agency % cut from a contract role?

[bigandclever]

Well... let's just agree that I'm right and you're wrong. I'm kidding

I agree with most of what you say (particularly the bit about the simplistic financial view) but I argue your second point - who knows whether my numbers or yours are correct, it's all about perspective. But, since I can't get 3% on my company money in the bank, if you were to offer me 3% 'extra' for waiting for payment until you get paid, I would bite your arm off and I suspect there would be many more like me willing to take the 'risk' (a risk that is lessened by (a) you're still liable to pay me and (b) I have a slush fund/warchest available in my company). That 3% can pay my accountants bill

[Soir]

blindswelledrat said:

Not so, B&C.
Firstly- clients dictate payment terms not suppliers.You offer to supply someone strictly on 7 day payment terms they will tell you to fk off and go to one of the many other agencies out there. Even if you were in a position to- you would just look 'tinpot' to any prospective customer.
And in many industries companies use agencies to enhance thier own cashflow and no other reason!

Secondly- I can't speak for all industries, but if I offered 100 contractors 3% extra in thier wages to get paid when I got paid, 98 of them would say no.

Thirdly- why should you? It's a business model that worksthe world over in every growing industry. All this "you should do x,y and z" churned out by the armchair business moguls (not you) is based on nothing more than narrow vision and a completely simplistic view of corporate finance

Edited by blindswelledrat on Thursday 17th June 14:05

Totally agree - factoring costs can be huge. (I own a recruitment agency that just does perm roles, but we are part of a larger company £9m t/o that manages contractors - and their experience is the same as you have put it)

[shirt]

seems I inadvertently opened a can of worms here!

I'm not disputing how agencies operate, I just didn't realise how much they took as a percentage.

fwiw, I've been informed that I have 'blown the other candidates out of the water' so there may be wiggle room on the rate. if not then I am still happy as it stands.

for the contractors on here with a ltd.co., how do you overcome ir35 if you only have one client and the contract was arranged via an agency? does this have an impact? if having to pay more tax under ir35, would using an umbrella co. give me a higher net income? I would be claiming 500miles per week in travelling expenses if this has any impact.

[blindswelledrat]

shirt said:

fwiw, I've been informed that I have 'blown the other candidates out of the water' so there may be wiggle room on the rate. if not then I am still happy as it stands..

I would say there definitely was wiggle room!
If you are right that they have a 25% margin and stand to lose the job if you don't want it there is definitely room for manoevre there.
As a rough guide- most agencies would do buisness as low as 18% but not below and there is no way they would refuse business at 20%!

[zippy3x]

Soir said:

blindswelledrat said:

Not so, B&C.
Firstly- clients dictate payment terms not suppliers.You offer to supply someone strictly on 7 day payment terms they will tell you to fk off and go to one of the many other agencies out there. Even if you were in a position to- you would just look 'tinpot' to any prospective customer.
And in many industries companies use agencies to enhance thier own cashflow and no other reason!

Secondly- I can't speak for all industries, but if I offered 100 contractors 3% extra in thier wages to get paid when I got paid, 98 of them would say no.

Thirdly- why should you? It's a business model that worksthe world over in every growing industry. All this "you should do x,y and z" churned out by the armchair business moguls (not you) is based on nothing more than narrow vision and a completely simplistic view of corporate finance

Edited by blindswelledrat on Thursday 17th June 14:05

Totally agree - factoring costs can be huge. (I own a recruitment agency that just does perm roles, but we are part of a larger company £9m t/o that manages contractors - and their experience is the same as you have put it)

Please correct me if i'm wrong - but isn't the 3% quoted the cost of factoring?

If thats "huge" what is the other 17% the agent creams off?

[blindswelledrat]

zippy3x said:

If thats "huge" what is the other 17% the agent creams off?

Creams off? Let me put that childish phrase in a slightly different way:
"Charges the client". Can you understand that? The agency pay whatever the appropriate salary is for a job and charge the client for thier services. In many cases that "appropriate salary" is actually the salary demands quoted by the contractor
That client is happy to pay this cost.
Its called margin, or income and goes towards the running of a company- no different to any company in the world.
Do you walk into your local newsagent and whinge at him because you know it only costs 10p to produce a can of coke thus he must be profiteering?

