Reply to: Agent won't budge

[NotAllThere]

It's all been discussed hundreds of times before, and I think we've recognised that Agent isn't the brightest spark in the firework factory.

Thread closed.

[northernladuk]

Clients aren't stupid, they won't pay a big rate difference for the same set of skills. If you're getting charged at less, it's because you're worth less - remember in the clients mind they only see the charge rate. If you're getting charged at a higher rate then it can be justifed by the client as you being worth it.

I think you missed the point.

[northernladuk]

Is that the margin of the rate they charge the client, or the markup on top of the rate they pay you?

A typical agency margin is 20%, often less in the public sector or with large customers (not necessarily large companies). That corresponds to a markup of 25%. Nothing to be upset about.

I don't think that's true. I thought the number banded about regularly was 10 to 12%. 20% is a hell of a lot. Do the sums on your own gig. How much is 20% over the 3 or 6 months on a gig. Look at that figure and tell us you think that is a fair representation of the work they did? I very much doubt it.

[northernladuk]

Oh really... I can't remember the last time (in over 10 years) that a contractor being aware of the charge rate EVER helped in a negotiation. Let's be clear about one thing, the end client is OUR client, we then contract the work to the individual contractor, WE are then YOUR client.

I can't believe what I am reading.....

An advantage over what? We have a piece of work and we price it accordingly, if you then feel that the agency is making too much money, tough. Seeing as you're so happy to 'help with negotiations' clearly you rate your skills so negotiate at the beginning. I don't know my clients margins and I can still negotiate a margin I'm happy with. You won't know my margins, does that suddenly change your price?

I can't believe what I am reading....

If your solicitor (or any other professional) starts dropping their fees because you feel they are making too much profit then I'd resign my job now and join the circus, get real.

Estate agents will drop their percentage if you push them hard enough. Fees are negotiated in many areas and I'll bet solicitors will in the interest of getting business. I know for a fact mine has in a case that's just closing now.

It's obvious you never run a successful business. You'll pay more to stay at a 5* hotel because it's more expensive to run vs. a 3* hotel. You'll pay more for a Bently because it's expensive to make than a Polo. EVERY DAY you pay more for things that are better and often have a higher overhead. The difference here is that you believe all agencies are the same and should price themselves the same - you're wrong, they are NOT.

Get real. You are a bloody salesmen pimping roles. Get over yourself. You've got jobserve to do most of it for you.

What would you say if I tried to push your rate down because I can find someone cheaper? You'd probably tell me that they're not as good as you, and you get what you pay for and you'd most likely be right. Being a good agency is expensive, at least more expensive than being a low quality agency.

Which happens all the time. You forget the choice of the client is important here and they won't be happy you ditching their first option because you are getting greedy. Hands up on here who've got a gig and the rate has mysteriously dropped by 10 or 20 quid.

Wrong - see above. You're missing the whole point around cost and price. Just because agency A makes a higher 'margin' than Agency B it doesn't mean that Agency A will fail.

It will if it doesn't get in line with the market and clients perceive them to be poor value compared to B.

Another example of your ignorance around agencies. Do you think that our clients just land in our lap, we put up and advert and then reap £100 a day? Youou don't value agencies, that much is clear. If they did 'sod all' then they wouldn't exist and all contractors would find their own contracts...

I don't value most agents at all no. We agree on one thing. But if you get a decent client that wants a churn of contractors then yes the roles do quite literally land in your lap. Wouldn't the last sentence be terrific.

You talk about £100 a day like it's a lot of money out of your pocket. It's called profit and there's nothing wrong with it. I've yet to meet a good and yet broke IT Contractor.

Who the hell doesn't think 100 quid out of your pocket a day isn't a lot? It depends on the money chain as to whether £100 profit is acceptable. If the client pays £400, you trouser £100 and the client gets a £300 a day contractor then yes, its a ridiculous amount of profit that isn't sustainable and is just greedy. Not a very good business model that.

If you're that concerned about the scope of work being outside of your abilities then I would suggest you don't take the contract. The interview is there for a reason. Knowing that the client is paying more probably just means that the recruiter is a better liar than you..

FTFY but that wasn't the point being made.

