Reply to: Found out what my agency make charge for me

[BHicks]

At my current client I managed to find out what the agency were billing (I won't discuss how, but it wasn't underhand) and when it came to renewal time I managed to negotiate the agency to increase my rate by around 6%. It was handled professionally and of course they trotted out all the expected sob stories along the way but we arrived at a mutually agreeable figure after some back and forth.

It helped enormously that the client essentially told them that if I walked, they wouldn't be doing business with them in the future which I imagine concentrated their minds somewhat.

[lukemg]

Mostly work through PSL so markup is reasonable and although that gives less margin to sneak a rise, I am usually happier with that.
Currently working through a 'consultancy' who I know are getting a decent chunk (would estimate 20% on top of my rate).
On the good side, my rate is good for me and 27% more than the last role at same client so happy with that plus managed to squeeze another 20 notes a day out of their chunk at next renewal (> £4k/year, which is nice). Had to upset them a bit but didnt play too dirty and 4 grand is worth a bit of effort !
Point is - knowledge is power but you still have to play the game properly (keep it business and calm) and know when to play hardball without removing nose to spite face...

[TheFaQQer]

You don't build a £27bn a year business without having a few smarts and understanding the costs of working in a commodity market.

shurely shome mishtake?

Industry, possibly. Business, no.

[malvolio]

"Come mothers and fathers throughout the land,
And don't criticise what you don't understand"

Hmm, how old are you really, Malvolio?

Where do you think Mr Zimmerman got the line from...?

[Cenobite]

When was the last time you spoke with a genuine decision maker?

Agents were useful to in my early contracting career but fortunately I've managed to cut them out for a number of years.

I don't doubt that agents do something useful, and the people who make a lot of money out of it must be doing something right, I just will never accept that I'm taking a cut from them. Well I might accept that outlook from the head of a billion pound company, but not the spotty kid you end up dealing with.

[evilagent]

Nonsense. What about the roughly 95% wasted effort spent by the agency before they get the chance to put the contractor in the interview?

Thats 95% time wasted that you dont have to do yourself.
You dont have to make scores of calls per day finding roles.
You only get to know about the 5% of calls that result in a prospective role to pitch for.

So, the margin reflects the dead time.

See it as panning for gold.

You might make great jewellery, but someone has to get through a load of silt to find those nuggets for you to work on.

[Ignis Fatuus]

Don't crtiicise what you don't understand. There are very smart people in the agencies, it's just they are too expensive to deploy on grunt work. The people you see are the cold-calling salesmen and the bad ones are the juniors who are marginally cheaper that writing a decent word search algorithm. When was the last time you spoke with a genuine decision maker?

You don't build a £27bn a year business without having a few smarts and understanding the costs of working in a commodity market.

"Come mothers and fathers throughout the land,
And don't criticise what you don't understand"

Hmm, how old are you really, Malvolio?

[Ignis Fatuus]

There are two possible business models here.

1. The one malvolio talks about whereby the agency is paid £X amount and they negotiate a rate £Y with the contractor. Agencies see it that "you are taking a cut of their money" and they negotiate the best margin they can in the circumstances. The client will typically take no interest in what the contractor gets paid, they just pay the £X to the agency and leave them to deal with the dirty work. This is the agency's favourite model because it offers a scope for making a good margin on a contract.

2. The other model is that the client takes the view that they are engaging a contractor for £X amount per day and they pay the agency a percentage or fixed fee on top of this to manage the recruitment, contract and payment of the contractor. In this situation, the client will often state the rate openly in discussions with the contractor though they may still require that rate negotiations are dealt with via the agency as they are best placed to do this. When a rate is finalised, the agency informs the client, adds their mark-up/fee and the deal is signed off. More and more clients are demanding this business model and selecting agencies on a "preferred supplier" basis as they perceive it as being fair and transparent.

SandyD, I think you came across a model 2 scenario whereas jmo21 is dealing with model 1.

I will leave it as an exercise for the reader to decide which business model they prefer.

Very well put. Of course we like to think in model 2 terms, but I suspect most clients see it as model 1. Agents would naturally like to see themselves offering the service to the client, and merely using us as tools to achieve the result.

The difference (to us) is that in model 2 it is reasonable to question the agent's cut, in model 1 it is not.

Personally I can live with either, but I would say that in model 2 I might try to work up to the client's high expectations based on the high rate he is paying. In model 1 I am not impressed by that, it's the agent's problem, I would work to the rate that I am paid. That is, if the client is paying the agent £800 per day and the agent is paying me £300, then if the client thinks he's getting £800 worth of expert consultancy commitment, he's dreaming.

[malvolio]

What about the years of effort, training, qualifications, certifications and hard work a typical contractor has had to put in to position themselves in the contracting marketplace? This hardly compares with the unskilled school leavers most agents are and the numpty keyword searching nature of most of their work.

Don't crtiicise what you don't understand. There are very smart people in the agencies, it's just they are too expensive to deploy on grunt work. The people you see are the cold-calling salesmen and the bad ones are the juniors who are marginally cheaper that writing a decent word search algorithm. When was the last time you spoke with a genuine decision maker?

You don't build a £27bn a year business without having a few smarts and understanding the costs of working in a commodity market.

[Ignis Fatuus]

What about the years of effort, training, qualifications, certifications and hard work a typical contractor has had to put in to position themselves in the contracting marketplace? This hardly compares with the unskilled school leavers most agents are and the numpty keyword searching nature of most of their work.

Agents are being compensated not for years of effort in the past but for days of wasted effort in the present. An analogy would be with taxi drivers, who in effect are compensated by their fares not only for the journey made but for all the time sitting around or driving around without a fare. It's nothing new, Adam Smith identified it clearly.

The equivalent for a contractor is that the rate must compensate for bench time. If it doesn't, then the market doesn't value you highly and you should find another line of work.

Or he saw you coming.

[Cenobite]

What about the roughly 95% wasted effort spent by the agency

What about the years of effort, training, qualifications, certifications and hard work a typical contractor has had to put in to position themselves in the contracting marketplace? This hardly compares with the unskilled school leavers most agents are and the numpty keyword searching nature of most of their work.

[Contreras]

77% surely?

Quite. 30% markup == 23% margin.

For most businesses, whether retail or B2B, reselling a product (or service) will be costed in terms of percentage margin or markup. There's something odd about agents if they perceive the opposite, i.e. that the supplier is getting a 'cut' of their revenue.

[Cenobite]

the good ones don't submit randomly selected contractors.

Right, I must have never met those.

[SandyD]

If all the contractors an agent puts through for a role, all make a mess of their interviews then the agent does not get the work do they? A good interview performance by a contractor wins the contract: it's the specific contractor the client wants after all, not a particular agent.

Spotting and selecting the right specific contractor to put forward is part of the agent work, the good ones don't submit randomly selected contractors.

[Cenobite]

Nonsense. What about the roughly 95% wasted effort spent by the agency before they get the chance to put the contractor in the interview?

If all the contractors an agent puts through for a role, all make a mess of their interviews then the agent does not get the work do they? A good interview performance by a contractor wins the contract: it's the specific contractor the client wants after all, not a particular agent.

If the client were really choosing by agent and not by contractor, then the agent could win the work and pick the contractor themselves. But this never happens: the client wants to interview the contractor and decides which agent wins the business after the interviews.