Reply to: Squeezing the agent's margin/markup at renewal

[escapeUK]

After some emailing and phonecalling, agent is adamant that they will not be passing any margin on to me.

So they bluffed and you caved.

[DodgyAgent]

Actually you don't need to prove your value to the project because you aren't asking the client for a rate increase.

The agent needs to prove their value to you as a business. Initially they had value based on the fact that they found the contract and recruited you to do it but since then all they've been doing is factoring the payments and a trivial amount of admin so they aren't worth that fat margin any more so they can give up some of it. Thank you very much.

You are trying to make a moral argument which any agent should ignore. The fact is that agents run around and much of what they do yields no earnings whatsover. Your argument is correct in saying that the work the agent has done specific to you is relatively negligible. What you are saying is that the agent should only be rewarded accordingly. If you are saying this then the quid pro quo is that if an agent should only be paid on this basis then you should be paying agents for the running around they do that doesnt yield them any fees - you cant have it both ways (unless the agent is weak of course)

The agent should not be manipulated by this con trick. Your placement and your fees represent his reward for all the work he does that leads up a blind alley

Your argument is tired and one sided and the agent should ignore it.

Having said that there is no reason whatsoever why you shouldnt negotiate whatever rate you can

[kingcook]

Let the defeat harden you up for next time.

It has done. I now know what to expect next time (whether it's with the same agent or not)

But as you say, the net result is that you are BOOMED anyway so

Cheers

[Wanderer]

OK, so i tried to get some of that margin.

Good on you for trying, you win some you lose some. At least you were brave enough to ask because you definitely wouldn't get anything if you didn't try. Let the defeat harden you up for next time.

But as you say, the net result is that you are BOOMED anyway so

[TheFaQQer]

Maximising profits by targetting the agent rather than just raising the price of your service?

He was looking to raise the price of the service.

[kingcook]

Maximising profits by targetting the agent rather than just raising the price of your service?

It's one tactic, yes.

[Taita]

Bluster? Heartache? I wouldn't use either of those terms.

I think you're missing the point. AEOD i run a business and i want to maximise profits, there is no harm in that. I tried and failed in this case, but it's not the end of the world.

Am i embarassed? No.
Will i try again sometime in the future? Yes.

Maximising profits by targetting the agent rather than just raising the price of your service?

[kingcook]

So it is down to experience..... after all the earlier bluster you settled for the status quo....next time save yourself the heartache of getting wound up about the agent's cut.

Bluster? Heartache? I wouldn't use either of those terms.

I think you're missing the point. AEOD i run a business and i want to maximise profits, there is no harm in that. I tried and failed in this case, but it's not the end of the world.

Am i embarassed? No.
Will i try again sometime in the future? Yes.

[Taita]

1. Like a car salesman, the agents do this stuff every day, you don't so accept they are better at it and stick to your strengths.
2. Forget pleading poverty, increased costs etc -totally irrelevant, they will counter with increased costs their end etc
3. As soon as the agent mentions renewal you say you want more money, they will say justify it to the client, just tell them you want it out of their margin which you know is x%.
You have 2 sources of leverage - You can walk and upset the client which makes them look bad + they might lose the role if it's readvertised. OR you can threaten to tell the client you are unhappy with the rate and margin the agent is taking, which again makes them look bad.
Just leave it with them, no threats too early. BUT you have to really be prepared to leave if you want to play hardball.

Do you not think leaving the client in the lurch might make me look just as bad as the agent. I don't know what contracts you guys enjoy but I have always had to be a little diplomatic with clients. I have never felt that they are naturally sympathtic to contractors. Remember when IR35 was introduced and some asked for more money because their tax was going up?

[Taita]

[QUOTE=kingcook;1498697]OK, so i tried to get some of that margin.

After some emailing and phonecalling, agent is adamant that they will not be passing any margin on to me.

Due to personal circumstances (and acknowledging the fact that the agency was probably trying to pull the wool over my eyes with the things they said), i decided to cave in an accept my current rate - which is still a good rate anyway. I'm putting it down to experience.

Not the planned outcome, but BOOMED all the same

So it is down to experience..... after all the earlier bluster you settled for the status quo....next time save yourself the heartache of getting wound up about the agent's cut.

Taita is in the scrum not on the bench

[kingcook]

OK, so i tried to get some of that margin.

After some emailing and phonecalling, agent is adamant that they will not be passing any margin on to me.

Due to personal circumstances (and acknowledging the fact that the agency was probably trying to pull the wool over my eyes with the things they said), i decided to cave in an accept my current rate - which is still a good rate anyway. I'm putting it down to experience.

Not the planned outcome, but BOOMED all the same

I'll get you next time Gadget.... next tiiiiiime.....

[lukemg]

1. Like a car salesman, the agents do this stuff every day, you don't so accept they are better at it and stick to your strengths.
2. Forget pleading poverty, increased costs etc -totally irrelevant, they will counter with increased costs their end etc
3. As soon as the agent mentions renewal you say you want more money, they will say justify it to the client, just tell them you want it out of their margin which you know is x%.
You have 2 sources of leverage - You can walk and upset the client which makes them look bad + they might lose the role if it's readvertised. OR you can threaten to tell the client you are unhappy with the rate and margin the agent is taking, which again makes them look bad.
Just leave it with them, no threats too early. BUT you have to really be prepared to leave if you want to play hardball.

[Wanderer]

7-10% is possible but agencies want at least £50

If a typical contractor rate for the site I'm on is 300 to 600 per day then the agent's mark up would be £21 to £42 per day. The client and the agency both told me the agencies mark up is a flat 7% and I've seen the purchase orders to back that up.

Perhaps the agency I deal with is unusual in taking such a small cut but those are the facts....

[bobspud]

Look at it a slightly different way. My last 3 agents have had no more than 10 points on the deal but then that makes them £50- 60 per day. And I consider that a fair margin for not dealing with snot nosed weasels.

If your day rate is fairly low then they still have rent, factoring, wages and other running costs so they are not going to take 10% on 180 a day.

7-10% is possible but agencies want at least £50

[Wanderer]

Bit like asking for a discount on the fifth pint- you have made enough profit out of me thank you very much!

No, the analogy is that you go into a bar with table service and the first time the dolly bird brings you a round of drinks she gets a big tip. The next few times she gets a much smaller tip.

Seriously, if you feel you are worth more now than when you started, there is nothing wrong in asking for an increase in rate on extension. Does it really matter whether it comes from the client, the agent or both?

You miss the point a bit. Yes, if I'm still working on a job after 3 months then I am worth more than when I started. Secondly, at contract extension time then agent is worth LESS than they were at the beginning so they can cut their margin. Thirdly, there is no reason why the client should pay more, it's the agent that should be getting squeezed here.

Well done earning such a high margain, you might be central to the project. The lowest I saw was 5% and that was when the funds were purely being passed through the agency. Although from an agency POV 7% return is awful. Either way well done.

The agency are a preferred supplier and they have a fair number of contractors on site. The client is adamant that 7% is how much they will take from the deal and they even discuss it with contractors openly. To be honest, for the amount the agency does they are coining it. It doesn't cost them much to manage the contractors on site and spit out contract extensions every few months. Also, since they are the preferred supplier, if the client wants any more contractors then the agency gets handed the vacancy on a plate and puts an ad out on jobserve to get some CVs in for the client to look at. It's not exactly hard work is it.