Take that chip of your shoulder and you'll enjoy life a lot more-I promise.

[bigandclever]

shirt said:

seems I inadvertently opened a can of worms here!

I'm not disputing how agencies operate, I just didn't realise how much they took as a percentage.

fwiw, I've been informed that I have 'blown the other candidates out of the water' so there may be wiggle room on the rate. if not then I am still happy as it stands.

for the contractors on here with a ltd.co., how do you overcome ir35 if you only have one client and the contract was arranged via an agency? does this have an impact? if having to pay more tax under ir35, would using an umbrella co. give me a higher net income? I would be claiming 500miles per week in travelling expenses if this has any impact.

All of the following is very broadly speaking...

The number of clients has little bearing on IR35 safe-ness, in the sense that each contract is treated entirely separately and having multiple contracts doesn't magically make you IR35 compliant.

You can claim the same expenses through a brolly as you can through your own limited company. The only differences between the different brollies are the quality of the service they provide and the cost they charge - ignore any "we have special dispensation with HMRC" guff.

A decent, IT contracting savvy, accountant will likely cost £1000 a year.

You will have to do the maths to work out whether going through a brolly makes more financial sense if IR35 caught. If you run your business as a proper business, and not as some pseudo-employee, then IR35 should cause you no concern.

Brollies are the perfect solution for a lot of people, just never have been for me.

[bigandclever]

blindswelledrat said:

Creams off? Let me put that childish phrase in a slightly different way:
"Charges the client". Can you understand that? The agency pay whatever the appropriate salary is for a job and charge the client for thier services. In many cases that "appropriate salary" is actually the salary demands quoted by the contractor

Salary? Contractor? What is this mumbojumbo?

[JontyR]

no1special said:

zippy3x said:

no1special said:

blindswelledrat said:

itsnotarace said:

blindswelledrat said:

Or alternatively, don't be a pikey.

Maybe if recruitment agencies took a fairer percentage for doing sweet FA....

Nothing unfair about agency percentages, in exactly the same way there's nothing unfair about shop margins.
You have an alternative- get off your arse and find your own job.
THe agency offer you a job at a given rate- it is either acceptable or it isn't. THat simple. WHat they make from it is nothing whatsoever to do with you becuase it is the client who pays thier bill not you.

Granted, there are a lot of cowboys out there who give decent agencies a bad name. But the decent ones do earn their percentages, and it p1sses me off when people begrudge them this.
Some people just have a bee in their bonnet about people earning money 'off them'.
As BSR says, if you dont like it, get off your own arse and find a job.

Please don't make the mistake of believing that just because you provide a neccessary service, that you're value for money.

I may need a tyre changed, and may not want to / possess the skills to change the tyre. The does not give the tyre fitter the right to charge me £100 to do it.

If you agents are so "worth it" then why do you hide your margins from both client and contractor?

Maybe you didnt read my post properly, so I will type it again for you;

Granted, there are a lot of cowboys out there who give decent agencies a bad name.

I have always been up front with fees when asked.

Maybe you are different. But the scum I have dealt with over the last 20 years has made me very cynical!

They phone you up pretending to be your friend, but don't even get your personal details correct!
They claim they put in a bucket load of effort, and yes maybe they read a few CV's at the start, but after 3 years of being in the same contract...what the hell do they offer? And all for approx £100 per day??

I was the same as one of the guys above...I sorted my own renewals, yet they still took the same cut! One agency, my last one, claimed there was little money in the pot...yet chatting to the client found they were taking 35%!!!! It was only when I threatened to walk, they reviewed their margin!
Most agents I have met, and it was a general concensus....they wouldn't be pi$$ed on if found on fire in the street!

[Original Poster]

JontyR said:

no1special said:

zippy3x said:

no1special said:

blindswelledrat said:

itsnotarace said:

blindswelledrat said:

Or alternatively, don't be a pikey.

