Reply to: Renewal Advice

[Glencky]

There is a lot of misinformation in this thread about you are providing the same services and thus you aren't going to get a raise/having to justify your raise. All rubbish. At the end of the day, the agent/client may decide to give you more just to avoid the hassle of getting someone new in and having it all falling to pieces - that is a fact that I have seen countless times occur, even for somewhat incompotent contractors . As for if you will get it, well you can only ask and see what happens, no one here can determine even the likelihood of you getting a raise.

It rather depends whether you want to get repeat business from the same client in the (more distant) future. I have also seen this happen, even for less than fully competent contractors. I have also seen those same contractors effectively blacklisted from going back to the same organisation because said contractor was perceived, correctly, as having taken the chance to press home their advantage when they had the organisation over a barrel. And yes, I'm absolutely certain this has happened because at the time I was a permie in the hiring organisation. That organisation managed its contractors very well (IMHO). On the one side, the contractor-focused side, it rarely gave notice before the end of a contract (which meant, for example, people usually only got a 3 month gig as a first contract which was just enough time to find out if they were sh1t before not renewing if they were). On the other side, the specific rate negotiations were out of the direct hiring manager's hands and in a central team, to ensure no overinflated rates were paid. In other words the organisation balanced its exposure and risk with being respectful towards an important contractor pool. In an organisation like that, if you take the p1ss it WILL get remembered and you WILL be bottom of the list of people to get back in once you've finished the immediate piece of work in which you are entrenched.

How inclined you are to risk this will depend on a number of factors, including your own business ethics and how big of a deal it is to lose access to this client in the future.

[billybiro]

I am, as a business, entitled to raise my prices to reflect the increasing workload, difficulty and responsibility.

If they want to buy goods from a different shop because they don't like the price, they are entitled to do that.

The bit that makes it contentious is that they are a captive audience, and charging an additional tax for that would be in poor taste.

Whilst I appreciate the balancing act that is required in relation to the overall arc of this thread, I just want to address this specific point bolded above.

As someone else has previously pointed out, a raise in rates isn't always due to "extra value" being delivered. In fact, it very rarely is.

For example, what extra value is my gas & electricity supplier delivering to me when they raise my prices every year? What extra value is the landlord delivering to the tenant when he raises rent at the start of every term renewal? What extra value is the local council delivering to me when they raise my council tax every year? What extra value is my digital service provider delivering to me when they raise my prices every year (sometime more frequently)?

(For the record on the last two points, my own council has actually cut public services whilst still raising council tax and my digital services provider will deliver me a reduce service compared to previous years yet has continued to raise their prices).

[LondonManc]

Suck it up and carry on at the same rate, doing the same great work on this gig and you're more likely to get repeat business, sometimes at a higher rate. I've had that experience at least twice.

[northernladuk]

There is a lot of misinformation in this thread about you are providing the same services and thus you aren't going to get a raise/having to justify your raise. All rubbish. At the end of the day, the agent/client may decide to give you more just to avoid the hassle of getting someone new in and having it all falling to pieces - that is a fact that I have seen countless times occur, even for somewhat incompotent contractors . As for if you will get it, well you can only ask and see what happens, no one here can determine even the likelihood of you getting a raise.

But he's already had a raise on that basis. The agent cut their fixed rate for him which is pretty unheard of to be honest.

[1manshow]

There is a lot of misinformation in this thread about you are providing the same services and thus you aren't going to get a raise/having to justify your raise. All rubbish. At the end of the day, the agent/client may decide to give you more just to avoid the hassle of getting someone new in and having it all falling to pieces - that is a fact that I have seen countless times occur, even for somewhat incompotent contractors . As for if you will get it, well you can only ask and see what happens, no one here can determine even the likelihood of you getting a raise.

[northernladuk]

Fill your boots then. After the agent dropping a fixed commission to accommodate a rise then I think you are on a wish and a prayer.

If you really think you are due one from the client then go for it. I think we've covered all the bases on this thread so just to you to do what you want now.

