Contract Renegotiation

[slippedthrough]

I started contracting in January 2011, initially on 6 month contract which got extended a further 6 months. The client would now like to extend the contract for a further 6 months. I am on a rate of £280pd, and I recently 'accidentally' learnt that the agency charges the client £360pd.

If I tried to renegotiate the contract, do you think the agency would be willing to reduce their margin if the client refused to increase on their £360 costs? If so, at what figure should I pitch in at?

[malvolio]

I started contracting in January 2011, initially on 6 month contract which got extended a further 6 months. The client would now like to extend the contract for a further 6 months. I am on a rate of £280pd, and I recently 'accidentally' learnt that the agency charges the client £360pd.

If I tried to renegotiate the contract, do you think the agency would be willing to reduce their margin if the client refused to increase on their £360 costs? If so, at what figure should I pitch in at?

Stock answer #1: There is no point asking the client for a raise in rate unless you have provided significant extra value to whatever it is you're working on; they already pay you to do the best job possible. So unless you have a good case, don't go there.

Stock answer #2: The agency has now recovered all the overheads it had in securing the original work. The margin is currently 22% (you get a proportion of their charges, they don't get a proportion of yours) against an industry average of 15%. If the margin was 15%, you'd be on £323. So split the difference and go for £300.

And let us know if you get it....

[northernladuk]

Stock answer #1: There is no point asking the client for a raise in rate unless you have provided significant extra value to whatever it is you're working on; they already pay you to do the best job possible. So unless you have a good case, don't go there.

Stock answer #2: The agency has now recovered all the overheads it had in securing the original work. The margin is currently 22% (you get a proportion of their charges, they don't get a proportion of yours) against an industry average of 15%. If the margin was 15%, you'd be on £323. So split the difference and go for £300.

And let us know if you get it....

Because Mal wants his cut which is £19 a day.

[malvolio]

Because Mal wants his cut which is £19 a day.

And why not? I need some compensation for coming second...

[TheFaQQer]

I started contracting in January 2011, initially on 6 month contract which got extended a further 6 months. The client would now like to extend the contract for a further 6 months. I am on a rate of £280pd, and I recently 'accidentally' learnt that the agency charges the client £360pd.

If I tried to renegotiate the contract, do you think the agency would be willing to reduce their margin if the client refused to increase on their £360 costs? If so, at what figure should I pitch in at?

What is the market rate for your skills? Have you got anywhere else to go? Do you want to stay where you are? What have you done to justify a raise?

The agency will either negotiate and agree something with you, or tell you where to go. If they tell you where to go, then you either back down or walk off.

Work out for yourself

• What rate would you like?
• What is your bare minimum rate?
• Are you prepared to threaten to leave?
• Are you actually prepared to leave?
• If you back down, do you mind how you will now be perceived?

Once you know what you want, it's significantly easier to negotiate.

[slippedthrough]

Thanks for the feedback so far.

I am doing more work than when I currently started in January 2011, and it requires a larger skill set, so I believe a rise is justified on on content and quality of work.

The market I work in doesn't have a tradition of employing contract workers, so it's difficult to find a market rate and benchmark against it. I believe the role simply exists because they couldn't get sign off for an employee. I am happy where I am, and would like to stay. Looking for a new role right now would just be hassle, but of course I won't be telling the agency that. I would like to get as much of an increase as possible without damaging any relationships, ideally would be looking at the £310 mark. My minimum rate would be £290. I want it to be a negotiation without having to mention that I would leave, I just want the agency to know that I have other options and want them to think that I am prepared to take one of them. I think thats the best way to proceed.

Any further advice much appreciated.

[TheFaQQer]

The market I work in doesn't have a tradition of employing contract workers, so it's difficult to find a market rate and benchmark against it. I believe the role simply exists because they couldn't get sign off for an employee.

I just want the agency to know that I have other options and want them to think that I am prepared to take one of them.

I'm not sure that those two quotes complement each other. Be wary that you don't end up with nothing, but this is part of the fun of being in business.

Good luck with the negotiations

[slippedthrough]

I'm not sure that those two quotes complement each other. Be wary that you don't end up with nothing, but this is part of the fun of being in business.

Good luck with the negotiations

I think i'd have to screw up really badly to end up with nothing. The worst case scenario I can envisage is continuing on the same rate i'm on now, but with tail firmly between legs and not being in a credible position to renegotiate with the same agancy/contact.

[SteelyDan]

In my experience, clients do sometimes (always?) increase the workload over and above the initial contract role spec - it usually happens after a bedding in period, once they have got to know you, and what you're capable of, plus of course assessing how 'amenable' you are.

It's called having a 'can do' attitude which can only stand you in good stead (imho).

I sometimes feel they are taking the pi55 tbh, but you have to be professional, amenable, & flexible & (at times) take it on the chin - especially if you actually enjoy the role.

People who work to rule (to spec) are not generally well regarded and can be accused of not having the requisite 'can-do' attitude.

However, if you feel there's a marked increase in responsibility, and you can show this and demonstrate extra value is being added through the increased work you are doing, then I would be tempted to point this out to the agent at renewal time, and seek to reach an agreement.

If you are really put out by the extra work, then I would be inclined to advise do not bluff and threaten to leave when/if you don't mean it. The agent may well call your bluff and say there is no more money, and if you are not actually prepared to quit, then you'll have lost some credibility & may feel foolish.

Provide evidence to support the increase; facts are always better.

Think 'business case' not 'bluff/tantrum'.

[Wanderer]

If I tried to renegotiate the contract, do you think the agency would be willing to reduce their margin if the client refused to increase on their £360 costs? If so, at what figure should I pitch in at?

Wow, the agency are really coining it on the margin here.

Get the agency to drop their cut of your money to 7% max which is more than reasonable especially after a year in the job. That would give you ~£334/day.

If they won't then tell them you'll take the fight to the client and get the client to beat them up on their margin and probably want to cut it even further.

The nuclear option is to tell the agent that you will walk away from the deal, tell the client why you are leaving and make sure that every agency in town knows that the client is recruiting a replacement so the agency won't get a look in.