Agency Margins

[Hockeynut]

I realise I may get flamed asking this, and if I do I do....

I'm coming to the end of my first 3 month contract. I have another option, but I know that the client really wants to renew the contract and keep me, I am prepared to walk away.

1. I've seen mention of margins on here for agencies before. What I wonder is at what range the margin is really taking the pi$$? I understand what I agreed to when I signed last contract, i.e. the rate I signed for. I have since discovered that I ought to be commanding a bit more than that skill-wise. Hence I've looking elsewhere.
My rate is currently £200 / day, and the agency is charging approx £300 per day.

2. I also opted out, which in hindsight reading on here I probably shouldn't have done.

In hindsight, I know this is only my first gig, but I feel I was a little naive. But I was after thoughts about whether 33% is a large margin? Is there a norm? Obviously I appreciate the agency will get whatever they can. If the rate can be higher I'd consider staying, but I wouldn't want to do that at the expense of the client, as I wouldn't want to damage our relationship.

I hope the above makes sense. Feel free to flame if required, maybe I deserve it to help me learn. It's not about greed, it's about balancing risk vs reward.

Thanks.

[northernladuk]

Are you happy with your agent getting a third what you do for doing absolutely nothing once you have started? Gotta apply a bit of business/common sense here.

Agents that are on fixed margins with clients can be between 4% and 8% which is as low as you can get. Guys not on fixed margins wouldn't get out of bed for these.

EDIT : Try the search. We have a lot of threads about agents on some eye watering margins and what the advice was to deal with it. You are not the first and certainly not the last to be in this position.

[LisaContractorUmbrella]

WNLUKS - you need to think as a business owner - what are your skills worth in the market you operate in? Have a look at adverts for similar contracts and see if what you are paid seems reasonable - if not then approach the agency and have a chat about a rate increase

[Jeebo72]

Ask for 275. Be prepared to walk. If they want to keep you, you will get 275. 1. You must be prepared to walk. 2 They must want to keep you. My first ever contract 10 yesrs ago went from 350 to 450. It was also a 3 monther ...

Just say you already have an offer of 275 from someone else. Even if the client doesn't want to pay more to the agent, they may put pressue on the agent to retain you. The agent may well take the hit, as the client is likely to source more people from them. ie the client is worth way more to the agent than 1 single person.

Thank me later...

J

[malvolio]

Some things to remember:

1. It's not the agency's margin. You get a cut of their money, not the other way round. Don't ever forget that.

2. Agencies have to make money. Lower rate contracts have to have a larger margin, since the agency has the same fixed costs to recover. They may well take the same income from a £600 a day gig, at an apparent 14% margin: is that any different?

3. More money to you means you have added value to make it worth their while ("they" being agency or client). You may have done something special, but you're already being paid to do the best job you can.

4. Rate incease on renewal from the agency's money means you persuading them they've recovered their costs so how about a little payback for providing them with a further income stream by you getting yourself renewed. I suspect they won't be too overawed about three months at £300 a day though, and may well consider your renewal as simply the client saving themself the bother of finding a new guy rather than you doing something special.

5. Threats of leaving is the last option, and a good way to end up with nothing.

And opting in or out has nothing to do wth it.

HTH

[malvolio]

...They must want to keep you. My first ever contract 10 yesrs ago went from 350 to 450. It was also a 3 monther ...

Whoop di doo... It was a different world then.

[lukemg]

You are getting royally rogered....
Quite common especially on a first contract, ask for 250 at next renewal and be prepared to dig in hard and walk if they won't back down.
DONT involve client co unless absolutely necessary, they won't want the grief but might appreciate the info about the markup as a VERY LAST RESORT. Do it casual though, really want to stay chief but the market is telling me the going rate is more then 200....
200 !!! WTF we're paying 3...

[northernladuk]

Remember the agent does this day in day out. If you are not prepared to stick to your guns he will walk all over you. He has proved that with this rate situation. He has heard bluff and bluster from every single contractor in his time.

Be strong and make it stick. If you don't believe in your ability to nail him to the wall then only ask for a tiny percentage and hope he is feeling generous.

[Hockeynut]

Thank you for all the responses. I am fully prepared to go, because I do have another offer. In the back of my mind I don't want to hack the agent off so much that it might affect my last month's invoice which comes soon!

And yes Malvio, I understand they still have the same fixed overheads, invoice processing, payment risk etc. That's why I was asking on here. On the surface of it to me, it looks like a massive margin, but I simply don't know, which is why I asked.

I was considering pushing him to £250, take it or leave it.

[lukemg]

do it ! do it ! do it ! do it !