Reply to: Advice on best way to ask for rate increase...

[Taita]

So, I got offered the extension yesterday. Seems they changed their mind about who and how long they were extending and I believe ended up extending all of us, but for a shorter time (so their original conversation may well have been bullpoop to stop me from looking elsewhere until they'd made their minds up). I had a quick chat with the friendly manager and he didn't know whether the agent was on a fixed rate.
So I called the agent and had a frank chat with him. Didn't mention that I knew what they were getting to start with, he ummm'd and arrrrh'd with the figures and eventually said he could offer me an extra 3% only (I wanted 7-8% but I didn't ask for anything specific). I then decided to be straight with him and talk margins and tell him that I knew what he was getting. He was a bit fed up that the guy had said something, but he told me that he has to keep his margins at 18% or above or he doesn't get paid anything on the deal. I mentiond my partner's figures of 8-10% and he said the lower percentages are only available when they are dealing with companies with loads of contractors as their overheads are cheaper. This client is not one of those.

So I took the 3% and thanked him for his time and honesty(?). Whether it's all true or not, I'll probably never know, but he did say the right thing by saying "the client is very happy with your work so I'd be silly not to do my best for you to keep you there" so for now I'm happy. It's not as much as I wanted, but I got a bit and for that I'm thankful.

BOOMED

Well done. Now you have the basis of a relationship with an agent you can do business with. Cultivate it.

[Antman]

So, I got offered the extension yesterday. Seems they changed their mind about who and how long they were extending and I believe ended up extending all of us, but for a shorter time (so their original conversation may well have been bullpoop to stop me from looking elsewhere until they'd made their minds up). I had a quick chat with the friendly manager and he didn't know whether the agent was on a fixed rate.
So I called the agent and had a frank chat with him. Didn't mention that I knew what they were getting to start with, he ummm'd and arrrrh'd with the figures and eventually said he could offer me an extra 3% only (I wanted 7-8% but I didn't ask for anything specific). I then decided to be straight with him and talk margins and tell him that I knew what he was getting. He was a bit fed up that the guy had said something, but he told me that he has to keep his margins at 18% or above or he doesn't get paid anything on the deal. I mentiond my partner's figures of 8-10% and he said the lower percentages are only available when they are dealing with companies with loads of contractors as their overheads are cheaper. This client is not one of those.

So I took the 3% and thanked him for his time and honesty(?). Whether it's all true or not, I'll probably never know, but he did say the right thing by saying "the client is very happy with your work so I'd be silly not to do my best for you to keep you there" so for now I'm happy. It's not as much as I wanted, but I got a bit and for that I'm thankful.

BOOMED

Congrats, seems like an open conversation, he's right if they're a small organisation then their costs will be higher (have you seen the maintenance plans for A3s?!). Modis who supply hundreds of contractors to Tesco were on 4%, if they've only got a few contractors placed then there is no economy of scale.

Have a banana,

[northernladuk]

So that equates to between 10 and 15 quid a day? I guess it's better in your pocket than theirs.. but it's not a lot. Still, chalk it down as a win and everyone is happy I suppose.

[zippy.mini]

So, I got offered the extension yesterday. Seems they changed their mind about who and how long they were extending and I believe ended up extending all of us, but for a shorter time (so their original conversation may well have been bullpoop to stop me from looking elsewhere until they'd made their minds up). I had a quick chat with the friendly manager and he didn't know whether the agent was on a fixed rate.
So I called the agent and had a frank chat with him. Didn't mention that I knew what they were getting to start with, he ummm'd and arrrrh'd with the figures and eventually said he could offer me an extra 3% only (I wanted 7-8% but I didn't ask for anything specific). I then decided to be straight with him and talk margins and tell him that I knew what he was getting. He was a bit fed up that the guy had said something, but he told me that he has to keep his margins at 18% or above or he doesn't get paid anything on the deal. I mentiond my partner's figures of 8-10% and he said the lower percentages are only available when they are dealing with companies with loads of contractors as their overheads are cheaper. This client is not one of those.

So I took the 3% and thanked him for his time and honesty(?). Whether it's all true or not, I'll probably never know, but he did say the right thing by saying "the client is very happy with your work so I'd be silly not to do my best for you to keep you there" so for now I'm happy. It's not as much as I wanted, but I got a bit and for that I'm thankful.

BOOMED

[Contreras]

Well do let us know how you get on...

[zippy.mini]

Before someone jumps on you... the agency aren't "taking a cut" they are selling your services with a mark-up. And yes , "mark-up" isn't the same as "margin", the later usually being the % figure quoted.

I think you will be lucky to achieve what you are asking. Fwiw, if I was happy in the role then I would ask for an extra £2 or £3 ph and be happy with £1ph. If you are pals with the client manager then perhaps tip them off but this has dangers too - in my experience permies sometimes justify contractors rates vs. their salary believing the agency must be raking say 50% of the rate and it may come a surprise for them to learn in fact you are getting the majority of it.

We already went through the maths in this thread on markup vs margin and my figures are fine

Maybe my terminology was incorrect, but that's being pedantic (which you're entitled to be )

You can't put a monetary per hour figure on what I should ask for. Not only do you not know what my rate is, but I also don't get paid hourly.

