What Is A Normal Agency "Cut"?

[Techforcer]

Hi Gents,

I've recently started a new contract, and during the interview, the client mistakenly revealed the amount the agency would be getting per day... It was higher that I imagined, at 21.8%

Is that regarded as high, low, or in the middle?

Not a bad deal for the agency, as the project is expected to go on for about 2 years!

[northernladuk]

An agency on a fixed margin agreement with a large client will be on 6-8%. 10-15% seems a reasonable figure from other discussions on here. It does depend on your rate of course though. 10% of £150 day isn't really worth it so may have to charge a higher figure to get a reasonable number. Hr still has to make a set figure to be profitable.

Before you get all upset at the agent remember you signed the contract at the rate offered and was happy to do so. It is up to you to negotiate hard. You will have to just suck it up for now and then beat him to a pulp when it comes to renewal. After proving yourself on a long term gig he should be happy to take 10% for no work for two years so don't let him get away with it. Negotiate your price and stick to it. If you don't like it you walk..however, do not threaten to do so and not mean it. They do this day in day out and will wipe the floor with you if you offer empty threats up to him.

[tarbera]

Dry your eyes and stop crying

Hi Gents,

I've recently started a new contract, and during the interview, the client mistakenly revealed the amount the agency would be getting per day... It was higher that I imagined, at 21.8%

Is that regarded as high, low, or in the middle?

Not a bad deal for the agency, as the project is expected to go on for about 2 years!

Dry your eyes and stop crying - non of your business really, I was happy to buy a tin of beans for a quid the other day from tesco, tesco probably got it for 20p, they add a magin and the deal was done.

Seems salesman (agent) is in line for a very good bonus this year if he gets 21% on all deals.

suck it up man

[kevpuk]

My first gig had the agent getting 15%
Should've been 12.5%, but I got caught on 'the Client will only go to £x' after having been put forward, interviewed etc. Still, the rate was still acceptable to me, and it doesn't really matter what the Agent got from the Client - I was just miffed I had been done.
Fast forward, I won't get caught again

[DirtyDog]

Lowest I've seen was about 1% (which I put down to the agent negotiating a rate with the client in Euros and agreeing the same number in Pounds with me!)

Highest that I know the agent has charged for me is 11%

I have no idea what the other agencies have charged, nor do I care - I pick a rate I'm happy with and negotiate around that.

[craig1]

A more polite way of telling you to suck it up: If you're contract has a renewal date in the first six months or so then remind the agency that they've had their "finders fee" bonus of a very high margin in that first contract period and you want them to reduce it to a more reasonable 10% on renewal (to allow negotiation somewhere in the 10-15% bracket). Never threaten to walk unless you really mean to do so if negotiations fail. If you've signed a two year contract then either suck it up or give the agency your notice to quit unless they increase your rate to reflect a lower margin, no real other option.

Lowest margin I've been on was 4%. Highest was way higher than yours but then that was only a two week contract on a very high rate, any lower and it just wouldn't have been worth their time or rewarding them for finding me so quickly for the client. Typical is 10-15% though as I tend to work through premium agencies.

Also, consider the quality of the agent. Are you getting paid weekly after weekly invoices and getting no hassle about payment? Are the agents knowledgeable and professional? If so, a higher margin is easier to swallow. If you're getting nothing back from an agency, poor payment terms or difficulty getting paid then a high margin is less acceptable.

Some people, including some above, think that the agency margin is none of your business. Wrong. You're a key part of the chain of contracts and have every right to get snippy if you think that you're the subject of sharp practice further up the chain. Same as in the supermarket scenario, if you find the supermarket is making a 400% margin on a product then you have the absolute power to go elsewhere or even simply not buy it.

[northernladuk]

Some people, including some above, think that the agency margin is none of your business. Wrong. You're a key part of the chain of contracts and have every right to get snippy if you think that you're the subject of sharp practice further up the chain. Same as in the supermarket scenario, if you find the supermarket is making a 400% margin on a product then you have the absolute power to go elsewhere or even simply not buy it.

But the supermarket scenario is a poor one. An agent has rights on a gig, there maybe one or two other agents and that is it. Closed market so don't have the choice to shop around as you are suggesting. Even if there are other agents once you have committed to one you are stuck. You cannot go play them off against each other once you have been put forward.

[tarbera]

snake oil salesman

A more polite way of telling you to suck it up: If you're contract has a renewal date in the first six months or so then remind the agency that they've had their "finders fee" bonus of a very high margin in that first contract period and you want them to reduce it to a more reasonable 10% on renewal (to allow negotiation somewhere in the 10-15% bracket). Never threaten to walk unless you really mean to do so if negotiations fail. If you've signed a two year contract then either suck it up or give the agency your notice to quit unless they increase your rate to reflect a lower margin, no real other option.

Lowest margin I've been on was 4%. Highest was way higher than yours but then that was only a two week contract on a very high rate, any lower and it just wouldn't have been worth their time or rewarding them for finding me so quickly for the client. Typical is 10-15% though as I tend to work through premium agencies.

Also, consider the quality of the agent. Are you getting paid weekly after weekly invoices and getting no hassle about payment? Are the agents knowledgeable and professional? If so, a higher margin is easier to swallow. If you're getting nothing back from an agency, poor payment terms or difficulty getting paid then a high margin is less acceptable.

Some people, including some above, think that the agency margin is none of your business. Wrong. You're a key part of the chain of contracts and have every right to get snippy if you think that you're the subject of sharp practice further up the chain. Same as in the supermarket scenario, if you find the supermarket is making a 400% margin on a product then you have the absolute power to go elsewhere or even simply not buy it.

snake oil salesman has 5 good CV's , Client budget is £600 a day, he has 2 interview slots to fill, he calls up the 5 and asks, What rate do you want, £590, £550, £525, £450, £400 are the replies, guess who gets the interview slots, so yes you are correct snake oil salesman has the absolute power to go maximise his profit and choose not to buy the lower margin guys.

[craig1]

snake oil salesman has 5 good CV's , Client budget is £600 a day, he has 2 interview slots to fill, he calls up the 5 and asks, What rate do you want, £590, £550, £525, £450, £400 are the replies, guess who gets the interview slots, so yes you are correct snake oil salesman has the absolute power to go maximise his profit and choose not to buy the lower margin guys.

Everyone gets screwed over by agencies at times and you do have to suck it up for the first period of the contract, on renewal though it's a different matter. You have better information on the whole contract, you have an established client relationship and you hold the power to walk or not meaning you have far more power in negotiations. I regularly negotiate agencies down on their margin on renewal if I think their rates are high. The first period is their "finder's fee", after that their margin is fair game for me to negotiate against.

[kevpuk]

snake oil salesman has 5 good CV's , Client budget is £600 a day, he has 2 interview slots to fill, he calls up the 5 and asks, What rate do you want, £590, £550, £525, £450, £400 are the replies, guess who gets the interview slots, so yes you are correct snake oil salesman has the absolute power to go maximise his profit and choose not to buy the lower margin guys.

But snake oil salesman also needs to make sure he does not cut off his fangs to spite his tail.....if he puts forward lowest-rate candidates all the time, he may find that they are not of sufficient calibre for client and then lose out on filling the slots to another agent etc. Could even result in dropping from PSL if continuing theme.....