Maybe if recruitment agencies took a fairer percentage for doing sweet FA....

Nothing unfair about agency percentages, in exactly the same way there's nothing unfair about shop margins.
You have an alternative- get off your arse and find your own job.
THe agency offer you a job at a given rate- it is either acceptable or it isn't. THat simple. WHat they make from it is nothing whatsoever to do with you becuase it is the client who pays thier bill not you.

Granted, there are a lot of cowboys out there who give decent agencies a bad name. But the decent ones do earn their percentages, and it p1sses me off when people begrudge them this.
Some people just have a bee in their bonnet about people earning money 'off them'.
As BSR says, if you dont like it, get off your own arse and find a job.

Please don't make the mistake of believing that just because you provide a neccessary service, that you're value for money.

I may need a tyre changed, and may not want to / possess the skills to change the tyre. The does not give the tyre fitter the right to charge me £100 to do it.

If you agents are so "worth it" then why do you hide your margins from both client and contractor?

Maybe you didnt read my post properly, so I will type it again for you;

Granted, there are a lot of cowboys out there who give decent agencies a bad name.

I have always been up front with fees when asked.

Maybe you are different. But the scum I have dealt with over the last 20 years has made me very cynical!

They phone you up pretending to be your friend, but don't even get your personal details correct!
They claim they put in a bucket load of effort, and yes maybe they read a few CV's at the start, but after 3 years of being in the same contract...what the hell do they offer? And all for approx £100 per day??

I was the same as one of the guys above...I sorted my own renewals, yet they still took the same cut! One agency, my last one, claimed there was little money in the pot...yet chatting to the client found they were taking 35%!!!! It was only when I threatened to walk, they reviewed their margin!
Most agents I have met, and it was a general concensus....they wouldn't be pi$$ed on if found on fire in the street!

Exactly the same can be said for contractors that feel the need to ask questions that have no relevance to them.

Agency agrees cost with client

Agency agrees cost with candidate

Client is obviously happy to pay said rate,

Candidate is obviously happy to accept said rate,

Agency is happy to pick up the margin between the two.

Why is that so hard for some people to understand?

it isn't as if the agency has pushed the client into agreeing a rate they are unhappy with, that is impossible.

[blindswelledrat]

JontyR said:

[
Recruitment agents are all scum!

So stop working for them then, FFS.
If something about you and the agents you deal with works that badly then go and work for someone else instead of sitting there for your whole life fuming about it.

[shirt]

bigandclever said:

You will have to do the maths to work out whether going through a brolly makes more financial sense if IR35 caught. If you run your business as a proper business, and not as some pseudo-employee, then IR35 should cause you no concern.

Brollies are the perfect solution for a lot of people, just never have been for me.

is their a website that explains the costs incurred so i can work this out?

you say 'as a proper business' - does this mean setting up a website and/or advertising? if i'm honest, the contract route is only a filler until i am in a position to relocate or a suitable permie role occurs.

[bigandclever]

Original Poster said:

JontyR said:

no1special said:

zippy3x said:

no1special said:

blindswelledrat said:

itsnotarace said:

blindswelledrat said:

Or alternatively, don't be a pikey.

Maybe if recruitment agencies took a fairer percentage for doing sweet FA....

Nothing unfair about agency percentages, in exactly the same way there's nothing unfair about shop margins.
You have an alternative- get off your arse and find your own job.
THe agency offer you a job at a given rate- it is either acceptable or it isn't. THat simple. WHat they make from it is nothing whatsoever to do with you becuase it is the client who pays thier bill not you.

Granted, there are a lot of cowboys out there who give decent agencies a bad name. But the decent ones do earn their percentages, and it p1sses me off when people begrudge them this.
Some people just have a bee in their bonnet about people earning money 'off them'.
As BSR says, if you dont like it, get off your own arse and find a job.

Please don't make the mistake of believing that just because you provide a neccessary service, that you're value for money.

