Agency Percentage. Does it matter or not?

[Wanderer]

There is always an argument between contractors whether the agency is taking a cut of 'your' money or whether you are taking a cut of 'their' money.

The other statements are 'It's none of a contractor's business', plus 'what is a normal cut?'

In truth, I believe it is part of a contractor's right to know.

I don't think there is any intrinsic or legal right to know but it's always good business to know what the agency is taking out of the deal. I always find out, one way or the other. Quite often the client will tell you up front.

I know agents would prefer a "don't ask, don't tell" approach so they can keep pulling the wool over everyone's eyes but I've been in business for too long and seen too many rip-offs to tolerate those stupid tricks.

[monobrow]

He helped in both the initial role and with my recent rate rise. I do not know what percentage he is on, but to me it's worth it!

Hmm, it may be because he has your best interests at heart and is a rare breed of agent. Either that, or you were on a large margin to begin with and it was very easy for him to reduce it, maintain a large margin and keep you sweet.

if I was a betting man..........

[d000hg]

I agree with that description.

And that's the problem: someone is not doing their job properly.

Therefore you exist.

If a company managed their resources intelligently and with more foresight, contractors might also be less needed.

[NotAllThere]

...
Again, you are looking down at recruitment tasks. Obviously, all companies are different, but may I ask you what the HR dept at your company does? They should do all the work of placing ads and sorting out candidates....)

Now you're just being naive. It's clear you've very little experience of the real world. Recruitment is a very small part of HR's remit. They have even less knowledge than agents about what skills are actually required. As far as looking down on recruitment tasks - that's silly. Why should I do basic admin tasks when there's all these agents willing to do the first filtering for no cost to me at all?

For contract jobs it's nothing to do with HR - the buggers I have to deal with there are the purchasing department who can't work out that a programmer on £300 a day may be twenty times less efficient (and therefore more costly) than a programmer for whom I pay £600 day. Perm jobs, I reluctantly have to involve HR. But they only get involved to ensure that I don't get the company into trouble by asking some bint whether she's planning on getting pregnant in the near future, for example. HR are fine for getting some pretty little admin assistant - no use at all for getting a highly skilled analyst.

[The Agents View]

Now you're just being naive. It's clear you've very little experience of the real world. Recruitment is a very small part of HR's remit. They have even less knowledge than agents about what skills are actually required. As far as looking down on recruitment tasks - that's silly. Why should I do basic admin tasks when there's all these agents willing to do the first filtering for no cost to me at all?

For contract jobs it's nothing to do with HR - the buggers I have to deal with there are the purchasing department who can't work out that a programmer on £300 a day may be twenty times less efficient (and therefore more costly) than a programmer for whom I pay £600 day. Perm jobs, I reluctantly have to involve HR. But they only get involved to ensure that I don't get the company into trouble by asking some bint whether she's planning on getting pregnant in the near future, for example. HR are fine for getting some pretty little admin assistant - no use at all for getting a highly skilled analyst.

I wish there was a "post of the day" section on this website...... common sense prevails!

[meridian]

... As far as looking down on recruitment tasks - that's silly. Why should I do basic admin tasks when there's all these agents willing to do the first filtering for no cost to me at all?

*cough* there is a cost, though slightly hidden - the agent does this filtering and the sales pitch in the hope that you will place one of his contractors, and therefore guarantee an income stream to the agency (and a smaller income stream to the agent). The agent's commission is a cost to you.

I'm not a hiring manager, but I'd like to question two things:
Firstly, assuming a contractor is placed for six months (20 working days * 6 months = 120 days) at £600 per day. Agency on 20% commission will receive £600 * 120 * 20% = £14,400. How would this compare against the total cost of doing it yourself (the cost of your time plus the cost of lost opportunity in doing other work)?

Secondly, there is no guarantee that the agent will be pushing the best candidates (who may want a higher rate) through to you. You might find that you're paying above-rate for your candidate simply so the agent gets a higher cut. Or maybe the ideal candidate is just an hour slow in getting his CV to the agent who "needs to get 3 cvs in front of the client asap". As an experiment, you could provide an agency with a potential role and also advertise it yourself to compare the quality of candidates. A field of lessor candidates is also an additional "cost" to your business.

[d000hg]

Having worked direct more than once, I found a very very simple solution to that problem. So simple, even an agency could manage it.

Have some money in the bank... that way when the client takes 3 months to pay an invoice, you're not reduced to bread and beans when you're owed £50k+

And don't give me the "what if the client goes bust" crap... agencies also go bust!

Of course you're right and anyone with a warchest shouldn't need to be paid particularly quickly. However I still wouldn't fee totally comfortable being owed £50k by a company I am no longer working with, especially if they're the other end of the country or even abroad, and it's not a company where I have a good relationship with at least one person on the inside. That may not be merited, but it's true.

And of course having a warchest that factors in an extra few months even after you start working again can be more demanding unless ALL your contracts work this way.

Long term it all averages out, but you have to have been reasonably fortunate or contracting quite a while to have that kind of buffer. It's something to aim for, but it takes work.

[Ignis Fatuus]

... Perm jobs, I reluctantly have to involve HR. But they only get involved to ensure that I don't get the company into trouble by asking some bint whether she's planning on getting pregnant in the near future, for example. HR are fine for getting some pretty little admin assistant - no use at all for getting a highly skilled analyst.

Sounds like HR might be right to be nervous about your attitudes to women?

[Cenobite]

We win the business, you then supply the product to fulfill the order - you are our cost, therefore, you are taking a "Cut" of our business.

You don't "win" the business: the contractor wins it through their performance in the interview.

[rd409]

The point is as simple as Home Insurance. The Insurance company does not exist because there are homes, but because something can go wrong with them.
Similarly Agents does not exist because there is a job, but because
a) The client fears, they might not get suitable candidate asap or they will have to do a lot of admin work.
b) Candidates are not sure, if they can land a gig by themselves, and they might have to be on bench for quite a while.

No one is eating no-one's share here. It is just a symbiotic co-existence. If tomorrow all the candidates started looking for their own jobs, surely agents would go on to provide some other service for e.g. CV checking stuff.

Once a contractor agrees to a certain rate, I don't see a reason, why he/she should be worried how much the agent is making. If you think agent is making a fortune, that is because you don't know how to sell yourself. End of. This comes with experience I guess, and you will fall for quite few times before you learn to walk. Is'nt it?