I'm not saying don't negotiate, I'm saying don't let your negotiation be 'you're making more money that I think you're worth' - negotiate from a value add point of view, if the duties of the role havent changed and the market rates haven't changed then why should your rate. You're worth more all of a sudden, I doubt it.. maybe next time, negotiate better, it's business after all, no point crying after the event.

But isn't that the whole point of a negotiation? Same for buying a car etc. Nothing to do with value add. There is a pot of money being paid by the client. You are taking a cut of that (although we get a cut your money technically) but you don't get to dictate carte blance. If you want me you should drop your margin. The clients wants me so you'd be pretty stupid to sit on that 25% thinking you are doing the smart thing. You also forget to factor in this mysterious rate drop that appears when many contracts turn up. We are still worth what we interviewed so why did you think it fit to try and pocket another £10/£20/whatever?

You're mixing up lying with business. Only YOU know your WORTH. If you accept a rate that you are happy with then what's the problem. If it turns out that the agent is making more money that you like, tough. It happens everyday, you can't base YOUR WORTH on what the agency negotiates, that's representative of what THEY'RE worth (both to their client as a supplier and their negotiation ability).

We don't have a 'worth' as such. We are slaves to the rate, which we can negotiate. If the agent is making too much we negotiate. That's the whole point of this thread. You are only worth the amount you can skim of the contractor by the way as the client isn't paying you. He's giving you a pot of money to get him a contractor. How much you pass on is up to you and the contractor so really what the client gives you isn't representative of your worth at all. It's representative of the role they are trying to fill... which thinking about it is the worth of the contractor. It's only the greedy salesman in the middle that's changing the figures.

Are you a new agent or with one of the smaller players?

[m0n1k3r]

After finding out the agent are taking 25% (and the p1$$ imho) it is renewal time.

Is that the margin of the rate they charge the client, or the markup on top of the rate they pay you?

A typical agency margin is 20%, often less in the public sector or with large customers (not necessarily large companies). That corresponds to a markup of 25%. Nothing to be upset about.

[Agent]

Originally Posted by NotAllThere

For the hard of thinking - high margins are bad because they distort the market. The client doesn't know how much you get, he only knows how much he's paying.

Bad for contractors:

Contractor A - costs £600 a day, gets £400 a day
Contractor B - costs £550 a day, gets £450 a day.

Which contractor gets canned first? From which one does the client expect more?

Bad for clients: they're paying over the odds.

One of my clients dictates margins to their suppliers. And after six months insists on a margin reduction - which must go to the contractor.

Clients aren't stupid, they won't pay a big rate difference for the same set of skills. If you're getting charged at less, it's because you're worth less - remember in the clients mind they only see the charge rate. If you're getting charged at a higher rate then it can be justifed by the client as you being worth it.

[malvolio]

For the hard of thinking - high margins are bad because they distort the market. The client doesn't know how much you get, he only knows how much he's paying.

Bad for contractors:

Contractor A - costs £600 a day, gets £400 a day
Contractor B - costs £550 a day, gets £450 a day.

Which contractor gets canned first? From which one does the client expect more?

Bad for clients: they're paying over the odds.

One of my clients dictates margins to their suppliers. And after six months insists on a margin reduction - which must go to the contractor.

That's only relevant if there is a fight for places a the client. Even if there is, £50 a day over a three month gig is around £3500; if the client is worried about that then you're probably better off out of there anyway. People are retained on performance, not cost.

[Agent]

Sorry to bring up an old topic, been busy but felt northernladuk deserved a reply.

We want to be aware to aid negotiation.

Oh really... I can't remember the last time (in over 10 years) that a contractor being aware of the charge rate EVER helped in a negotiation. Let's be clear about one thing, the end client is OUR client, we then contract the work to the individual contractor, WE are then YOUR client.

If not the margin is veiled and knowing gives you an advantage

An advantage over what? We have a piece of work and we price it accordingly, if you then feel that the agency is making too much money, tough. Seeing as you're so happy to 'help with negotiations' clearly you rate your skills so negotiate at the beginning. I don't know my clients margins and I can still negotiate a margin I'm happy with. You won't know my margins, does that suddenly change your price?

If you find out how much and you find he's got an unreasonable mark up on you can then negotiate

If your solicitor (or any other professional) starts dropping their fees because you feel they are making too much profit then I'd resign my job now and join the circus, get real.

Just because that agent has unreasonably high overheads it doesn't mean he can calmly pass it on to someone else to fund.

