Reply to: Realistic Agency Margin

[BlasterBates]

I think some contractors are happier earning a lower rate if the agency has a low margin.

i.e. 400 per day 40 to to the agency = happiness, 600 per day 100 to the agency = misery.

[SussexSeagull]

No. You don't understand. Being contented with a rate is not a binary thing : higher rate => higher levels of contentment.

So if the contractor is "happy with a rate" they can be even happier with a higher rate. See ? It's simple really...

Boo

It is also fairly simple to understand that there are different approaches to life and business and some of us can appreciate a different viewpoint without being obnoxious.

[Boo]

Then ask for a higher rate and if you aren't happy then don't do it.

No. You don't understand. Being contented with a rate is not a binary thing : higher rate => higher levels of contentment.

So if the contractor is "happy with a rate" they can be even happier with a higher rate. See ? It's simple really...

Boo

[XperTest]

That is until you realise that every other contractor working on your project is taking home £100 a day more than you.

This will dawn on you when they rock up in their new BMW's and Mercs.....

The OP is absolutely right to be interested.

Again though, I would have taken the assignment only if I was happy with the rate on offer, which would be above market rate anyway in my case as I have so far refused to lower my rate due to this so called financial crisis and have still had plenty of work. At that point, I would rather find out the client paid the agent 20% on top of my rate than 2%, as the former gives me much more scope for a rate increase than the latter. I know of a case where the agent mark up was 50%. Once the client and contractor found out they ditched the agent for another one (client power) and split the difference: win-win.

[DirtyDog]

If you're happy to lose 25, 50, 100k potential income over 10 years of contracts I guess that's your choice.

I refer the honourable gentleman to the answer I gave some moments ago

I feel neither happy nor sad about these facts - there was no scope to increase the rate, so I took a very good rate that I was happy with.

[Barley]

(FWIW, my car is newer and shinier than the guy that I have invoiced less than)

I'm driving an 8 year old Ford KA, there's only 1 person invoicing more than me at my client.

Been thinking of treating myself to a nice new car but I quite like the KA, I just look at shiny new motors and think of depreciation and the missed opportunity cost of pulling the money from equities which are growing 25%

It's a no brainer to maximise your income in my view , the same reason I invest money instead of leaving it in a bank account paying a pitiful return, the same reason I swap my car insurance at renewal when current insurance go try and put the premium up 20%

If you're happy to lose 25, 50, 100k potential income over 10 years of contracts I guess that's your choice.

[Wanderer]

(FWIW, my car is newer and shinier than the guy that I have invoiced less than)

What if you found that the other guy brought the same car for £7200 less than you? Would you still be OK with that. If you are then that's fine.

Like most business people, I am looking to maximise my profits and minimise my expenses though...

[DirtyDog]

I'm not suggesting you should be angry with anyone. My point is you won't feel very happy when you realise you passed on £1,000's of potential earnings, because you were "happy" with the rate offered.

So far on this contract (assuming that we've worked the same number of days), I've invoiced £7200 less than one of my colleagues.

So far on this contract (assuming that we've worked the same number of days), I've invoiced £7200 more than one of my colleagues.

I feel neither happy nor sad about these facts - there was no scope to increase the rate, so I took a very good rate that I was happy with.

(FWIW, my car is newer and shinier than the guy that I have invoiced less than)

[DirtyDog]

That is until you realise that every other contractor working on your project is taking home £100 a day more than you.

This will dawn on you when they rock up in their new BMW's and Mercs.....

The OP is absolutely right to be interested.

Of course, on all projects, all contractors MUST earn the same. Any difference in daily rate is down to the agency margin. It has nothing to do with the difference in ability / experience / skills.

[XperTest]

Might just be me, but personally I see a huge benefit in finding out the agent is on a higher margin (providing I am happy with my own rate, which I will be otherwise I wouldn't have taken on the assignment), as it makes my scope for a rate rise at extension time that much bigger once the client wants to keep me beyond the initial period/project. You can just eat into the agency margin based on the fact it's now a rolling contract with little maintenance/cost for them, instead of having to go through the painful process of getting a client to agree to a rate increase. It makes no sense to be bitter about these things if you ask me; I don't ask my local bakery what his margin is on the loaf of bread, so why would I do so for an agent who I need to get paid work?

[Kanye]

As I've posted before, I think of agents as my salesforce, so don't really have a massive motivation to minimise their rate.

I couldn't source and sell direct work for £600 or £700 a day so good look to them if they can do this and get more for themselves too.

[psychocandy]

As I said before found out for one role that went dead and then re-appeared that agency was taking 35%.

[sunflower]

If your agent is a preferred supplier, they probably have a fixed fee. I've know cases when that is 9%-15%. Ask your agency if they are on the pls.

Some agents have mark ups of 35%-40% and will rip both you and their client off.

[Wanderer]

So whats a reasonable margin for an agent? If the contractor is on 500, 600, or 700 a day how much would we expect the agent to be charging the client?

5-15% markup on your rate for an agency, probably up to 100% for a consultancy.

Which you can do by concentrating on your own rate and not worry about a figure you probably won't be able to find out.

I know how much the client was paying for my last 4 contracts. They either told me up front or it was no secret and I found out anyway.

[SussexSeagull]

Yes, if the OP would be even happier with a higher rate.

Boo

Then ask for a higher rate and if you aren't happy then don't do it.