Reply to: What to do in negotiations

[Crossroads]

I'm just stating a point that the client is happy with the work, otherwise they wouldn't extend.

But why is that justification for a change in rate. An extension suggests that the client is happy with the service provided for the rate charged and has more work.

If you pay a tradesman to fit a bathroom, and he charges £5k, will you pay him £7.5k to do exactly the same job next time just because the first job was OK?

OP.
1. Has your role changed?
2. Did you explain at the start that you were discounting your rate and would look for an increase in the future if extended?
3. Are you prepared to walk, or be managed out by the client?
4. Can you demonstrate that your client would need to pay more to replace you - i.e the market rate has increased by 22%?

[scooby]

i wrote a business case to save the Client a 1st year £500k with a total of an expected £3.8 over 4 years. they gave me an 18mth extension to allow me to deliver, and now they are offering me a further 6mths taking me to 2.5yrs from start.

The extension saw me get a 10% rise and the agency drop to 10% margin. that took a lot of effort and arguing and involved the head of procurement who i was working closely with at the time. this extension for a further 6mths will see me take the same rate, as the agency wont budget and the client cant afford much more... I say take what you can, and go from there.

be grateful of the work and not the bench.

[d000hg]

Can't you start off by telling agency "I want to raise my rate to £X+Y" where X is your current rate. They will probably counter by saying "the client won't accept a increase of £Y". Quick as a flash you respond "well can't you reduce your cut since this is bringing in a lot of money for you for very little work, I know you have a healthy margin on me"?

[XLMonkey]

for what its worth...

Rate rise negotiations are, like all negotiations, about good preparation and knowing your alternatives. There isn't enough information on your post to tell how much planning you've done, but generally, these are the steps that work for me:

1. Do your research. Check what the market rate is for your role, and be sure that you understand how easily, and at what rate, they could replace you.
2. Document your value. You have, I assume, been keeping a careful record of your original terms of reference, what additional responsibilities you've taken on, and the testimonials of your happy customer reps to give evidence of how useful you are? Now is the time to wheel them out.
3. Set out at the start of the 6 month contract that you are working at a discount to your normal rate. This means that when you get to an extension, you are negotiating from a higher start position. This is my single top-est tip for getting a rate rise - if you didn't do this 6 months ago, make sure you do it next time you take on a contract.
4. Link your request for a rate rise to the 3 items above, especially the point about value. What you are trying to do is get the client to accept that, since you are delivering great results, beyond the scope of the original contract, your new rate is reasonable.
5. If you are going to play hardball - then be prepared to walk away. Are you confident that you can easily get another comparable contract at a higher rate?
6. If you are not going to play hardball - then be prepared to bargain and be happy with what you get.

Final thought, and just for reference, a 20% markup is well within the normal range for an agent. There is some room for negotiation with them (since the extension is easy, low risk revenue), but don't imagine that you'll be taking half of it unless they really love you.


Hope it goes well

(no smilies from me today - I'm having a bad day)

[nomadd]

Nomadd,

I do appreciate your reply.

However, are you aware that this is Business/Contracts and not General. A more serious tone is appropriate here.

Yep, I'm absolutely aware which forum I'm on - I do work in I.T. you know.

My reply was absolutely serious. Maybe the smilies () made you think I wasn't being serious? If so, just re-read my post and pretend they aren't there. Seriously.

(NB. The reason I put so many smilies in my replies on Internet Forums is people don't like reading replies if they weren't the one's they already had in their heads - hence they take offence at anything and then start a "rant." Hence the smilies help defuse the ranting idiots before they start. Seriously.)

Cheers,

Nomadd

Ps. If this wasn't the reply you wanted, just pretend it had more smilies in it.

[Torrango]

Ultimately in this kind of situation, you need to consider two things - are you genuinely being paid "below market rate", and if so, are you prepared to walk if you don't get the required rate? (Which you should be able to do if it is indeed below market)

Next you need to see if the client is being charged below market rate. With this information you will know where to concentrate your efforts (client, agent or both). If your aim is to squeeze the agent, the client can probably help and vice versa.

[lukemg]

As ever with these things it is about how hardball you are feeling. If you are prepared to walk, dig in and take your chances. Very brave in this market, I would probably ask for a 10% rise, which the agency can bear if it doesn't want to hassle the client. Beware the, I will call you back, sorry the client says no more budget available response (agency will not have called the client).
I dug in at a well known Telco, they said no thanks and I walked, but I was happy to go at the time. 4 months later I was still getting splinters and adding up how much money I had missed out on....
In short, ask anyway, but I wouldn't demand/threaten, too many others who can step in and the agency will make sure the client knows it.

