Reply to: How to deal with a long term contract extension offer?

[MrButton]

1. ~2 years on same rate, once contract signed

Nope. Extremely poor reason. Tell your “friend” to go get a permie job.

[WTFH]

So what stopped him?

The car park barrier.

[washed up contractor]

Probably more valid query to agent is 'Do you expect me to work with same rate for nearly 2 years..?' ..??

And a question he could have asked the agent when discussing rate in the first place. So what stopped him?

[washed up contractor]

This^^^^^

Sounds like the guy is just greedy. Longer term = lower rate. On what planet do you pay more if you buy in bulk?
Perhaps the person should refuse a long term at the offered rate, take a shorter term and ask for more money. That makes more sense but not much more.

Be careful of that attitude as an absolute else agents will be encouraged to use the 'it's a longer term contract so the rate isnt particularly high' routine even more.

[clearedforlanding]

OK. Upside here is very small. You aren't going to get much if you are just asking the agent to reduce his margin. But you can make a case.

"Dear Mr Agent

I realise you probably are not getting any increase on this contract from the prior contract. However, you are also having to do less work than for the first six months. You do not have to go out and find a client, find a contractor that fits, negotiate terms, etc. That saves you some money. They like me, this wraps up a nice income stream for 12 more months for you, for little work. That's definitely good for your business, and I've made it happen by being good at what I do.

I would like an increase. I'm not asking for a lot. I know your margin probably hasn't increased, and I'm not asking you to go back and renegotiate with the client. But effectively, because your costs are lower than they were for the first contract, your margin has increased, and I'd like to have a small piece of that. I'm asking for a 1.5% increase. I think that makes this extension a win for both of us."

Ask for 1.5%. Settle for a 1% increase. That's probably all you are going to get. If you are going through an agent, he just isn't likely to give up much margin. If you want a bigger increase, it almost certainly has to come from the client.

Whether an increase of that size is worth the risk of rocking the boat, you'll have to decide.

It's a little verbose.

I would make the sell that keeping good contractors in long term roles with a client reflects positivley on the agency and shows stability.

[WordIsBond]

Not keen to get client involved in this...prefer agent to absorb!

OK. Upside here is very small. You aren't going to get much if you are just asking the agent to reduce his margin. But you can make a case.

"Dear Mr Agent

I realise you probably are not getting any increase on this contract from the prior contract. However, you are also having to do less work than for the first six months. You do not have to go out and find a client, find a contractor that fits, negotiate terms, etc. That saves you some money. They like me, this wraps up a nice income stream for 12 more months for you, for little work. That's definitely good for your business, and I've made it happen by being good at what I do.

I would like an increase. I'm not asking for a lot. I know your margin probably hasn't increased, and I'm not asking you to go back and renegotiate with the client. But effectively, because your costs are lower than they were for the first contract, your margin has increased, and I'd like to have a small piece of that. I'm asking for a 1.5% increase. I think that makes this extension a win for both of us."

Ask for 1.5%. Settle for a 1% increase. That's probably all you are going to get. If you are going through an agent, he just isn't likely to give up much margin. If you want a bigger increase, it almost certainly has to come from the client.

Whether an increase of that size is worth the risk of rocking the boat, you'll have to decide.

[northernladyuk]

Counter it with an early termination clause and see how keen the client is to commit to a long-term deal.

Or quote them a short term rate with the last three months' rate discounted by 50%, or a suitable reduction if the contractor walks first.

[WTFH]

2. Something is better than nothing!

From the David Davis school of negotiating.

You Your friend needs to go into negotiations with at least a clue as to how much extra they want.

Now if they were any good and they wanted this to be done purely by the agent then before entering negotiations they should find out what % or amount the agent is on. Then they also need to know if the agent is on a fixed % from the client.

So, find out how much your agent is making from you, find out if they are on a fixed % and then think about what might be possible - remember that they are not going to give away half of their business to someone for no valid reason, and if you start to get pushy with them, they'll go to the client, or go to the market.

[Darren_Test]

Your friend needs to get better friends.

Yes, CUK friends!

[tarbera]

Sure, not saying No to extension. But nothing wrong in trying! right..?

I've seen offers withdrawn when contractors have asked for a rise

[northernladuk]

1. ~2 years on same rate, once contract signed

24 month rule? IR35 problems?

2. Something is better than nothing!

But don't end up with nothing while messing up your approach to getting something.

3. Yes, that is the plan. Agent absorbs rather than trouble client!

Has he not confirmed whether the agent is on a fixed margin or not yet? If they are you've both wasted a lot of time.

4. Nope :-)

Thank god for that.

Contract length is pointless anyway. Most clients can terminate contract immediately for no reason.!

FTFY

[Darren_Test]

I doubt that the client is committing to the full term. There is likely to be a termination clause

as always termination clause will be there

[Darren_Test]

It also depends on the relationship with the client.

I have been quite lucky in having good working relationships and have often broached the topic with the hiring manager who holds the budget. They then say whether they have wiggle room or not. Often they have then gone to the agent to change the day rate on the renewal paperwork.

Other times, I have used the agent to negotiate a rate rise but only on gigs where I've been there a year or more. I don't think a 6 month gig, unless you've gone well above and beyond*, warrants a rate rise. If your agent isn't a tw@t, you can ask about the chances of a rate rise.


* waffle about how you shouldn't do stuff that's not in the contracted scope

Not keen to get client involved in this...prefer agent to absorb!

[Darren_Test]

1. Why does he think he deserves an increased rate?
2. How much of an increase is he wanting? 1%? 5%? 20%?
3. Does he think the agent will just suck up a reduction in their take without demanding an increase from the client?
4. Have you advised him on how you've got increases in your rate over the last 10 years?

For me short term = higher rate, long term/perm = lower rate.
And for most businesses, if a customer wants to work with a supplier for a a higher volume of business, they are expecting that the supplier will be pleased with the opportunity of the trade arrangement and will reduce their prices to secure the contract, not increase them.

1. ~2 years on same rate, once contract signed
2. Something is better than nothing!
3. Yes, that is the plan. Agent absorbs rather than trouble client!
4. Nope :-)

Contract length is pointless anyway. Most clients can terminate contract with 2 weeks notice if no work.!

[northernladuk]

Probably more valid query to agent is 'Do you expect me to work with same rate for nearly 2 years..?' ..??

Who would say 'Of course, why not?'