It's obvious you never run a successful business. You'll pay more to stay at a 5* hotel because it's more expensive to run vs. a 3* hotel. You'll pay more for a Bently because it's expensive to make than a Polo. EVERY DAY you pay more for things that are better and often have a higher overhead. The difference here is that you believe all agencies are the same and should price themselves the same - you're wrong, they are NOT.

What would you say if I tried to push your rate down because I can find someone cheaper? You'd probably tell me that they're not as good as you, and you get what you pay for and you'd most likely be right. Being a good agency is expensive, at least more expensive than being a low quality agency.

Businesses that can't get their costs down to market levels without having to pass the cost on fail.

Wrong - see above. You're missing the whole point around cost and price. Just because agency A makes a higher 'margin' than Agency B it doesn't mean that Agency A will fail.

If you run a business where you want 100 quid a day for doing sod all

Another example of your ignorance around agencies. Do you think that our clients just land in our lap, we put up and advert and then reap £100 a day? Youou don't value agencies, that much is clear. If they did 'sod all' then they wouldn't exist and all contractors would find their own contracts...

You talk about £100 a day like it's a lot of money out of your pocket. It's called profit and there's nothing wrong with it. I've yet to meet a good and yet broke IT Contractor.

Your analogies don't make sense. For some of my consultancy work, I normally charge at the mid-range which is about £500-550pd. With the agent's cut on top I expect the client to be paying about £650. But if the client is paying £900+, then the client will be expecting services from someone used to delivering projects at £650+, and that might be outside of what I'm able to deliver. E.g. I wouldn't go for a contract paying £1,000 per day (they do still exist) because I know I don't have the expertise to deliver at that level.

So it is important to either know what the client is paying, or work with the knowledge/assumption that the agent is taking a fair margin.

If you're that concerned about the scope of work being outside of your abilities then I would suggest you don't take the contract. The interview is there for a reason. Knowing that the client is paying more probably just means that the recruiter is a better negotiator than you..

But you are absolutely wrong. There is the option to negotiate a price that suits everyone. It's been part of business since people were paying for stuff in chickens and goats. Very very poor view that indeed and shows a level of incompetence and naivity IMO. A vast majority of contractors have negotiated rates so it happens. To say it doesn't is just dumb.

I'm not saying don't negotiate, I'm saying don't let your negotiation be 'you're making more money that I think you're worth' - negotiate from a value add point of view, if the duties of the role havent changed and the market rates haven't changed then why should your rate. You're worth more all of a sudden, I doubt it.. maybe next time, negotiate better, it's business after all, no point crying after the event.

One thing you also forget is agents, any type, be it estate, football, contractor ones have a habit of lying to get the most money. That means we have to negotiate to protect ourselves.

You're mixing up lying with business. Only YOU know your WORTH. If you accept a rate that you are happy with then what's the problem. If it turns out that the agent is making more money that you like, tough. It happens everyday, you can't base YOUR WORTH on what the agency negotiates, that's representative of what THEY'RE worth (both to their client as a supplier and their negotiation ability).

[northernladuk]

I enjoyed that.

[northernladuk]

I'm sorry but I can't believe guff I am reading here. I do hope you are really are an agent because that would be slightly understandable.

It's an odd mentality that you feel you should be aware of how much margin the agency is making.

We want to be aware to aid negotiation. I don't think anyone has said they think legally we should know. We know when agents are on fixed margins and they are happy to tell us. If not the margin is veiled and knowing gives you an advantage. Quite natural I'd say.

I can't think of any other service industry where you would demand to know the charge rate?

Again I don't think anyone is demanding and we understand why you will not tell us but as business we have to find out to protect ourselves and make the best out of a deal we can.

Do you ask the salary of your waiter before you leave them a tip?

Useless analogy. Nothing to do with our situation

Do you ask you solicitor how much it actually costs him per hour to justify why he charges £300 an hour?

You can do and he wont tell you just as agents don't. If you find out how much and you find he's got an unreasonable mark up on you can then negotiate. Again not the best analogy as agents are just middle men. The solicitor is the specialist.

Just because the agency is making 25% margin doesn't mean that they're laughing at you and driving around in sports cars. Some companies have higher running costs, some are startups and need to make more money today than they will in 12 months time.

