Realistic Agency Margin

[CoolCat]

So whats a reasonable margin for an agent?

If the contractor is on 500, 600, or 700 a day how much would we expect the agent to be charging the client?

I am a bit out of touch as I have been direct to consultancies recently and their man day rate to their client is clearly much higher but then they are taking on delivery risk etc.

So whats a sensible margin for a normal contract agency?

[SussexSeagull]

Does it matter so long as you are happy with your rate?

[CoolCat]

yes, as knowledge helps put you in a better negotiating position

[northernladuk]

One of our esteemed agents posted that 8-12% is a reasonable figure when talking about the 400 mark but it depends on a lot of factors. Obviously to make the same money it can be to the lower end for higher rates. Agents that are on a fixed price margin with clients can be on around 6%. It will depend on the agents situation with the client though, if he has just a few contractors in to a smaller client he is going to want a higher margin to recoup the time he has spent with the client. Larger clients with a lot of contractors is much easier so lower margins.

Trying to get that 8-12% figure is hard work though. If there are a couple of candidates the agent can afford to dig his heels in. Wouldn't be unreasonable for him to start on something higher and then you ask for an increase after an extension or two as he has recouped his time and is just making easy money.

[DirtyDog]

So whats a reasonable margin for an agent?

Market rate

[d000hg]

Does it matter so long as you are happy with your rate?

Of course it matters. As a business you should be working to reduce overheads and maximise profit. Successful businesses don't say "you know what, we're making enough profit".

[SussexSeagull]

Of course it matters. As a business you should be working to reduce overheads and maximise profit. Successful businesses don't say "you know what, we're making enough profit".

Which you can do by concentrating on your own rate and not worry about a figure you probably won't be able to find out.

[DirtyDog]

Does it matter so long as you are happy with your rate?

If you are on a high enough rate, then percentage almost becomes an irrelevance; if you are on a low rate then the percentage becomes very important.

Which is why you get people on a low rate moaning about how the agent is taking 25%, whereas you rarely hear of anyone on a high rate moan that the agent is taking 12%.

[d000hg]

Which you can do by concentrating on your own rate and not worry about a figure you probably won't be able to find out.

Rubbish. A client has a certain budget to pay for a contractor.

Unless you always work for a fixed rate "I charge £400/day" to every client, regardless what they're willing to pay - in that case I can agree with you. But most contractors seem to negotiate every contract rate. If you always charge £400/day and saw an advert for a role you liked at £600/day would you still tell the agent "I want £400/day" though? After all, you're happy to get £400/day...

[EAFS]

The clients will have a per day or per hour budget which they offer to the agency.
The agency then advertise the position and try and beat us down to the lowest price and then take the margin. Margin could be 5% up to 25% maybe even 40%.

Its up to the contractor to ask for the rate they want and then its game time. Clients have become more wise and now have managed services in place which should keep the agencies in check and restrict their margins, problem is the managed service companies now take a % of the agencies rate.