Contractors' Questions: Agency commission: how much do agents take?
Contractor's Question: Is there a rule of thumb for the agency margin a recruiter makes on your contract?
I am in my first contract (IT Project Management) and have worked out that the agent that placed me is taking 25% commission of the daily rate the company is paying for my services. Is that pretty average or outrageous? What sort of agency margin is usual or does it vary widely? And does an agent increase their rate when contractors are squeezed or do clients have a say?
Answer, by a City recruiter, supplying financial and IT project consultants:
The commission percentage the agency takes is negotiated between the agency and their client, and typically there is no negotiation at all, just a fixed percentage set by the client which might normally be anything between 10-35%.
This has no bearing on the contractor's rate as it is worked out as 'contractor's rate + agency fee', just as a permanent placement fee has no impact on the salary of the candidate placed.
Frankly, it is a matter between the agency and client and the reason some contractors get excited by it, when permanent staff don't, says more about the nature of some contractors, it's really none of their concern.
Answer, by a global IT staffing firm, specialising in permanent and contract placements:
We have formal agreements with clients where they quote a rate they would like to pay for the contractor, not a charge rate (i.e. contractor rate plus our margin/commission). Agency margins do vary but where there is a formal agreement between us and a client; the commission would be at the lower end of the quoted [10-35%] range.