Agency margin

[RichardCranium]

At previous ClientCo, I mentioned at my leaving do about the agency adding just over 19% to my rate being too much since they are the sole supplier. One of the permies said "No, it's 3%. I negotiated the contract with the agency so I should know."

Me: "It can't be 3%, the agency wouldn't be making any money. Anyway, I've got bad news for you. They're lying to you. I've seen what they invoice you for me, and I know what they're paying me. They're taking over 19%."

He was not a happy bunny.

Nor was his boss (who was present).

Nor were the other contractors round the table.

[ChrisPackit]

This one ... 15% last one 80% yes 80%


I went for a contract at 'Junior' rates as I'd been out of the game for 5 years, and the agency was charging me out as a 'Senior' Systems Analyst. When I found out, the sh!t hit the fan so they offered me an extra £10 a day. Needless to say I went direct with the Clientco at the first opportunity. That opened the next can of worms, which was it took 4 weeks to set my company up as a preferred supplier, then another 4 weeks payment terms a.k.a no money for 2 months.

[conned tractor]

Around the 8-10% mark for the last 3 contracts.

The one time the agent took the piss, I was told I was too expensive and didn't get it - even though I'd gone in at £10 an hour less than market rates at the time becuase it as a role I really wanted.

£25/hr doing senior systems role in Derby - specialising in a field that I had studied at quite a high level.

[MarillionFan]

One of my recent contracts specifically stated that I was in breach of contract if I told the client what I was paid!

[Wanderer]

At previous ClientCo, I mentioned at my leaving do about the agency adding just over 19% to my rate being too much since they are the sole supplier. One of the permies said "No, it's 3%. I negotiated the contract with the agency so I should know."

Me: "It can't be 3%, the agency wouldn't be making any money. Anyway, I've got bad news for you. They're lying to you. I've seen what they invoice you for me, and I know what they're paying me. They're taking over 19%."

Had a similar thing happen at a place I was working. They were livid and kicked the agency out and all the contractors through that agency off site.

After that they made a point of telling the contractor what the rate was and what the agencies margin was too.

[d000hg]

One of my recent contracts specifically stated that I was in breach of contract if I told the client what I was paid!

TBH I don't see a massive problem there.

Also I'd hardly say 20% is being "ripped off".

[The Agents View]

TBH I don't see a massive problem there.

Also I'd hardly say 20% is being "ripped off".

The problem in these situations is that people don't know the difference between margin and markup. It drives us nuts.

Lets put the record straight. The agency world, works on Margin. Anyone who tells you they work on a mark up, is lying.

Margin is a simple way of dividing up the pie - ie client agrees rate, contractor takes (for example) 80% of that rate, and agency takes 20%. This is a 20% margin.

In the above example, if you've got them round the wrong way, then you've basically screwed your agency (although you're right - 3% is not a rate that most agents would work at). 19% mark up comes out at about 14-15% margin, which is neither unreasonable, or a rip off.

Indeed, dependent on the situation (volume, relationship, prestige of the client) I would say any agency who provides a decent level of service, would expect to put between 15 and 20% margin into a deal.

[d000hg]

And:

markup = (margin*100)/(100-margin)

Right? So 20% margin => 25% markup = 25%, 50% margin => 100% markup?

[Scrag Meister]

And:

markup = (margin*100)/(100-margin)

Right? So 20% margin => 25% markup = 25%, 50% margin => 100% markup?

Saw an invoice the other day from my agency to ClientCo.

Doing the math, my agency works on 11% markup. i.e My rate plus 11% of my rate.

[The Agents View]

And:

markup = (margin*100)/(100-margin)

Right? So 20% margin => 25% markup = 25%, 50% margin => 100% markup?

Errr....not quite, but not far off.....

15% Markup = 13.0% Margin
20% Markup = 16.7% Margin
25% Markup = 20.0% Margin
30% Markup = 23.0% Margin
33.3% Markup = 25.0% Margin
40% Markup = 28.6% Margin
43% Markup = 30.0% Margin
50% Markup = 33.0% Margin
75% Markup = 42.9% Margin
100% Markup = 50.0% Margin