Reply to: What is a fair cut for an agency to take?

[brentmeister]

flexibility

Flexibility only goes one way for the contractor:

Down

[tim123]

The point that I am trying to make is that you take a contract that pays you a rate that you are happy to work for. If you are happy to work for £300/day it makes no difference if the agent is charging the end client £350/day or £500/day.

Yes it does.

In general:

A client paying 300pd has 300pd expectations.

A client paying 500pd has 500pd expectations.

As a contractor, I need to know what the clients expectations are in order to consider if I am the right man for the job. Usually the only way I can determine this is from the rate.

tim

[Ardesco]

Unless an agency is using a fixed rate, which seems to be rare, my take home rate and the marginal increase in the agency rate, that they get when they rip me off, are clearly directly related.

In simple terms, I get (say) 5/hour less, in order that they can get 5/hour more.

For newbie contractors who get 20/hour for a 40/hour gig this is of course even more "troublesome".

The point that I am trying to make is that you take a contract that pays you a rate that you are happy to work for. If you are happy to work for £300/day it makes no difference if the agent is charging the end client £350/day or £500/day. That is the contract the agent has drawn up between themselves and the end client. If you are willing to be bullied into accepting £5/hour less than you want then all that means is that you are not as good a negotiator as the agent.

At the end of the day you are not forced to accept a contract, if you accept the rate you are offered you have nobody to blame but yourself.

At the end of the day it is a business and the agent is not there to get you a fulfilling role that you love and makes you rich, they are there to get as much money as they can from the end client while paying you as little as posssible making thier business as profitable as possible.

I must admit it riles my slightly that the agency is in effect getting money for my work, but unless you are going to get all of your contracts direct with the end client you don't really have much choice. The best thing to do is forget about the agency and thier cut and focuss on the money you are bringing in for yourself. Life is too short to get completely stressed about something that isn't going to change no matter what you do anyway.

[abc]

Quite true, you do not haggle.

You quote your rate and you stick to it.

This has nothing to do with flexibility. Flexibiility is to do with being productive at the end of the 1st day in the job and being prepared to fly out and work in difficult situations at the drop of a hat. I am only flexible about my rate if they are not prepared to pay expenses (the rate only increases, never decreases).

This has everything to do with confidence in your value in the marketplace and the good old supply/demand principle.

If you lack confidence in your value or you feel that there are not many jobs out there to replace this one, then drop the price. If you feel that other contractors with your skillset would accept this rate, then drop your price.

I have niche skills, experience and confidence that the end-client will value my work, rates and all (and can show this with extentions to every contract I have worked on).

There is one very important exception to this rule, and it ultimately benefits you, not the agent.

If you don't have any of the above, begin by looking in Jobserve to see what skills do get the good rates then get the proper training in those skills. You can then winkle your way into a contract by accepting the lowest rate you can afford to sell yourself, for 3 months only. Agents who are desperate to get people in with unusual skills will not mind if you don't have the experience provided you are confident that you can do the job.

And I don't give a t0ss about your cowboys, abc - ultimately that's the low end of the contract market. If they muck me about I'll not touch them with a barge pole, I like to see barrow-boys sweat. I keep my professional agents who get me jobs (and don't stiff the client) close and friendly.

Sounds like you are in a good niche there. I am not jealous.

I am broader based myself, so I have to compete against a corresponding broad range of people. Even so I regularly turn offers down. I have no problem getting offers, just offers honestly dealt with, because this part of the market is infested with cowboy agents. I have seen too many hard-working people messed around by the cowboys to remain cool about it.

That’s the bad side of it; the good side is that technically I enjoy the fast-moving ever-changing nature of things in this part of the market, so when I am on a job I have good job satisfaction. I enjoy the work itself a lot.

I take your point about moving to a more niche area. I have considered it and might well go that way in the future. My younger brother is in a niche and he has always earned more than me!

[cojak]

Haggling is what you do when you are selling a used car. Of course I do realise that many agents come from that background.

Quite true, you do not haggle.

You quote your rate and you stick to it.

This has nothing to do with flexibility. Flexibiility is to do with being productive at the end of the 1st day in the job and being prepared to fly out and work in difficult situations at the drop of a hat. I am only flexible about my rate if they are not prepared to pay expenses (the rate only increases, never decreases).