[Contreras]

Actually, that's not true. Some clients just don't pay the big rates... Now I know that this client does, but the agent is taking such a big cut, it's irked me. I spoke to my other half who is a hiring manager and was told that the agency they deal with only take 8-10%, which obviously added fuel to the fire...

As for your previous reply, 15% of something is better than 20% of nothing, which is the alternative I would give him.

Before someone jumps on you... the agency aren't "taking a cut" they are selling your services with a mark-up. And yes , "mark-up" isn't the same as "margin", the later usually being the % figure quoted.

I think you will be lucky to achieve what you are asking. Fwiw, if I was happy in the role then I would ask for an extra £2 or £3 ph and be happy with £1ph. If you are pals with the client manager then perhaps tip them off but this has dangers too - in my experience permies sometimes justify contractors rates vs. their salary believing the agency must be raking say 50% of the rate and it may come a surprise for them to learn in fact you are getting the majority of it.

[zippy.mini]

Why should he care who pays. The nub of his beef is that he is underpaid for the job in hand....he didn't care who paid when he took the job.

Actually, that's not true. Some clients just don't pay the big rates... Now I know that this client does, but the agent is taking such a big cut, it's irked me. I spoke to my other half who is a hiring manager and was told that the agency they deal with only take 8-10%, which obviously added fuel to the fire...

As for your previous reply, 15% of something is better than 20% of nothing, which is the alternative I would give him.

[Taita]

In your demands, make sure that you make it clear to the agency that you expect the increase to come from their margin being cut rather than them asking the client for an increase.

Why should he care who pays. The nub of his beef is that he is underpaid for the job in hand....he didn't care who paid when he took the job.

[Taita]

I've just been inadvertantly told what my current client is paying the agency for my services. It's over 20% more than I'm receiving. I took a smaller rate than I ideally wanted to get my foot in the door at this client as I believe there may be scope for repeat work. Increasing the rate to what I really wanted would mean the agency would have to cut their margin from over 20% to just under 15%. Do you think that's a reasonable request? The client have expressed an interest in extending me (my understanding is that they will choose to extend my contract but not others doing the same job) and I do also bring SC clearance to the role, which will make me able to do more roles within this client co (it wasn't required for this role but may be for future ones).

I would like to know how others have approached this situation and whether their approach has been successful. Do I tell the agency that I know what their margin is now and ask them for what I want? Or is there a better way?

So you are expecting an agent to readily accept a 20% drop in gross profit? Dream on <mod snip>

[zippy.mini]

I don't think I agree with this. Most clients are on rate cards and they dictate the rate to the agent and tell them to go away to find someone to fit. I am sure the agent won't want to rock the boat with a client asking for a couple of percent here and there more. I am also sure the agent knows the client is working to a budget so chance of them upping it will be close to zero anyway. Client could start asking awkward questions why and want to the know the contractor rate at which point the agent has to divulge what a money grabbing git he is which will probably infuriate the client and so on.

I can't see for one minute why an agent would do that instead take a few percent hit on a gig that he's already done the lions share of the work so is just easy profit.

That's my thinking. If I'm being chosen to stay and others aren't, I've proved that the client likes me and what I do. The agent should then be looking at ways to keep me there to keep everyone happy...

I'll let you know what I decide.
It may all be a moot point if the project finance bods say no to any of us staying!

[northernladuk]

Quote the numbers to the agent, but they won't think 20% is excessive, so I'd be surprised if they don't go to the client manager for more to cover your increase. I'd defo talk to the friendly client manager in advance. A decent sounding place and possible repeat work, is 5% worth the walk !? Every day you are on the bench will take a month to recover at 5%. Tulip client then a different story.

I don't think I agree with this. Most clients are on rate cards and they dictate the rate to the agent and tell them to go away to find someone to fit. I am sure the agent won't want to rock the boat with a client asking for a couple of percent here and there more. I am also sure the agent knows the client is working to a budget so chance of them upping it will be close to zero anyway. Client could start asking awkward questions why and want to the know the contractor rate at which point the agent has to divulge what a money grabbing git he is which will probably infuriate the client and so on.

I can't see for one minute why an agent would do that instead take a few percent hit on a gig that he's already done the lions share of the work so is just easy profit.

[TechJinx]

Maybe some idiot at the client is refusing to pay the agent.......

cross thread comedy - like it

[SlipTheJab]

No because I don't think many agents believe their contractors are so stupid they would fall for it. They have to do the factoring, it's part of their business. If an agent is having to borrow large sums of money to pay their contractors I would be seriously worried about their cashflow!!

Maybe some idiot at the client is refusing to pay the agent.......

[zippy.mini]

Quote the numbers to the agent, but they won't think 20% is excessive, so I'd be surprised if they don't go to the client manager for more to cover your increase. I'd defo talk to the friendly client manager in advance. A decent sounding place and possible repeat work, is 5% worth the walk !? Every day you are on the bench will take a month to recover at 5%. Tulip client then a different story.

Agreed and that's what I'm currently weighing up. Thank you. I guess I was just surprised that the margin was so high, so it's more the principle of the thing. The more I think about it (with all your help ) the more I'm wondering if it's worth rocking the boat.

I will actually have to walk in a few months anyway unless they get me on an SC role as I want to keep my clearance current...