Originally posted by ratewhore
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Offered new contract! Rate increase methodology
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Interesting someone said Barclays is 4% through preferred agencies. I've been at Barclays for 18mths and my agency takes 8% in the first 12 months, then down to 4% thereafter.
Considering I got the contract and was forced to use the agency to process it, that's a hell of alot for them to be taking, and upon my impending renewal I will suggest they lower their cut and pass it on to me.Comment
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If you got the work yourself, then they're just acting as a convenient invoicing point for Barclays (and, of course, getting you paid several weeks before the client pays them, which is worth a few bob to you I suspect) and 4% is more than fair. If you get bored, work out the bad-debt liability on an agency with 100 contractors at average rate - it's about £2m a month and someone has to pay the lost interest...Blog? What blog...?Comment
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You're very right. Hadn't thought about that!! Too many bloody conference calls have hurt my brain today!
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It isn't margin!
Originally posted by MikeBI think I know the answer to this already, but....... I'm going through this process at the moment. My Agent is on 17% and having been offered an extension, I am trying to negotiate a reduction in that margin. One quote from the Agent is that "17% is about average". I would have said 10% was about average, am I right/wrong?
Since you don't know what the agent's fixed costs are, then you have NO idea what their margin is. You only know what the mark-up is. I've come across (admittedly not many) agents that are charging a mark-up of over 30% but are still losing money (i.e. negative margin).
Mark-up = difference between the price paid for services/unit and price obtained for the same services/unit
Margin = difference between total costs (fixed and variable) and total income/year
How can you negotiate with them if you don't understand the nature of their business?Comment
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Originally posted by XLMonkeyMark-up = difference between the price paid for services/unit and price obtained for the same services/unit
Margin = difference between total costs (fixed and variable) and total income/year?
Example : Contractor paid £300 from agent. Customer buys contractor's services through agent for £350.
The mark-up/margin, gross profit, whatever you want to call it, is £50. That's clear.
However, when expressed as a percentage, things change.
The mark-up is £50 on £300 which is 16.66%
The margin is £50 of £350, which is 14.29%.We must strike at the lies that have spread like disease through our mindsComment
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Originally posted by FleetwoodNo, that's called profit.
Example : Contractor paid £300 from agent. Customer buys contractor's services through agent for £350.
The mark-up/margin, gross profit, whatever you want to call it, is £50. That's clear.
However, when expressed as a percentage, things change.
The mark-up is £50 on £300 which is 16.66%
The margin is £50 of £350, which is 14.29%.
Ooops, I should have added "expressed as a percentage of total sales" onto that definition.... (my thanks to Wikipedia for confirming that I wasn't totally losing my marbles)
However, the margin in your example is not 14.29%
Mark-up is £50 on £300 = 16.66%
Margin is 1 - (total costs (£300 plus the agent's own cost of business, say £30/day) / total revenue (£350)) = 5.7%
My point being that ... since you don't know what the agent's cost of business is, you can't calculate what the actual margin is. Could be any number lower than 14.29%, including a loss.Comment
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