This has everything to do with confidence in your value in the marketplace and the good old supply/demand principle.

If you lack confidence in your value or you feel that there are not many jobs out there to replace this one, then drop the price. If you feel that other contractors with your skillset would accept this rate, then drop your price.

I have niche skills, experience and confidence that the end-client will value my work, rates and all (and can show this with extentions to every contract I have worked on).

There is one very important exception to this rule, and it ultimately benefits you, not the agent.

If you don't have any of the above, begin by looking in Jobserve to see what skills do get the good rates then get the proper training in those skills. You can then winkle your way into a contract by accepting the lowest rate you can afford to sell yourself, for 3 months only. Agents who are desperate to get people in with unusual skills will not mind if you don't have the experience provided you are confident that you can do the job.

And I don't give a t0ss about your cowboys, abc - ultimately that's the low end of the contract market. If they muck me about I'll not touch them with a barge pole, I like to see barrow-boys sweat. I keep my professional agents who get me jobs (and don't stiff the client) close and friendly.

[abc]

What always annoys me is the agent still getting a cut after renewal, which is basically nothing to do with them. I don't mind paying for their services (or the client paying for their services if you look at it that way) first time around as the agent has done some work. But when it comes to renewal the relationship between you and the client is much stronger than either of you have with the agent, and I find having to involve a third party and not being able to speak for myself is a bit insulting.

I'm talking renewal at the moment, and I've told client and agent I'm not really happy with the current rate. For all I know the client is moaning about how expensive I am compared to other contractors, and I'm moaning about how cheap I am compared to other contractors, and we're both right.

In my opinion this example returns us to the same very basic issue of trust and honest dealing that I've been banging on about for a while now.

If your agency was honest enough to tell you its percentage, then you would know the full amount the client is paying for you now, so you would be able to judge if you are expensive or cheap.

But without this honesty from your agent, you could be on (say) 30/hour and feeling cheap, but thanks to your cowboy agent taking (say) 15/hour, the client thinks you are a greedy bastard when you ask for more!

The agent then sets you up, by agreeing with the client that yes indeed you are a greedy bastard, but offers to replace you with a "highly skilled" newbie. The newbie comes in and takes your job, working for 20/hour. The agent now has 25/hour and puts in an order for that new AUDI that you were hoping one day to be able to afford. While driving the new AUDI for the first time he offers your girlfriend a lift... OK maybe I am getting a bit carried away now.

But anyway, as I said earlier, because of this I think it's very important to try to do business with just those few agents that don't make a career out of insulting our intelligence.

Don't "feed" the cowboys.

[VectraMan]

What always annoys me is the agent still getting a cut after renewal, which is basically nothing to do with them. I don't mind paying for their services (or the client paying for their services if you look at it that way) first time around as the agent has done some work. But when it comes to renewal the relationship between you and the client is much stronger than either of you have with the agent, and I find having to involve a third party and not being able to speak for myself is a bit insulting.

I'm talking renewal at the moment, and I've told client and agent I'm not really happy with the current rate. For all I know the client is moaning about how expensive I am compared to other contractors, and I'm moaning about how cheap I am compared to other contractors, and we're both right.

[Cowboy Bob]

In simple terms, I get (say) 5/hour less, in order that they can get 5/hour more.

For newbie contractors who get 20/hour for a 40/hour gig this is of course even more "troublesome".

No, you accept £5 per hour less.

As for newbies, what you say is true. However, every contractor board that I've come across will warn of the dangers of agencies exploiting newbies, and to be honest, if a newbie doesn't do their homework before entering contracting then they get what they deserve. This isn't a game and it shouldn't be treated as such. So many newbies I meet go into contracting thinking it's easy money that will just automatically land in their bank account - they don't think about the possible pitfalls or even do any kind of basic research at all.

[abc]

Seriously, don't worry about the agencies cut, worry about your take home. Agency percentage is useful to know when you go for renewal because you can then get a rough idea of how much money they have to play with and what sort of an increase you can ask for, apart from that forget about it, it doesn't matter

Unless an agency is using a fixed rate, which seems to be rare, my take home rate and the marginal increase in the agency rate, that they get when they rip me off, are clearly directly related.