I may need a tyre changed, and may not want to / possess the skills to change the tyre. The does not give the tyre fitter the right to charge me £100 to do it.

If you agents are so "worth it" then why do you hide your margins from both client and contractor?

Maybe you didnt read my post properly, so I will type it again for you;

Granted, there are a lot of cowboys out there who give decent agencies a bad name.

I have always been up front with fees when asked.

Maybe you are different. But the scum I have dealt with over the last 20 years has made me very cynical!

They phone you up pretending to be your friend, but don't even get your personal details correct!
They claim they put in a bucket load of effort, and yes maybe they read a few CV's at the start, but after 3 years of being in the same contract...what the hell do they offer? And all for approx £100 per day??

I was the same as one of the guys above...I sorted my own renewals, yet they still took the same cut! One agency, my last one, claimed there was little money in the pot...yet chatting to the client found they were taking 35%!!!! It was only when I threatened to walk, they reviewed their margin!
Most agents I have met, and it was a general concensus....they wouldn't be pi$$ed on if found on fire in the street!

Exactly the same can be said for contractors that feel the need to ask questions that have no relevance to them.

Agency agrees cost with client

Agency agrees cost with candidate

Client is obviously happy to pay said rate,

Candidate is obviously happy to accept said rate,

Agency is happy to pick up the margin between the two.

Why is that so hard for some people to understand?

it isn't as if the agency has pushed the client into agreeing a rate they are unhappy with, that is impossible.

Logically, you're right of course. The angst (and I think that's the right word!) for both client and contractor comes when the markup or the margin is disproportionate for the service being provided. We all know that, far too often, juniors are paid for by clients at senior rate - the only winner is the agent. We all know that agents do the square root of feckall at renewal time, yet still trot out the "we've got rates and rent and insurance and marketing and hairgel to pay for and there's no more in the pot" lines. For the OP, it is 100% a certainty that the agent will be making the most of a first-time contractor, and they will, if they can get away with it, pimp him out at a ludicrous margin.

However, I'm emphatically not a bum on seat contractor, so I make it my business to, well, run a business. Maybe it's different for the mass market guys, and I'm talking ste

[Dupont666]

Original Poster said:

JontyR said:

no1special said:

zippy3x said:

no1special said:

blindswelledrat said:

itsnotarace said:

blindswelledrat said:

Or alternatively, don't be a pikey.

Maybe if recruitment agencies took a fairer percentage for doing sweet FA....

Nothing unfair about agency percentages, in exactly the same way there's nothing unfair about shop margins.
You have an alternative- get off your arse and find your own job.
THe agency offer you a job at a given rate- it is either acceptable or it isn't. THat simple. WHat they make from it is nothing whatsoever to do with you becuase it is the client who pays thier bill not you.

Granted, there are a lot of cowboys out there who give decent agencies a bad name. But the decent ones do earn their percentages, and it p1sses me off when people begrudge them this.
Some people just have a bee in their bonnet about people earning money 'off them'.
As BSR says, if you dont like it, get off your own arse and find a job.

Please don't make the mistake of believing that just because you provide a neccessary service, that you're value for money.

I may need a tyre changed, and may not want to / possess the skills to change the tyre. The does not give the tyre fitter the right to charge me £100 to do it.

If you agents are so "worth it" then why do you hide your margins from both client and contractor?

Maybe you didnt read my post properly, so I will type it again for you;

Granted, there are a lot of cowboys out there who give decent agencies a bad name.

I have always been up front with fees when asked.

Maybe you are different. But the scum I have dealt with over the last 20 years has made me very cynical!

They phone you up pretending to be your friend, but don't even get your personal details correct!
They claim they put in a bucket load of effort, and yes maybe they read a few CV's at the start, but after 3 years of being in the same contract...what the hell do they offer? And all for approx £100 per day??

I was the same as one of the guys above...I sorted my own renewals, yet they still took the same cut! One agency, my last one, claimed there was little money in the pot...yet chatting to the client found they were taking 35%!!!! It was only when I threatened to walk, they reviewed their margin!
Most agents I have met, and it was a general concensus....they wouldn't be pi$$ed on if found on fire in the street!

