Offered new contract! Rate increase methodology

[Roc7ky]

I have been offered an extension to my current contract on a project.

The rate I accepted on commencement of the contract was in the lower regions of what the agency was offering.

The advertised position had a rate of £300 -£400 /day

Now that I have proved myself I would obviously like to receive extra monies for my time here as the project is in it final stages.

The agency has recruited recently for this role so I know the same rate bracket has remained.

The agency doesn’t appear to have a monopoly in the department as there are many other recruitment agencies I have heard of.

Now I would like your advice/ tips on how best to obtain the best rate.

I presume they will try to suggest that they cannot reduce their margins, etc, etc.

Obviously I would like to obtain £400, however I would be happy with £350.

Any advice is appreciated

[Mailman]

Ask them for £450 per day...they will then either give you a flat out no OR try and reduce it to £400 a day.

Either way...there is no harm in asking.

Mailman

[ratewhore]

Set the minimum rate you will accept and negotiate. Always be willing to walk rather than be bent over the desk...

[handsfree]

Don't bother

Unless the rate difference is really important to you. And if it is, get another, higher paying contract instead of signing the extension.

I'm bored of having arguments with agents about rate increases. They almost always win. It gets to a point where they say "No we can't cut our margins" and the only option for you is to threaten to leave, as the previous poster said. If you're not willing to walk over the raise, then absolutely don't bother trying to get it, as in real terms you don't have a lot to bargain with.

Both the agency and client get annoyed, as the first thing the agent does when you ask for the rate rise is contact the client and pass the rise on to them. In fact the best thing to do is to sound out your manager, pre-warn him that you will be negotiating over the rate with the agency, and try to find out if there's any willingness on their part to raise the fee. Chances are there won't be, neither will the agency lower their cut UNLESS they think you might walk if you don't get it. You have to ask yourself whether you are willing to walk over it, if not then forget it as the agent will test you for this and call your bluff if he finds any weakness.

Not that I'm bitter or anything.

[expat]

Unless the rate difference is really important to you. And if it is, get another, higher paying contract instead of signing the extension.

I'm bored of having arguments with agents about rate increases.

I'd go so far as to say that the pay review crawl is one of the things I left permiedom to avoid. And wanting to keep the current post more than they want to keep me is another. Just my attitude.

[lORD lUCAN]

Set the minimum rate you will accept and negotiate. Always be willing to walk rather than be bent over the desk...

You might like getting bent over the desk,
just make sure you charge appropriately !

[Mordac]

>The rate I accepted on commencement of the contract

If you were happy with the rate then, why not now? If you had agreed a rate increase on 3 or 6 months in advance (and had it written into the contract) fair enough, but if you agree a rate, you should be sticking to it, imho.
If you think you are worth more, by all means either refuse the extension or try and negotiate a better rate, but that's what you should have done in the beginning.

[ratewhore]

Thats one way of looking at it Mordac. Another way of course is to assess your value to the client. This can be based on a number of factors including how deeply embedded to the project you are (i.e. impact to the client of not renewing) and also the value of your project knowledge in terms of not just technologies but the faces and politics of the project, all of which you could argue have value.

And the rate you set at the beginning of your contract, isn't that an agreed rate for the duration of that initial contract? Arguably.

Just playing devils advocate...

[XLMonkey]

Getting rate increases is always tricky, but good fun too. Don't agree that the agents always win, but it does depend on having the right information and being prepared to use it.

Top tips are:
- It is very rare for the client to be prepared to up the effective rate they pay you. Trying to up that rate is possible if you can show you are doing substantially more responsible/valuable work than was originally advertised, but as often as not you will end up damaging the relationship with them (since they will perceive you as sticking them over a barrel)
- The agency mark-up is always at it's highest when you start a contract, and is always negotiable.
- Find out what the agency mark-up is by asking your client how much they are actually paying for you.
- If the mark-up is in the 5-10% range, then the real room for manoeuver is limited (the agency will probably walk if the mark-up is less than 5%). Above that, you have every reason to expect to be able to get the mark-up down.
- Never forget, mark-up is not margin. Margin is difference between costs and revenue, and you don't know what the agents cost of business is.
- Your main line of argument with the agent is that they got you the job, but you got them the extension. Therefore, the mark-up was appropriate for the first contract, but not for the second.
- Keep the client informed of what you are doing (the process), but not the numbers. As long as they are on your side, you are in a strong position.
- Don't bother starting this process unless you are actually prepared to walk if you don't get a concession.

[IT contract agent]

I don't know any agency who will work at 5% - if you think that most agencies work at between 5% and 10%......you're wrong!