What do you know about IR35? All this extra responsibility and the other aspects you've mentioned through this thread is starting to sound like you are taking on more that you signed up for so D&C and MoO might be a problem?

[aft]

I am, as a business, entitled to raise my prices to reflect the increasing workload, difficulty and responsibility.

If they want to buy goods from a different shop because they don't like the price, they are entitled to do that.

The bit that makes it contentious is that they are a captive audience, and charging an additional tax for that would be in poor taste.

If they had any sense they would offer me 10% more as a gesture of good will in an effort to retain me.
They want a premium service they ought to expect to pay a premium price.

Maybe I should the client I want 10% more because of the additional expectations (paid OT & on call)

An alternative I was thinking is mentioning to the client that I want to squeeze the agents margin and intend on asking the agent for a rise, just to gauge the response and also drop a not so subtle hint.

[northernladuk]

If you've delivered over the last year you've provided reasonable certainty that you will deliver in the coming six months, and reasonable certainty that you are able to fit in and work with people there and not throw your toys out of the pram if someone looks at you the wrong way.

i.e. carry on doing what you are being paid to do and meeting the expectations of the client.

That's a better value than you offered when you started. When they brought you on, they had no such certainty. They paid you £X even with the risk that you were going to be useless. 6-12 months later, that risk is removed so you are worth more to them than a new guy who has those same risks.

But the rate is not artificially lower because of that risk. They want a guy to deliver at £xxx. If the risk is realised that it isn't him they go get someone else. If expectations are met the guy continues to deliver at the rate offered.

Add to that, you are embedded in the project and know the code. When you started, that wasn't the case. So you certainly WILL provide better value on this contract than the starting one because you are going to be far more productive in the first two weeks of this one than you were in that initial contract.

Again, if this were the case the rate would be artificially lower and it isn't. You are paid for the time and the expertise you have.

So unless you aren't professional enough to keep on providing quality work after renewal, of course you'll be giving better value than when you started.

And it isn't holding the client to ransom, either. It's normal business behaviour. Businesses often charge lower rates on services and products until they've proved themselves. And they also have costs go up all the time and pass those on to their customers. It's normal and expected.

Of course, if you aren't that good and the client can easily replace you, you have a weak position and you'd be better focusing on improving than asking for more money.

But agents and clients don't apply this logic to contractors. It's bum on seats at a set price. I've also seen plenty of contracts where 10% year on year savings are expected because the supplier is now more efficient. Should we expect that to happen as well..

You are right in what you say but it just doesn't apply to a bum on seat delivering skills. It's the same skill at the same price. Nothing has changed. The fact the the clients in a vast majority of cases won't change their rate card is evidence of this. In some cases they do, happy days. In most they won't.

[BlasterBates]

As a long term contractor you want to maintain long term relationships, the other thing is whilst you have this elevated responsibility you are increasing your earning potential,

My advice is play the long ball game, rather than go for a few extra crumbs leaving behind "scorched earth". I would finish the project, make them happy and then go for a higher rate next time probably by switching to a new client. It is much harder to raise your rate significantly at an existing client.

[WordIsBond]

You say it's rubbish but no evidence in your second paragraph backs up the first. You talk about the cost of replacing which, yes, is true but that's just holding the client to ransom. You say nothing about providing better value. If you are doing what you are brought on to do then you are not providing any extra value so surely its not rubbish at all?

If you've delivered over the last year you've provided reasonable certainty that you will deliver in the coming six months, and reasonable certainty that you are able to fit in and work with people there and not throw your toys out of the pram if someone looks at you the wrong way.

That's a better value than you offered when you started. When they brought you on, they had no such certainty. They paid you £X even with the risk that you were going to be useless. 6-12 months later, that risk is removed so you are worth more to them than a new guy who has those same risks.

Add to that, you are embedded in the project and know the code. When you started, that wasn't the case. So you certainly WILL provide better value on this contract than the starting one because you are going to be far more productive in the first two weeks of this one than you were in that initial contract.

