Contracting staff, daily rates: How to determine?

[Frimley111R]

I am looking at contracting out senior staff of a certain discipline to SME level businesses. However, at this point I do not know how much to offer them. It will be the usual recruitment style set up of me charging them out a X a day, paying them a percentage of X and me making my profits from this.

However I have an idea of what I want to offer them and what I want to charge but at this point I have no idea if the amount I am offering will be attractive or not. They will all be self employed.

One thought is to place an advert for a vacancy on one of the main sites and see what interest this generates from applicants. Although I have not yet started my business this could work in terms of building staff numbers for new clients.

Thoughts/Other ideas?

[V8mate]

Slightly off-topic, but do you have work waiting for these contractors?

What areas of specialism are you proposing?

[Chris_OCR]

Frimley111R said:

I am looking at contracting out senior staff of a certain discipline to SME level businesses. However, at this point I do not know how much to offer them. It will be the usual recruitment style set up of me charging them out a X a day, paying them a percentage of X and me making my profits from this.

However I have an idea of what I want to offer them and what I want to charge but at this point I have no idea if the amount I am offering will be attractive or not. They will all be self employed.

One thought is to place an advert for a vacancy on one of the main sites and see what interest this generates from applicants. Although I have not yet started my business this could work in terms of building staff numbers for new clients.

Thoughts/Other ideas?

So you're starting up a Recruitment Agency and purely dealing with contractors?

You clearly have not worked in the industry judging by the nature of your questions, so for that reason I would stay well clear, however in response to your questions -

Making the rates attractive is not what contractors are about, contractors are a solutions and typically solutions are not cost effective, employers know this so expect large costs.

Do not go in to clients saying we charge X for this role, you will seriously shoot yourself in the foot. Contractors rates very greatly so if you want to be up front with your clients say X amount + Y amount (X being contractors rate, Y being your margin).

Your last sentance really does concern me and makes me think this business will fail before it has started, the first thing you need to do is get log in details for one or more of the major job boards, adverts typically do not work, we only ever use them as a last resort so do not expect this to have results that would create a sucessful business.

[Frimley111R]

Chris_OCR said:

Frimley111R said:

I am looking at contracting out senior staff of a certain discipline to SME level businesses. However, at this point I do not know how much to offer them. It will be the usual recruitment style set up of me charging them out a X a day, paying them a percentage of X and me making my profits from this.

However I have an idea of what I want to offer them and what I want to charge but at this point I have no idea if the amount I am offering will be attractive or not. They will all be self employed.

One thought is to place an advert for a vacancy on one of the main sites and see what interest this generates from applicants. Although I have not yet started my business this could work in terms of building staff numbers for new clients.

Thoughts/Other ideas?

So you're starting up a Recruitment Agency and purely dealing with contractors?

You clearly have not worked in the industry judging by the nature of your questions, so for that reason I would stay well clear, however in response to your questions -

Making the rates attractive is not what contractors are about, contractors are a solutions and typically solutions are not cost effective, employers know this so expect large costs.

Do not go in to clients saying we charge X for this role, you will seriously shoot yourself in the foot. Contractors rates very greatly so if you want to be up front with your clients say X amount + Y amount (X being contractors rate, Y being your margin).

Your last sentance really does concern me and makes me think this business will fail before it has started, the first thing you need to do is get log in details for one or more of the major job boards, adverts typically do not work, we only ever use them as a last resort so do not expect this to have results that would create a sucessful business.

Blimey, you're a barrell of laughs aren't you? My idea/intention is not quite what you believe it to be and at this point I am keeping it mostly to myself but the basic premise is supplying senior staff to SMEs who are specialist in a key area of business.

[NightDriver]

This is very much how my business model works. I get awarded various pieces of work on various projects with various clients - basically the contract for this work is XXXhours of engineering design/project managemet etc labour. I then build/distribute a small team of contractors to go in and do the work.

However, the issue of rates to pay your contractors should ideally be something you can answer for yourself. In order to be able to charge you clients competitively you must have very good knowledge of your market. Ultimately, your contractor rates will be calculated from your rate minus overheads and profit etc. But saying, that to maximise profits and ensure you get good contractors you need to understand their worth. Its also worth noting that the rates can vary massively across the country (I can easily pay the same level designer £5/hour less in Crewe than I can in Surrey... and still charge the client the same!).

