Reply to: Rate Increase - how to go about getting one...

[TykeMerc]

As jmo21 said, TAV is talking utter bollocks.

The contractor has a great deal of leverage as the client isn't looking for some anonymous contract resource, but wants to extend the relationship with an encumbent contractor who's up to speed with the work, organisation, staff and processes.
To replace a satisfactory contractor who's happy to stay will cost the agency effort and money and may damage their relationship with the client especially if the client is made aware that it's the agency preventing the contractor extending.

[jmo21]

The fact is, that the OP is negotiating with an agent. The agent holds ALL the cards here. They have the contract in hand, you have a restriction clause in your contract - if you play hardball with us, there are PLENTY of people on the bench.

Again, a bullsh!t line.

While of course correct from a contract point of view, you'll only end up pissing off the end client if they want to keep the contractor.

Feeding these lines to the newbie is not going to get past the more seasoned contractors on here.

[The Agents View]

TAV hasn't given sound advice from a contractors perspective, he's simply sold you the agents line.

If you know what the agency cut is then you have significant ammunition to tackle the agency for them to reduce their cut and increase yours. Agents hate it when contractors find out what rate others are on and really hate it when you find out what their take is from the contract.
Depending on what your relationship is with the client management I'd tell them that you're certainly interested in the extension, but you're uncomfortable with certain parts of the agency terms and conditions so you will be resolving those differences.
I'd then tackle the agency, lead with wanting an increase to £375/day, when the agent says that the client won't agree to pay more (they might try the "I'll ask the client" line to stall a day or so) you can respond with the approach that the agency is able to fund the increase from their margin, if the agent responds the margin isn't big (they often lie that it's 25% of what it actually is) then you can always respond with the info that you're well aware of what you're being charged at to the client and their recruitment costs will have been well covered already. Settle at £350/day or more if you're willing to play hardball.

This is complete rubbish.

I couldn't care less if you know what my margin is - it's my agreement, and you are my cost - you agreed to perform a service for a price, and I've sold that service on. I would simply ignore your request, and tell you to either extend the contract, or leave.

As for "the recruitment cost has been covered". I'm not here to "cover recruitment costs" - I'm here to make a profit - as much profit as I can.

Feel free to take the approach that every other contractor who doesn't get a rate increase takes - but don't be surprised to find that you don't get it.

[The Agents View]

Seriously TAV, f u c k off with this s h i t!

The contractor is the one who has managed to get the extension, not you. Your cut up front for the original term of the contract is fine, but there is nothing more you do to get the extension.

Thank you for your considered and mature reply.

The fact is, that the OP is negotiating with an agent. The agent holds ALL the cards here. They have the contract in hand, you have a restriction clause in your contract - if you play hardball with us, there are PLENTY of people on the bench.

Whether it's right or wrong for the above details to be true, is not the discussion here - the question was "how do I go about getting a rate increase" - I've detailed how the OP should go about doing this.

Now if you've quite finished.

[SimonMac]

Alternatively, ask the client why the agency is taking £100/day for doing bugger all. The agent's made their money for recruiting you, now they can cut their margin to a minimum. Let's say the client cuts their payment to the agency to £375 and the agency ups your pay to £350. Job done, everybody is happy.

I would imagine the Agent would be pretty pissed that they are being screwed by both sides

[LittleLady]

TAV hasn't given sound advice from a contractors perspective, he's simply sold you the agents line.

Told you I was new to this!

[TykeMerc]

sound advice, thank you

TAV hasn't given sound advice from a contractors perspective, he's simply sold you the agents line.

If you know what the agency cut is then you have significant ammunition to tackle the agency for them to reduce their cut and increase yours. Agents hate it when contractors find out what rate others are on and really hate it when you find out what their take is from the contract.
Depending on what your relationship is with the client management I'd tell them that you're certainly interested in the extension, but you're uncomfortable with certain parts of the agency terms and conditions so you will be resolving those differences.
I'd then tackle the agency, lead with wanting an increase to £375/day, when the agent says that the client won't agree to pay more (they might try the "I'll ask the client" line to stall a day or so) you can respond with the approach that the agency is able to fund the increase from their margin, if the agent responds the margin isn't big (they often lie that it's 25% of what it actually is) then you can always respond with the info that you're well aware of what you're being charged at to the client and their recruitment costs will have been well covered already. Settle at £350/day or more if you're willing to play hardball.

[Wanderer]

Think about WHY you are worth the rise.

Alternatively, ask the client why the agency is taking £100/day for doing bugger all. The agent's made their money for recruiting you, now they can cut their margin to a minimum. Let's say the client cuts their payment to the agency to £375 and the agency ups your pay to £350. Job done, everybody is happy.

[jmo21]

How valuable are you to the agent? (do you pass them information about the client, who's doing what, where there are contract requirements, etc?) - Why should the agent, take a hit on his rate, to keep you happy?

<mod snip - bad language in the Professional forums is a no-no >

The contractor is the one who has managed to get the extension, not you. Your cut up front for the original term of the contract is fine, but there is nothing more you do to get the extension.

