Agency Taking Large Percentage of Daily Rate

[BlasterBates]

My first agency took around 30% but after 12 months that was cut to more like 23%. 36% is high but if you're happy with the rate I don't see the problem. I was much happier with the agent earning 30% than the agent I have now who takes less than 10%, because with the agent who took 30% I had a much higher rate than I do now.

Who cares what percentage they take, the agency is one element in the chain, the customer can also do you over as well....and remember this an agency who takes 5 or 6% won't really give a monkey's about fighting to keep your rate high.

The thing is for this debate to be meaningful we need to know what percentage the client takes, i.e. you create value for the client, the client subtracts a profit margin and gives the rest to the agency, who then takes his cut.


So remember what counts is what percentage of the total value you provide is important

Example

Your value to the client is £200
Agency gets £100
you get £70

Agency takes 30%

Another example

Your value to the client is £200
Agency gets £55
You get £50

Agency takes 10%

Which would you prefer?

[AnonAgent]

If your wife starts sleeping around, I take it you'd be happy (but obviously not if you found out)

...yes? If I thought my wife was faithful, then id be happy. When I find out she isnt, I wouldnt be happy.

[yasockie]

Given that it's yet another thread on agents getting a large cut, what do you think of short term contracts?
I am aware of much an agency is getting and in % it's rather high, but since it's short term I'm still getting paid a decent rate.
In practical terms they will not get that much in terms of a commission so is it any more acceptable you think?

[Scrag Meister]

Last 3 contracts 9%, 11%, 6.5%, not managed to find out the current profit markup.

[AnonAgent]

All I know is that I dont get out of bed for less than 20% and I dont get fully dressed for less than 18%

Ive known of one contract that was at 76%. So could be worse?

[Wanderer]

Its only too much if you find out...

But the client is paying the agency to find them someone and payroll them. If they can take 80% and everyone is happy, then why not?

Because you are adding little or no value to the deal.

I've seen far too many contractors and clients get ripped off by agencies so I discuss the rate with the client if possible. It keeps the process is open and transparent.

[kingcook]

I've seen far too many contractors and clients get ripped off by agencies so I discuss the rate with the client if possible. It keeps the process is open and transparent.

I'm on your side here, but all my contracts (and most others I bet) usually have some clause stating that MyCo and ClientCo must not discuss rates. I am wondering if this is legal?

What would happen if MyCo/Client openly discussed rates and the agent found out?

[speling bee]

I'm on your side here, but all my contracts (and most others I bet) usually have some clause stating that MyCo and ClientCo must not discuss rates. I am wondering if this is legal?

What would happen if MyCo/Client openly discussed rates and the agent found out?

As a PM, I need to report on project expenditure. I need to know PM costs.

[yasockie]

.... and one time when an agent went insolvent. I was really pissed when the cut was exorbitant.

Same here, unfortunately - they were taking a massive cut in my case and still managed to go out of business...

[AnonAgent]

I'm on your side here, but all my contracts (and most others I bet) usually have some clause stating that MyCo and ClientCo must not discuss rates. I am wondering if this is legal?

What would happen if MyCo/Client openly discussed rates and the agent found out?

Nothing. Its just a scare tactic.

Most clients are clueless about what rate is acceptable, they think that 20% (margin, not markup) is an okay % because it mirrors the permanent ones. So often the client will just guess that if they are paying £500/day then the candidate will be getting between £400 and £420/day.

Personally, I work on an assumption that every contractor I place will be there long term, so before I try to be cheeky with the margin, I think about what would happen if that conversation did take place.