your reply.

However, are you aware that this is Business/Contracts and not General. A more serious tone is appropriate here.

Yep, I'm absolutely aware which forum I'm on - I do work in I.T. you know.

My reply was absolutely serious. Maybe the smilies () made you think I wasn't being serious? If so, just re-read my post and pretend they aren't there. Seriously.

(NB. The reason I put so many smilies in my replies on Internet Forums is people don't like reading replies if they weren't the one's they already had in their heads - hence they take offence at anything and then start a "rant." Hence the smilies help defuse the ranting idiots before they start. Seriously.)

Cheers,

Nomadd

Ps. If this wasn't the reply you wanted, just pretend it had more smilies in it.

[XLMonkey]

for what its worth...

Rate rise negotiations are, like all negotiations, about good preparation and knowing your alternatives. There isn't enough information on your post to tell how much planning you've done, but generally, these are the steps that work for me:

1. Do your research. Check what the market rate is for your role, and be sure that you understand how easily, and at what rate, they could replace you.
2. Document your value. You have, I assume, been keeping a careful record of your original terms of reference, what additional responsibilities you've taken on, and the testimonials of your happy customer reps to give evidence of how useful you are? Now is the time to wheel them out.
3. Set out at the start of the 6 month contract that you are working at a discount to your normal rate. This means that when you get to an extension, you are negotiating from a higher start position. This is my single top-est tip for getting a rate rise - if you didn't do this 6 months ago, make sure you do it next time you take on a contract.
4. Link your request for a rate rise to the 3 items above, especially the point about value. What you are trying to do is get the client to accept that, since you are delivering great results, beyond the scope of the original contract, your new rate is reasonable.
5. If you are going to play hardball - then be prepared to walk away. Are you confident that you can easily get another comparable contract at a higher rate?
6. If you are not going to play hardball - then be prepared to bargain and be happy with what you get.

Final thought, and just for reference, a 20% markup is well within the normal range for an agent. There is some room for negotiation with them (since the extension is easy, low risk revenue), but don't imagine that you'll be taking half of it unless they really love you.


Hope it goes well

(no smilies from me today - I'm having a bad day)

[d000hg]

Can't you start off by telling agency "I want to raise my rate to £X+Y" where X is your current rate. They will probably counter by saying "the client won't accept a increase of £Y". Quick as a flash you respond "well can't you reduce your cut since this is bringing in a lot of money for you for very little work, I know you have a healthy margin on me"?

[scooby]

i wrote a business case to save the Client a 1st year £500k with a total of an expected £3.8 over 4 years. they gave me an 18mth extension to allow me to deliver, and now they are offering me a further 6mths taking me to 2.5yrs from start.

The extension saw me get a 10% rise and the agency drop to 10% margin. that took a lot of effort and arguing and involved the head of procurement who i was working closely with at the time. this extension for a further 6mths will see me take the same rate, as the agency wont budget and the client cant afford much more... I say take what you can, and go from there.

be grateful of the work and not the bench.

[Crossroads]

I'm just stating a point that the client is happy with the work, otherwise they wouldn't extend.

But why is that justification for a change in rate. An extension suggests that the client is happy with the service provided for the rate charged and has more work.

If you pay a tradesman to fit a bathroom, and he charges £5k, will you pay him £7.5k to do exactly the same job next time just because the first job was OK?

OP.
1. Has your role changed?
2. Did you explain at the start that you were discounting your rate and would look for an increase in the future if extended?
3. Are you prepared to walk, or be managed out by the client?
4. Can you demonstrate that your client would need to pay more to replace you - i.e the market rate has increased by 22%?