pushing for a higher daily rate

[_Deano]

I have a contract through an agent (lets call them Agent X) to work at a company (lets call them company Y. Agent X also supplies another contractor to company Y and I've been chatting with the contractor, who has worked at company Y for sometime and worked out that company Y pays agent X the same amount for both me and the other contractor, yet what i get paid by agent X is a hell of a lot less than what the other contractor is getting per day.

Now i've never been in a position of pushing up the rate of pay, but feel that agent X is taking the piss a bit, when i found out how much i am out by in comparison to the other contractor (we both do the same job). I know that the agent is there is make money also, but i was told that their cut is about 5%; this is closer to 17%.
So what would be the professional way of increasing the rate of pay at the start of a contract renewal?

thanks in advance

[flyingjase]

_Deano said:

I have a contract through an agent (lets call them Agent X) to work at a company (lets call them company Y. Agent X also supplies another contractor to company Y and I've been chatting with the contractor, who has worked at company Y for sometime and worked out that company Y pays agent X the same amount for both me and the other contractor, yet what i get paid by agent X is a hell of a lot less than what the other contractor is getting per day.

Now i've never been in a position of pushing up the rate of pay, but feel that agent X is taking the piss a bit, when i found out how much i am out by in comparison to the other contractor (we both do the same job). I know that the agent is there is make money also, but i was told that their cut is about 5%; this is closer to 17%.
So what would be the professional way of increasing the rate of pay at the start of a contract renewal?

thanks in advance

My advice would be to ascertain your value to the client / agent as leverage. Looking at the URL on your profile you are a business man (unless the website is a rouse to fool HMRC to avoid IR35), so it shouldn’t be difficult to demonstrate your USP/ value.

Before that, are you sure that your colleague is on a 5% margin? I don't know any type of business that can make a profit at 5%GP. Is it just bravado on the part of your colleague?

A pub for example makes a 55% GP on wet sales, a (decent) restaurant, 75%.

So, if you’re not adding value to the client OR the agent, then why should either increase the rate that you agreed to when you took the contract? If you can demonstrate value, then, a decrease in margin for the agent or an increase in cost for the client is worthwhile.

Only you (and the agent / client!) can answer that.

Good luck with maximising your profit.

Jason

[zippy3x]

This is the prime reason i never discuss rates with any other contractor or employee of the client.
At the end of the day this other contractor did a better job of negotiating his rate than you. May have been due to circumstances, but its still true.

As I'm sure you know there will be clauses in your contract and the contract between agancy and clientCo. that restrict you working directly for around 6-12 months, which effectively means the agency can block a renewal of your contract. With the market the way it is now (i'm assuming your IT) theres probably about 30 benched contractors who will work for your rate or less. In other words, you could well play right into the hands of the agency and be replaced to allow them to make more money from a cheaper contractor.

If you're going to do try to negotiate, then have a good look at the current market, and make sure you can get/have got something else lined up.
Secondly you will need the clientCo completely on-board to tell the agency they will not accept a replacement and if the agency loses you as their contractor they will replace you thru another agency.

I went thru all this about 7 months ago - took really supportive clientCo, and about 6 weeks of negotiation to get an extra 20 quid a day. By the end I only doing it out of principle.

I think the way agencies are shedding jobs, you will be on a hiding to nothing personally.

Of course if you've some special niche skill then you will be in a stronger position

Edited by zippy3x on Thursday 29th January 13:38

[_Deano]

Thanks for the tips guys.
Company Y does think highly of me and not wanting to blow my own trumpet i am doing the same amount of work as 2 permy staff; i've seen the figures.
I will try and get company Y to be on my side, maybe an email from the budget holder might help.

[zippy3x]

To be honest - if you can produce figures saying your as good as 2 permies then i would just push for increase at renewal stating this, and anything else that would support your case and let the agency/clientco sort it out.
If the agency come back and say clientco will not pay anymore then you can start on about their margin.

I would just add that 17% margin is probably not that far of industry standard for the larger (belonging to the S3 group) agencies.

[isv]

A lot of large clients force standard terms and margins on their supplying agencies - it prevents this sort of thing and ensures that the client is spending their money on skills rather than lining the agent's pockets. Financing costs for many agents have come down over the last year - and if your agent doesn't pay you until they've been paid by the client then there's no financing exposure at all - and their margin should reflect that.

My agent takes just 3% - I supply services to a global IT company... and once the client pays the agent I get paid... I don't get paid as quickly as some contractors but it does mean that the agent can get their margin right down and that makes me more competitive (I am the most expensive contractor the client uses - but due to my agent's low margin the difference is not as extreme as it could have been).

I would talk to the client and get them to apply some pressure - there's no way any agent should be taking a big margin in the current climate. Most are on 8-12%.