In simple terms, I get (say) 5/hour less, in order that they can get 5/hour more.

For newbie contractors who get 20/hour for a 40/hour gig this is of course even more "troublesome".

You say "Don't worry". Sorry but I don't agree.

I think that it is important that contractors try to select in favour of those agencies that are honest about rates, especially those that work to a clearly stated low/medium fixed margin.

It's necessary in order to combat the cowboys out there. If you help to “feed” the cowboys they might increase their market share, pushing honest agencies out.

[Ardesco]

Seriously, don't worry about the agencies cut, worry about your take home. Agency percentage is useful to know when you go for renewal because you can then get a rough idea of how much money they have to play with and what sort of an increase you can ask for, apart from that forget about it, it doesn't matter

[Swamp Thing]

12-15%

[abc]

Whenever an agent says this they are trying to increase their margin. The client has already agreed the fees with the agent before you even get involved. Always stick to the original rate.

At the end of the day, if you're not happy with 40 per hour, don't accept it. If you accept it, it has to be assumed that you're happy with that rate - regardless of what excuse the agent gives for the rate change and whether they're lying or not. If they said that the new rate was 30 per hour would you accept? No, because you wouldn't be happy with that rate. You were happy to accept 40 though. The agent is simply haggling with you and you accepted the proposal, simple as that.

Haggling is what you do when you are selling a used car. Of course I do realise that many agents come from that background.

In this market, that approach only leads to friction and bad feeling, which is bad for everyone in the end. Just scan some of the content on this site or elsewhere to see the negative effect it has on the attitude of contractors to agents.

I don't think that it is unreasonable of a contractor to hope that when an agent says that a client will pay a maximum rate of XX/hour, that the agent would be telling the truth.

I do partly agree that perhaps identifying and sticking to a fixed original rate, rather than being flexible over a range, is one other way to go. But it is not flexible and so does not cater for the good agents (yes there are some) who are telling you the truth and are just making an honest effort to find a compromise figure that both the contractor and client can live with.

In a nutshell, I am only happy if I am not being ripped off.

[BlasterBates]

Competition means on the whole the Agency cut is largely OK.

You ...as a contractor can contact any agency right.

You ...as a contractor can quote any rate you want.

Therefore there is no problem.

If agencies cuts were unfair, they would be making huge profit margins, in which case other agencies would move in and offer margins that were slightly less, so taking business from unfair agencies...and so this process goes on until the margins reach a point at which the salaries of Agents would be equivalent to Dustbin men, at which point all the agents go off and start refuse collecting.

That is what one refers to as a "free market", and means that profit margins are such that agents get paid a little bit more than dustbin men.

[Cowboy Bob]

Say I ask an agent for 45/hour, but the agent lies to me, saying that sadly on this occasion the client can only afford 40 (when in fact the client would pay the 45).

Whenever an agent says this they are trying to increase their margin. The client has already agreed the fees with the agent before you even get involved. Always stick to the original rate.

At the end of the day, if you're not happy with 40 per hour, don't accept it. If you accept it, it has to be assumed that you're happy with that rate - regardless of what excuse the agent gives for the rate change and whether they're lying or not. If they said that the new rate was 30 per hour would you accept? No, because you wouldn't be happy with that rate. You were happy to accept 40 though. The agent is simply haggling with you and you accepted the proposal, simple as that.

[abc]

True, but you're splitting hairs. At the end of the day, if the contractor is getting what they consider a fair price for the contract, then whatever cut the agency has managed to negotiate must be considered fair, since all parties are in agreement with regards to fees received/fees paid.

Well I don't see how an agreement can be considered to be fair, when one of the parties (the contractor), is often kept in the dark, or sometimes simply lied to, about what the client will actually pay.

Say I ask an agent for 45/hour, but the agent lies to me, saying that sadly on this occasion the client can only afford 40 (when in fact the client would pay the 45).

I am not happy about it, but in order to be flexible and work with the agency to secure the work, I say "yes". I sometimes give the agent the benefit of the doubt, because to be fair, they do not always lie. Just most of the time.

The agent then arranges his/her contract with the client, such that this extra 5/hour is still paid by the client, but is trousered by the agency, instead of me.

When later I find this out, I am not happy.