[LittleLady]

First things first. FORGET the other contractors. They are nothing to do with you, you are independant - there is nothing "fair" about contract negotiation - it's kill or be killed.

Then....

Think about WHY you are worth the rise. What have you done for the client which makes you worth more money? What have you delivered? How valuable are you to the client? How valuable are you to the agent? (do you pass them information about the client, who's doing what, where there are contract requirements, etc?) - Why should the agent, take a hit on his rate, to keep you happy?

THEN SELL IT TO HIM/HER - "I have proven XYZ qualities, I'm good for your business because of ABC, and I want to keep the relationship going. All I ask is that we address the rate element of this current contract, in order to better reflect our working relationship"

If you focus on whinging about what other people get paid, or whining because the agent is taking too much of a cut, you'll get shot down in flames.

I hope this helps.

TAV

sound advice, thank you

[The Agents View]

I'm pretty new to contracting, this is only my second contract. I've had one extension and i've just been told that if I want it there's another one. I have to let them know and they'll inform my agency.

My rate is £300pd, but I know other contractors taken on for the same project are on £325pd and one of them £350 and i'm pretty sure my agent is getting £400pd.

I know the client won't increase rates (why should they, they're already giving my agent £400pd and i'm only getting £65% of that!), so what's my best approach with my agent to get an increase? I was going to tell him I want £340, is that too much to ask for?

Thanks.

First things first. FORGET the other contractors. They are nothing to do with you, you are independant - there is nothing "fair" about contract negotiation - it's kill or be killed.

Then....

Think about WHY you are worth the rise. What have you done for the client which makes you worth more money? What have you delivered? How valuable are you to the client? How valuable are you to the agent? (do you pass them information about the client, who's doing what, where there are contract requirements, etc?) - Why should the agent, take a hit on his rate, to keep you happy?

THEN SELL IT TO HIM/HER - "I have proven XYZ qualities, I'm good for your business because of ABC, and I want to keep the relationship going. All I ask is that we address the rate element of this current contract, in order to better reflect our working relationship"

If you focus on whinging about what other people get paid, or whining because the agent is taking too much of a cut, you'll get shot down in flames.

I hope this helps.

TAV

[DaveB]

The client have told me the agent rate.

I can see where you're coming from it shouldn't matter to me what the agent is making, but i'm on my 2nd extension, i've had it on good authority that there's enough work for another extension too so isn't it normal practice to ask for a rate increase?
I can back it up too btw, i'm hitting targets, completing projects on time (most of the time ahead of schedule) and quite obviously the client like me otherwise they wouldn't ask me to stay.
As I see it, the agent is now getting money for almost nothing. The client asked if I would like to move to another agency, i'll get a better rate, but I know if that's professional and if it's frowned upon.

I'm learning loads from this forum, but on certain things there's a lot of conflicting advice.

Moving to another agency could be problematic if you have a restrictive covenant in your contract with the agency that specifically prevents you from working for this client through anyone else or directly.

The agency are still doing some work for you here, they are factoring your payments. If you are on a weekly or monthly pay run then they will almost certainly be paying you before the client pays them and taking the risk in doing so.

In your position I would go back to the agent and ask for the rate hike. Anything over a 10-15% markup for an agency is very good from their point of view. Point out that there is an extension in the bag and another on the cards. You know what they are taking so you are in a position to negotiate but don't be too greedy. Make it clear the client wants to keep you, but you are prepared to walk and find a better paid gig if you can't come to some arrangement.


This is what *I* would do. I'm not saying it's what *you* should do but it is one option.

[LittleLady]

The client have told me the agent rate.

I can see where you're coming from it shouldn't matter to me what the agent is making, but i'm on my 2nd extension, i've had it on good authority that there's enough work for another extension too so isn't it normal practice to ask for a rate increase?
I can back it up too btw, i'm hitting targets, completing projects on time (most of the time ahead of schedule) and quite obviously the client like me otherwise they wouldn't ask me to stay.
As I see it, the agent is now getting money for almost nothing. The client asked if I would like to move to another agency, i'll get a better rate, but I know if that's professional and if it's frowned upon.

I'm learning loads from this forum, but on certain things there's a lot of conflicting advice.

[SimonMac]

If you dont ask, you don't get. The agent is on a good markup, so there is clearly room for negotiation.

However, the question you have to ask is, what will you do if they say no? Are you prepared to walk away or just roll over take and it if they refuse?

This is where being in business on your own account becomes a reality.

WHS

Both you and the agent are out to make as much money as you can for yourself, its just a question of who blinks first.

[DaveB]

Will agents normally tell you what rate they are getting?

Some will, some won't, some will lie to you. I'm assuming the OP knows from the cleint end rather than the agent. The best you can do is ask.

The other issue is that, you took the gig at the rate offered and presumably were happy with that. Just because you know the agent is making X off the contract should not affect how you feel about what you are paid. If the agent was only making £10 a day rather than £100 how would you feel about the rate then?