If your going to be providing into an industry which doesn't currently rely very heavily on contractors and then the rates will obviously be a lot more open for you. If that's the case then find out what these guys are currently getting paid and make your proposal better than this. Ultimately if you want the contractors to come and work with you then (in my experience) you tend to be more successful by being open with them and coming up with a rate both parties are happy with. If you've got a rate in mind, knock a bit off it and get on the phone to some contractors and discuss if they would accept this. If not, you've got some room to negotiate! Fake adverts on job sites would be a big no no imho.

[TooLateForAName]

To be fair, it does sound like you want to set up a recruitment business without knowing anything about it. Perhaps a little more info?

I can see three ways of charging : 1st is a day rate which the client will generally dictate and you then find suitable staff, then try and negotiate upwards. 2nd is where you take on a project for a fixed price, final option is if you are genuinely delivering something unique/special is to negotiate a share of savings/profits from an initiative.

As a new business you are probably not in the position of being able to dictate much unless you really have industry leading people in your team.

Oh, your contractors should not be self employed, they should be ltds.

[Chris_OCR]

Frimley111R said:

Chris_OCR said:

Frimley111R said:

I am looking at contracting out senior staff of a certain discipline to SME level businesses. However, at this point I do not know how much to offer them. It will be the usual recruitment style set up of me charging them out a X a day, paying them a percentage of X and me making my profits from this.

However I have an idea of what I want to offer them and what I want to charge but at this point I have no idea if the amount I am offering will be attractive or not. They will all be self employed.

One thought is to place an advert for a vacancy on one of the main sites and see what interest this generates from applicants. Although I have not yet started my business this could work in terms of building staff numbers for new clients.

Thoughts/Other ideas?

So you're starting up a Recruitment Agency and purely dealing with contractors?

You clearly have not worked in the industry judging by the nature of your questions, so for that reason I would stay well clear, however in response to your questions -

Making the rates attractive is not what contractors are about, contractors are a solutions and typically solutions are not cost effective, employers know this so expect large costs.

Do not go in to clients saying we charge X for this role, you will seriously shoot yourself in the foot. Contractors rates very greatly so if you want to be up front with your clients say X amount + Y amount (X being contractors rate, Y being your margin).

Your last sentance really does concern me and makes me think this business will fail before it has started, the first thing you need to do is get log in details for one or more of the major job boards, adverts typically do not work, we only ever use them as a last resort so do not expect this to have results that would create a sucessful business.

Blimey, you're a barrell of laughs aren't you? My idea/intention is not quite what you believe it to be and at this point I am keeping it mostly to myself but the basic premise is supplying senior staff to SMEs who are specialist in a key area of business.

Then you need to be more clear on your intentions, your original post basically says I am starting a contractor Recruitment Agency but don't know it.

[qureshia]

In the world of consultancy they used to be the old adage

A 1/3 for staff, a 1/3 for overheads and a 1/3 for margin.

A £50k a year employee gets paid circa £230 a day (220 working days a year)
Add a further £230 to cover over heads (marketing, rent, back office admin staff) and lastly another £230 for margin. This is not profit as remember you could have non chargeable time, slack periods with no work etc.

So £50k PA employee should be charged out at circa £700 a day


Lastly a consultancy is very different to a recruitment co/agency, in the case of a consultancy the quality of the work carried out by the "employee" is underwritten by the consultancy. Poor work and the invoice will not get paid !

I forgot to add... in the case of the big 4 consultancies, they still follow the same calculation but then simply double the total before passing on to the client, so a £50k a year employee would be charged out at circa £1400 a day !!

• discounts apply for long term/ full time assignments versus short term/part time ones

Edited by qureshia on Sunday 25th April 20:07

[sidekickdmr]

nothing to add but from ukbf too!

[spikeyhead]

From a contractors point of view, I see a role on a job board that I like the look of, I'll do the following

Check the company that's advertising the role, tipically an agency. If the agency is barely known, doesn't have a decent website then I'll make some discrete enquiries.

Phone up and find out about it, it's very easy to tell if it's just a fishing ad. There's a lot of these about and any experienced contractor will soon be able to tell.

As far as rates, it really depends on the skillset, experience, location and task.

As for the rest, your initial question shows a great deal if niavety. Simple things like wanting the contractors to be self employed rather than Ltd, etc.

[Frimley111R]

Ok, thanks all some useful stuff in there.

I didn't want to put too much about my idea as I feel I have lead on the area of business I am looking at. There are simlirities to recruitment but it's more specilised than that and more involved.