Agency Percentage

[Greenmantle]

All

I have lost touch with this but what is the usual Agency Percentage for an IT contract role. The agent is obviously a preferred supplier of client. Role is 9 months so what % of my daily rate should they normally take. If it is easier to show it as a fixed amount per day then do that.
All replies welcomed.

John

[Hoolio]

Greenmantle said:

All

I have lost touch with this but what is the usual Agency Percentage for an IT contract role. The agent is obviously a preferred supplier of client. Role is 9 months so what % of my daily rate should they normally take. If it is easier to show it as a fixed amount per day then do that.
All replies welcomed.

John

The agency will agree a rate with their client, if a preferred supplier it will usually be fixed anywhere between 5-15% margin. However you are incorrect in your assumption that the agency take any money off you. They are, in fact, charging a margin on top of your day rate which you charge the agency.

[-crookedtail-]

Hoolio said:

The agency will agree a rate with their client, if a preferred supplier it will usually be fixed anywhere between 5-15% margin. However you are incorrect in your assumption that the agency take any money off you. They are, in fact, charging a margin on top of your day rate which you charge the agency.

Yep, bill rate and pay rate, they might be paying you 50.00 per hour but charging the client 60.00.

[pherlopolus]

-crookedtail- said:

Yep, bill rate and pay rate, they might be paying you 50.00 per hour but charging the client 60.00.

they might be paying you 10, and charging 60

[jesusbuiltmycar]

Hoolio said:

Greenmantle said:

All

I have lost touch with this but what is the usual Agency Percentage for an IT contract role. The agent is obviously a preferred supplier of client. Role is 9 months so what % of my daily rate should they normally take. If it is easier to show it as a fixed amount per day then do that.
All replies welcomed.

John

The agency will agree a rate with their client, if a preferred supplier it will usually be fixed anywhere between 5-15% margin. However you are incorrect in your assumption that the agency take any money off you. They are, in fact, charging a margin on top of your day rate which you charge the agency.

Some agencies are sharks - a few years ago I caught one out trying to force up the rate to the client whilst telling me the client wasn't prepared to pay the rate I had originally requested. Unknown to the agency my brother was an employee of the clients and he mentioned that I wouldn't be starting because due to poor rate. This came as a shock to the manager as the rate the agency were demanding was about 60% more than they were offering me.

[Greenmantle]

Ta

I am aware of the rate differences since I have been a contractor for 18 years but I was wondering what is the acceptable daily margin.
EG in the good old days one agent used to take £100 off me per day
Then by 2008 that was down to as low as £27.50.

I am just wondering now what is acceptable.

John

[Hoolio]

Greenmantle said:

Ta

I am aware of the rate differences since I have been a contractor for 18 years but I was wondering what is the acceptable daily margin.
EG in the good old days one agent used to take £100 off me per day
Then by 2008 that was down to as low as £27.50.

I am just wondering now what is acceptable.

John

John, I think you're missing the point somewhat. The agent has a contract with their client to supply contractors at an agreed margin / mark-up (most agencies work on a margin basis). This percentage is agreed with their client. Therefore the agency isn't taking any money off you, assuming they honour their legally binding agreement with their client. Whatever their agreed margin percentage is with the client isn't any of the contractors concern. If you don't like the rate the agency is offering don't take the role, simple.

Typically agency margins, as stated previously, are anywhere between 5 and 15% but if an agency had agreed 20% with the client that's between them and their client.

Additionally, margins agencies will accept from clients depend on many factors including but not limited to; volume of business, sector, specialism etc so there is no cut and dry answer to your question but I hope this will give you a guide.

[Greenmantle]

Thanks Hoolio

I was well aware of everything that you said and I will certainly ask the agent what his agreed margin is. From a contractors view point it is good to know what the agents margin is since you can then figure out the total cost of yourself to the client. Back in 2001/2 when clients were cutting rates and letting go of contractors they based their decisions on who were the most expensive (including margin).

John

[dibblecorse]

Greenmantle said:

Thanks Hoolio

I was well aware of everything that you said and I will certainly ask the agent what his agreed margin is. From a contractors view point it is good to know what the agents margin is since you can then figure out the total cost of yourself to the client. Back in 2001/2 when clients were cutting rates and letting go of contractors they based their decisions on who were the most expensive (including margin).

John

Don't be surprised if they don't divulge that info as that is a potentially sensitive piece of commercial data that they may not want in the market as it could affect future business bids and become something their competitors can leverage.

Do you expect to know what Tescos pays for a tin of beans that they sell you for 75p for instance ? No, its the same thing, they'd never tell you as thats their business.

As has been said, either the rate is right for you, or it isn't, what the agency can extract from the client for their service is their issue.

[edc]

People want to know this information as they see it as personal to them but it is little different from asking a business what rates/margins and terms it has agreed with its various suppliers and perhaps what what rates/margins and terms it has agreed with its distribution, wholesale or sales network.

[krallicious]

When I was contracting in 2013, I found out after a few weeks that the agency was paying me a third of what they were charging the client! Needless to say, I left after 6 months after very protracted negotiations that came to nothing.

[dibblecorse]

edc said:

People want to know this information as they see it as personal to them but it is little different from asking a business what rates/margins and terms it has agreed with its various suppliers and perhaps what what rates/margins and terms it has agreed with its distribution, wholesale or sales network.

But it isn't, they are a company at this stage, they are not a person, even if they are a single employee LTD company, and their business has no rights to access the commercial terms of another, in the same way that if they are IR35 compliant and and exercising their rights to work concurrent contracts then the agency has no right to know the terms of that engagement.

Its all too easy to see this as personal, but its not, its business and terms of business are highly held data that isn't just issued.