Agency Percentage. Does it matter or not?

[MarillionFan]

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.

In most contracts(especially recently), I have seen clauses which state 'The Consultancy understands this contract is subject to the terms & conditions between the Client & The Agency' or 'This contract withstands as long as their is an agreement between the Client & The Agency'

Other clauses relate to 'damages' in case the contractor(consultancy) breaks the contract. This normally relates to the amount the agency is charging. So 15% of £500 per day (£75 per day) or a £300 per day rate, with the agency PO at £425 for example (£125 per day).

I was about to start requesting the Agency/Client contracts alongside my own Agency/Consultancy contract as recent clauses have stated they are interlinked.

So percentage is important. Has anyone requested the Agency/Client contracts and had any luck reviewing them?

[jmo21]

I've only found out once, and it was for my current contract, and there is an agency and a consultancy between me and client co.

Consultancy is "taking" 21% of overall charge, not sure what the agency is getting.

So not a bad percentage I don't think.

As for rights..... we clearly do not have a "right to know", in my case there are 2 other business to business contracts involved.

Similarly, a permie being sent out to a client site does not have a right to know what his employer is charging him out at.

That being said if I were to find out about a gigantic % having usually tried to get a bigger rate and getting knocked back, then yes, I would be unhappy, but in the cold light of day, it comes down to negotiating skills between you and the agency.

[The Agents View]

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.

In most contracts(especially recently), I have seen clauses which state 'The Consultancy understands this contract is subject to the terms & conditions between the Client & The Agency' or 'This contract withstands as long as their is an agreement between the Client & The Agency'

Other clauses relate to 'damages' in case the contractor(consultancy) breaks the contract. This normally relates to the amount the agency is charging. So 15% of £500 per day (£75 per day) or a £300 per day rate, with the agency PO at £425 for example (£125 per day).

I was about to start requesting the Agency/Client contracts alongside my own Agency/Consultancy contract as recent clauses have stated they are interlinked.

So percentage is important. Has anyone requested the Agency/Client contracts and had any luck reviewing them?

You have no "Right" to see the contracts. End of - it's a Business to Business relationship, in the same way that the client has no right to see the terms of your contract with us (although, we'd be stupid not to have the same terms back2backed on the contracts!)

The fact is, that you provide a product - your limited company sells that product at wholesale - agents sell that product at resale - the wholesaler never asks what the reseller is making - they can guide them, but not dictate to them.

How many times do people need to be told? YOU ARE A BUSINESS, YOU ARE NOT AN EMPLOYEE.

[Scrag Meister]

You have no "Right" to see the contracts. End of - it's a Business to Business relationship, in the same way that the client has no right to see the terms of your contract with us (although, we'd be stupid not to have the same terms back2backed on the contracts!)

The fact is, that you provide a product - your limited company sells that product at wholesale - agents sell that product at resale - the wholesaler never asks what the reseller is making - they can guide them, but not dictate to them.

How many times do people need to be told? YOU ARE A BUSINESS, YOU ARE NOT AN EMPLOYEE.

This implies that the value starts at the contractor, which in lots of cases it doesn't.

Often it is the other way around, ClientCo say they are happy to pay £425 pd, Agent then rips as much as they can out of that, to leave enough to get the contractor to sign.

I always try to use agencies who are on the PSL for the client in question and that they are on a fixed margin on top of my rate. Then there is at least a little motivation for the agent in line with the contractor to get a better rate.

[thunderlizard]

in the same way that the client has no right to see the terms of your contract with us

Just out of interest, do you enforce that side too? i.e. if the client says "we've got an ethical supply chain policy and want to see your agency-contractor contract", do you stick to your guns?

[Lolas Cat]

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.
...

It's simple. A contractor can coduct his business even without an agent, but an agent can't earn money without a contractor. The dependency is obvious, so THEY are taking a cut of YOUR money. They exist because you exist, not the other way around.

[The Agents View]

This implies that the value starts at the contractor, which in lots of cases it doesn't.

Often it is the other way around, ClientCo say they are happy to pay £425 pd, Agent then rips as much as they can out of that, to leave enough to get the contractor to sign.

I always try to use agencies who are on the PSL for the client in question and that they are on a fixed margin on top of my rate. Then there is at least a little motivation for the agent in line with the contractor to get a better rate.

This is part of what makes this industry unique. How many resellers do you know who sell a product that once offered from a wholesaler, can change it's flaming mind??

The fact is that this industry commodotises the contractor field - I don't like it, and I try not to do it, but the reality of the markets right now is that there are too many people, for not enough jobs.

It can be likened to the IBM PC area if you like - IBM come out with their first PC, and are constantly barraged with sale - they have the saleable product that everyone wants. Everyone else follows suit, and before you know it, the contracts, sales or whatever you want to call them, are split between far too many people.

[The Agents View]

Just out of interest, do you enforce that side too? i.e. if the client says "we've got an ethical supply chain policy and want to see your agency-contractor contract", do you stick to your guns?

Probably more so on the client side than the contractor Side to be honest....

[The Agents View]

It's simple. A contractor can coduct his business even without an agent, but an agent can't earn money without a contractor. The dependency is obvious, so THEY are taking a cut of YOUR money. They exist because you exist, not the other way around.

Trust me, there are a million ways to make money in this industry, and only a small percentage of them involve contractors.

We exist because someone has to provide that function - if we weren't around, you'd have a point of contact at a client site, looking for contractors, agreeing rates with other business units, and charging a margin into their business units coffers.

The reality is, that contractors are specialists in their discipline, we are specialists in the marketing of that discipline (some more than others obviously!) - you charge for what you do, and in order to make a business proposition, we charge for what we do.

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.

[Lolas Cat]

Trust me, there are a million ways to make money in this industry, and only a small percentage of them involve contractors.

We exist because someone has to provide that function - if we weren't around, you'd have a point of contact at a client site, looking for contractors, agreeing rates with other business units, and charging a margin into their business units coffers.

The reality is, that contractors are specialists in their discipline, we are specialists in the marketing of that discipline (some more than others obviously!) - you charge for what you do, and in order to make a business proposition, we charge for what we do.

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.

Oh please. If you don't leach on contractors you leach on permies.

Can you give me any other "way to make money in this industry"?

If hiring managers were not that lazy, your services won't be needed.