Exactly the same can be said for contractors that feel the need to ask questions that have no relevance to them.

Agency agrees cost with client

Agency agrees cost with candidate

Client is obviously happy to pay said rate,

Candidate is obviously happy to accept said rate,

Agency is happy to pick up the margin between the two.

Why is that so hard for some people to understand?

it isn't as if the agency has pushed the client into agreeing a rate they are unhappy with, that is impossible.

Yes but if you find out that 'the client' can only afford to pay you £500 a day and the agency are pimping you out at £675 a day, its the agency taking an additional 35% on top of the wages they just told you the client can afford... Its that the some find unfair... the wording that suggests the client is happy to pay £675 a day all in and then agent tells the candiadte its a maximum of £500 and thats all they can pay, when that is clearly bks.

Have seen 2 mates fall foul to that at renewal time when querying the the client and seen just how much the margin was on them... instant walk back to the agency who then claim ingorance about what was discussed in the initial meeting before the contract started and lying about the margin.

Not saying there arent some good eggs out there (my agent is one of them), but the bad ones certainly ps off people and give you a bad name

[bigandclever]

shirt said:

bigandclever said:

You will have to do the maths to work out whether going through a brolly makes more financial sense if IR35 caught. If you run your business as a proper business, and not as some pseudo-employee, then IR35 should cause you no concern.

Brollies are the perfect solution for a lot of people, just never have been for me.

is their a website that explains the costs incurred so i can work this out?

you say 'as a proper business' - does this mean setting up a website and/or advertising? if i'm honest, the contract route is only a filler until i am in a position to relocate or a suitable permie role occurs.

You could try ltd and brolly calculators as a starter comparison. There's also an IR35 calculator

You can also work through the first-timer gumph here

[shirt]

thanks very much <doffs cap>

[blindswelledrat]

bigandclever said:

[
Logically, you're right of course. The angst (and I think that's the right word!) for both client and contractor comes when the markup or the margin is disproportionate for the service being provided. We all know that, far too often, juniors are paid for by clients at senior rate - the only winner is the agent. We all know that agents do the square root of feckall at renewal time, yet still trot out the "we've got rates and rent and insurance and marketing and hairgel to pay for and there's no more in the pot" lines. For the OP, it is 100% a certainty that the agent will be making the most of a first-time contractor, and they will, if they can get away with it, pimp him out at a ludicrous margin.

However, I'm emphatically not a bum on seat contractor, so I make it my business to, well, run a business. Maybe it's different for the mass market guys, and I'm talking ste

In individual cases you definitely have a point.

On one hand there are the "low maintenance" contractors who your margin is disproportianately high to your efforts, which are negated by the high maintenance ones.
In effect, if you are very good at your job- you create no problem and in many cases you create the further work for yourself just by being good-then you will have every right to feel hard done by.
In my experience these are the people I tend to make lowest margin on (in the loss leader sense) or if it is definitely a one off job- then charge particularly high for and pay well.

One thing to remember if you think margins are excessive- Recruitment is porobably the most fiercely competitive industry there is. For every client you have, there are 15 agencies trying to get thier business. Price/margin is obviously the easiest way of them doing that. If 20-25% was as profitable as everyone seems to think, one of those 15 companies would come in an say "Ill do your placements at 15%". None of them do!

Edited by blindswelledrat on Thursday 17th June 17:02

[blindswelledrat]

Dupont666 said:

Yes but if you find out that 'the client' can only afford to pay you £500 a day and the agency are pimping you out at £675 a day, its the agency taking an additional 35% on top of the wages they just told you the client can afford... Its that the some find unfair... the wording that suggests the client is happy to pay £675 a day all in and then agent tells the candiadte its a maximum of £500 and thats all they can pay, when that is clearly bks.