[pmeswani]

You have missed the point. The OP is looking for 22%, the agency margin is 20%. he is going to need something a bit stronger than the client is happy to extend. The client is going to need to put hands in pocket to meet expectations.

I think you misunderstood my reply. . I didn't say that the OP should tell the agency that the client my suggestion.... I'm just stating a point that the client is happy with the work, otherwise they wouldn't extend. What the OP needs to do is to find out why the client is happy to extend.

The agent and the OP need to negotiate a decent rate increase that is mutually benificial to all parties... 22% may or may not be achieveable in the current market.

[Torran]

I have recently found out the the agency is charging the client £450 a day for my services - I get £300. I didn't tell them I knew of this but asked for a modest £25 a day rise at renewal last week. They refused!
I am walking tomorrow as I have found something more lucrative.

Been there, had that. Despite my scope doubling and responsibilities increasing

[Torran]

1. The OP has been offered a 13 month extension. That implies that the client is sufficiently happy with the work in order to offer such an extension.

However, to answer the OP's question... You can tell the agency that in order for you to accept the 13 month extension, you would like rate increase in order to keep you sufficiently interested not to look elsewhere (subject to your handcuff clause.. etc) after you have signed the contract.

Some people may suggest telling the agency that you know that they are taking a 20% rake... however, personally, I wouldn't bother. That information is suppose to be confidential between client and agency. The fact that you know, may upset the agent if they are told of this. However, I would wait for others to offer advice on this area.

You have missed the point. The OP is looking for 22%, the agency margin is 20%. he is going to need something a bit stronger than the client is happy to extend. The client is going to need to put hands in pocket to meet expectations.

[Sausage Surprise]

I have recently found out the the agency is charging the client £450 a day for my services - I get £300. I didn't tell them I knew of this but asked for a modest £25 a day rise at renewal last week. They refused!
I am walking tomorrow as I have found something more lucrative.

[BlackenedBiker]

Just tell them "20% is insane in the current market" and they are "greedy fookers." That should break the ice nicely. I would. But, hey, that's just me.

Then look to split the difference, say go for a 10% rise. I think any more just isn't going to happen. NB. It doesn't matter that your rate is so low - that's your fault for accepting it in the first place, not the agents; so going back and looking for 20% plus is just going to make you look a greedy b'stard in the eyes of the client - and yes, the agency will tell them that, along with the 200 cv's they send through to get you replaced.

All cleared up now. Have a nice day.

Nomadd

Nomadd,

I do appreciate your reply.

However, are you aware that this is Business/Contracts and not General. A more serious tone is appropriate here.

[nomadd]

Some people may suggest telling the agency that you know that they are taking a 20% rake... however, personally, I wouldn't bother. That information is suppose to be confidential between client and agency. The fact that you know, may upset the agent if they are told of this. However, I would wait for others to offer advice on this area.

Just tell them "20% is insane in the current market" and they are "greedy fookers." That should break the ice nicely. I would. But, hey, that's just me.

Then look to split the difference, say go for a 10% rise. I think any more just isn't going to happen. NB. It doesn't matter that your rate is so low - that's your fault for accepting it in the first place, not the agents; so going back and looking for 20% plus is just going to make you look a greedy b'stard in the eyes of the client - and yes, the agency will tell them that, along with the 200 cv's they send through to get you replaced.

All cleared up now. Have a nice day.

Nomadd

[pmeswani]

Why do you deserve an increase? The reasons given in your post are not enough in isolation.

1. The OP has been offered a 13 month extension. That implies that the client is sufficiently happy with the work in order to offer such an extension.

However, to answer the OP's question... You can tell the agency that in order for you to accept the 13 month extension, you would like rate increase in order to keep you sufficiently interested not to look elsewhere (subject to your handcuff clause.. etc) after you have signed the contract.

Some people may suggest telling the agency that you know that they are taking a 20% rake... however, personally, I wouldn't bother. That information is suppose to be confidential between client and agency. The fact that you know, may upset the agent if they are told of this. However, I would wait for others to offer advice on this area.

[BlackenedBiker]

A good question, but essentially I am working as a technical architect managing 2 offshore teams for the rate of a developer.

I have been doing it well and accepting my rate for 6 months. Now they have offered a 13 month extension (indicating that they are very happy) and I believew that the rate should reflect the work.

Please be aware the is still, even with the increase some 25% off the rate for such a position in 2007/8