So unless you aren't professional enough to keep on providing quality work after renewal, of course you'll be giving better value than when you started.

And it isn't holding the client to ransom, either. It's normal business behaviour. Businesses often charge lower rates on services and products until they've proved themselves. And they also have costs go up all the time and pass those on to their customers. It's normal and expected.

Of course, if you aren't that good and the client can easily replace you, you have a weak position and you'd be better focusing on improving than asking for more money.

[malvolio]

You say it's rubbish but no evidence in your second paragraph backs up the first. You talk about the cost of replacing which, yes, is true but that's just holding the client to ransom. You say nothing about providing better value. If you are doing what you are brought on to do then you are not providing any extra value so surely its not rubbish at all?

Yep, not rubbish at all. Replacing contractors isn't expensive, since the agency deal - which is what costs expensive executive effort - is already in place. Who turns up to do the work is a trivial extra cost and most of that is borne by the agency anyway.

But with my hiring hat on (one I've worn several times), I'm not going to pay you more for doing the same job unless you are reducing my net project costs. Nor is any competent budget holder.

[Old Greg]

Go and get that other job at the same (or slightly better) rate with a lot less responsibility.

[northernladuk]

A lot of these guys are against rate rises because you aren't providing any better value than you were when you started.

I say that's a load of rubbish. If you are good, it's a lot cheaper for them to bump you up 3-5% at renewal time than to replace you. My rates go up every year. I could probably get away with 7-10% without much trouble, TBH. Are they going to drop me in the hopes they get someone as good without the increase, and go through all the cost of onboarding?

So generally, I'm in favour of bumping up the rate

You say it's rubbish but no evidence in your second paragraph backs up the first. You talk about the cost of replacing which, yes, is true but that's just holding the client to ransom. You say nothing about providing better value. If you are doing what you are brought on to do then you are not providing any extra value so surely its not rubbish at all?

[WordIsBond]

A lot of these guys are against rate rises because you aren't providing any better value than you were when you started.

I say that's a load of rubbish. If you are good, it's a lot cheaper for them to bump you up 3-5% at renewal time than to replace you. My rates go up every year. I could probably get away with 7-10% without much trouble, TBH. Are they going to drop me in the hopes they get someone as good without the increase, and go through all the cost of onboarding?

So generally, I'm in favour of bumping up the rate.

That said, I'd be pretty hesitant in your case. If I got it right, you are at market rate now and you started at a 25% discount to market rate. That tells me that six months ago you got uprated by about 33%. You were at 75% of market rate, you are now at 100%, that means to the client they are paying 1/3 more than they were six months ago. And now you want more?

You'd better be phenomenal at what you do to come back six months later after that kind of an uplift and ask for more. You'd better actually have a better offer, IMO.

The furthest I'd go is to tell the agent, "There's other roles out there at the same or better pay with less responsibility. What are they offering for the renewal rate?" If the answer comes back, "The same," and you like the gig, I'd take it, personally. I might be looking for 10% more six months from now, but I wouldn't be hitting them again six months after a big uplift.

[northernladuk]

You need to understand the chain and relationship here and think carefully about where to you want your increase to come from. You are contracted to your agent. That is the only party you should be discussing rate rises with.

The client will have a rate card and will have to go through all sorts of governance to change it so that's not going yo happen. You being important isn't enough. You are paid to do the job you are doing and that's it. The only place you can get a rise from is by cutting the agents margin. He's made his money back on getting you in do it's all profit now. Maybe you can shave a couple of percent off him but you will have to fight for it. He does this as a job so he's going to very easily bat of a wimpy request for more money. You've got to convince him you are gonna look elsewhere if you don't get it but that won't be easy. They know you won't leave a gig for a tenner a day more.

All that said if the agent is on a fixed margin then he can't flex and you are wasting his time.

Edit : dammit. Should have read the post properly. So he's on a fixed margin so you are screwed.