It's just business.Stop taking it so personally. Just a more polite way of saying "There are 5 other people who I can employ on £500 per day so I can't justify paying you £550". Maybe it's not more polite. I don't really know.
Just personally I would feel a bit wrong saying to a person, in effect, "you're easily replacable"
DOn't get me wrong, if figures of 35% are banded around- that sounds to me excessive and slightly untrue. THe average agency is will not actively look to overcharge because it would piss of thier client.

[JontyR]

blindswelledrat said:

JontyR said:

[
Recruitment agents are all scum!

So stop working for them then, FFS.
If something about you and the agents you deal with works that badly then go and work for someone else instead of sitting there for your whole life fuming about it.

I have And now I do find work through previous people I worked for, so all is good

[JontyR]

Original Poster said:

JontyR said:

no1special said:

zippy3x said:

no1special said:

blindswelledrat said:

itsnotarace said:

blindswelledrat said:

Or alternatively, don't be a pikey.

Maybe if recruitment agencies took a fairer percentage for doing sweet FA....

Nothing unfair about agency percentages, in exactly the same way there's nothing unfair about shop margins.
You have an alternative- get off your arse and find your own job.
THe agency offer you a job at a given rate- it is either acceptable or it isn't. THat simple. WHat they make from it is nothing whatsoever to do with you becuase it is the client who pays thier bill not you.

Granted, there are a lot of cowboys out there who give decent agencies a bad name. But the decent ones do earn their percentages, and it p1sses me off when people begrudge them this.
Some people just have a bee in their bonnet about people earning money 'off them'.
As BSR says, if you dont like it, get off your own arse and find a job.

Please don't make the mistake of believing that just because you provide a neccessary service, that you're value for money.

I may need a tyre changed, and may not want to / possess the skills to change the tyre. The does not give the tyre fitter the right to charge me £100 to do it.

If you agents are so "worth it" then why do you hide your margins from both client and contractor?

Maybe you didnt read my post properly, so I will type it again for you;

Granted, there are a lot of cowboys out there who give decent agencies a bad name.

I have always been up front with fees when asked.

Maybe you are different. But the scum I have dealt with over the last 20 years has made me very cynical!

They phone you up pretending to be your friend, but don't even get your personal details correct!
They claim they put in a bucket load of effort, and yes maybe they read a few CV's at the start, but after 3 years of being in the same contract...what the hell do they offer? And all for approx £100 per day??

I was the same as one of the guys above...I sorted my own renewals, yet they still took the same cut! One agency, my last one, claimed there was little money in the pot...yet chatting to the client found they were taking 35%!!!! It was only when I threatened to walk, they reviewed their margin!
Most agents I have met, and it was a general concensus....they wouldn't be pi$$ed on if found on fire in the street!

Exactly the same can be said for contractors that feel the need to ask questions that have no relevance to them.

Agency agrees cost with client

Agency agrees cost with candidate

Client is obviously happy to pay said rate,

Candidate is obviously happy to accept said rate,

Agency is happy to pick up the margin between the two.

Why is that so hard for some people to understand?

it isn't as if the agency has pushed the client into agreeing a rate they are unhappy with, that is impossible.

I understand business is business.....but also being honest is part of the deal. There should be some transparency involved. Agencies are there to sort the weeds but then thats pretty much it, other than passing money from peter to paul.

My gripe is that I was told there was very little budget. I was then told by the client that that wasn't the case! Don't be so nieve as to think contractor and client don't talk! So then I go back and I'm lied to...so understandably I was a little miffed. None of the agents I have met have been very nice! The majority of the ones I dealt with in the 90's were typical of an 80's yuppy stuffed up to the eyeballs with self importance and cocaine! And the 00's weren't much better...may have dropped the coke.....but the attitude still stank! Not one person I have met has had a nice thing to say about their agents, but there was no point in telling them this as in their world they were king!

The biggest problem I saw was that the loyalty shifted from the agent looking after the best interest of the candidate to the client. Once upon a time, your agent treasured you as their income...whereas now the contractor is just a pawn and the real money comes from the client. When a contract ended, your agent found you a new one...not the case anymore, its back into the pool again and shift to another agency.