But then you've got a problem if your business needs almost 3 times the rate to survive than the rest of the industry. Just because that agent has unreasonably high overheads it doesn't mean he can calmly pass it on to someone else to fund. Business nowadays look at efficiency saving rather than passing on the cost to the customer. Businesses that can't get their costs down to market levels without having to pass the cost on fail. Clients won't want an agent like that onboard as they are getting a £300 contractor for the £400 they are paying because the agent is incompetent. If you run a business where you want 100 quid a day for doing sod all when an IT professional is working his nuts off for only 3 times that you can go whistle, whatever your overheads are.

Who are you to dictate the profit margins of the agency? I'm not sure how much you know about the running costs of an agency but you may be surprised, it's not all profit.

We don't aim to dictate them. We aim to do business with them to get the best deal we can. Sometimes there is wiggle room and it works, sometimes there isn't and the agent makes what he expects. It's called business.

At the end of the day, you always have a choice. Accept the rate offered or walk. Walking only to secure another contract at the same rate (but lower agency margin) seems crazy.

But you are absolutely wrong. There is the option to negotiate a price that suits everyone. It's been part of business since people were paying for stuff in chickens and goats. Very very poor view that indeed and shows a level of incompetence and naivity IMO. A vast majority of contractors have negotiated rates so it happens. To say it doesn't is just dumb.

One thing you also forget is agents, any type, be it estate, football, contractor ones have a habit of lying to get the most money. That means we have to negotiate to protect ourselves. Look at the newbie tax. How many new contractors get screwed over by agents because they are new. A large majority. If you want to play that stupid game then expect the contractor to come back and demand a better rate. You caused it so you have to expect it. You can't sit on your high horse and complain about us negotiating when it's the agents blind greed that is the root of the problem.

When stories of agents ripping off people upwards of 40% in some cases stop we will stop negotiating and accept the first offer. While you are lying to try and get a tenner more in your pocket expect to fight for it.

[GillsMan]

It's an odd mentality that you feel you should be aware of how much margin the agency is making. I can't think of any other service industry where you would demand to know the charge rate? Do you ask the salary of your waiter before you leave them a tip? Do you ask you solicitor how much it actually costs him per hour to justify why he charges £300 an hour?

Just because the agency is making 25% margin doesn't mean that they're laughing at you and driving around in sports cars. Some companies have higher running costs, some are startups and need to make more money today than they will in 12 months time.

Who are you to dictate the profit margins of the agency? I'm not sure how much you know about the running costs of an agency but you may be surprised, it's not all profit.

At the end of the day, you always have a choice. Accept the rate offered or walk. Walking only to secure another contract at the same rate (but lower agency margin) seems crazy.

Your analogies don't make sense. For some of my consultancy work, I normally charge at the mid-range which is about £500-550pd. With the agent's cut on top I expect the client to be paying about £650. But if the client is paying £900+, then the client will be expecting services from someone used to delivering projects at £650+, and that might be outside of what I'm able to deliver. E.g. I wouldn't go for a contract paying £1,000 per day (they do still exist) because I know I don't have the expertise to deliver at that level.

So it is important to either know what the client is paying, or work with the knowledge/assumption that the agent is taking a fair margin.

[Agent]

It's an odd mentality that you feel you should be aware of how much margin the agency is making. I can't think of any other service industry where you would demand to know the charge rate? Do you ask the salary of your waiter before you leave them a tip? Do you ask you solicitor how much it actually costs him per hour to justify why he charges £300 an hour?

Just because the agency is making 25% margin doesn't mean that they're laughing at you and driving around in sports cars. Some companies have higher running costs, some are startups and need to make more money today than they will in 12 months time.

Who are you to dictate the profit margins of the agency? I'm not sure how much you know about the running costs of an agency but you may be surprised, it's not all profit.

At the end of the day, you always have a choice. Accept the rate offered or walk. Walking only to secure another contract at the same rate (but lower agency margin) seems crazy.

[Lance]

Except I haven't signed the renewal which is a separate negotiation. Even simpler.

Good luck.

[ClothCap]

Except I haven't signed the renewal which is a separate negotiation. Even simpler.

[Lance]

How can the winkers get away with blocking my services just cos they hide their margins at the outset?

They can get away with as you've agreed a price, the client has agreed a price, and you have a clause in your contract to prevent you from bypassing the agent.

Simple.