First Time Contractor Rate Question

**Wilmslow** · 13 January 2008, 16:45

Originally posted by bumblingabout View Post

Firstly, apologies if I have posted this in the wrong forum, I am new to CUK and have much to learn. I've trawled through many of the threads and seem to have my head partially round the main concepts, so I was just looking for clarification really.

I have just started a new contract (3 months initially, rolling). I was initially interviewed for one position but was offered a more senior role. The agency told me that the client only offered a fixed rate for both positions. I am slightly sceptical about this, because why would two jobs at different levels pay the same rate (the client would find it difficult to fill positions that way). Anyway, I know now from filling in the companies timesheets just how much the agency is getting and I obviously know how much of that I am getting.

My questions are:
The agency margin is 33%. Is this margin reasonable? I know agencies try to maximise their margins, but is there an average margin that I should be aiming for? Would it be worth approaching the agency at renewal time and asking for a more agreeable (to me) margin? I suppose I could play hardball as I have other options waiting in the wings but I don't know if that's a good idea on my first contract. Should you spend a reasonable time in your first contract?

I'm tempted to ask them up front what their margin is, as I'm not sure they are aware that I know what they are billing the client.

Thanks all.

I caveat my reply by saying only my second contract, and worked for a couple of consultancy companies......

Margins can be wild. I knew of someone being charged out at £450 per day and given £220. I was also on a permie salary being charged out at the same rate.

Hence there is no rule, as such, as long as you are happy with the rate, you could argue who cares what the agency is given??

As first contract, maybe settle in for a renewal first, but no harm in asking about an increase as client seems to like you and wants to renew.

You say you have other options - options in writing with more money? A bird in the hand and all of that.....

**ratewhore** · 13 January 2008, 16:46

This has got you into the contracting game so do the 3 months as it stands. At renewal time, tell the agency what rate you are prepared to do the work for, taking into consideration what the client is paying. (FWIW, the agencies I have worked through have taken between 8 and 15%).

As you have other irons in the fire, you are in a strong position and can walk away if need be.

All IMHO of course...

**thunderlizard** · 13 January 2008, 23:03

Ah, it's always nice to find out there's more cash in the system than you thought. If the agency was on 3% you'd have much more reason to worry.

Don't worry too much, it generally takes 3 or 4 contracts before you work out which rate to settle at.

33% is on the high side. (make sure you're calculating this right though: 33% would be e.g. client pays £300, you get £200. Not client pays 400, you get 300)

Ratewhore's advice is good: think about what rate you need, stick to that, and let the agency margin look after itself. Maybe also slip a quiet word to the client so that you can both apply the pincer-squeeze manoeuvre.

**MrRobin** · 14 January 2008, 10:17

I had a shock when I found out my agency margin on my second contract - it was about 33% also. I was disgusted at first but after I calmed down I realised that I was happy originally with what I was getting so why should I be upset now... I guess some of it comes from missed opportunity, i.e. I really should have pushed for a better rate in the first place and squeezed the greedy agent...

Anyway, as thunderlizard says, use it to your advantage, you now know what you are worth to a client so at renewal, ask for say half of the 33%, knowing fully well the agent can afford it.

**Xenophon** · 14 January 2008, 10:24

As long as you get what you want, I would worry little about the agency-end client side.

**The Lone Gunman** · 14 January 2008, 10:45

If you are getting the rate you expect then the agency margin is not important.
HOWEVER: The agents margin may be making you expensive.
The senior role should be paying more, but when you come to move on it may look good on your "CV" to show you have been doing a senior role.

It is 3 months, you accepted it. Take it on the chin, file it under experience and move on.

**rootsnall** · 14 January 2008, 10:50

I'd say 20% tops even for a one off contract with no history of client - agency repeat business. Anything more and they are taking the p*ss.

**Dow Jones** · 14 January 2008, 11:28

Same old, same old!

Newbies come here crying about their rates. When are they going to wake up? Agents know this and use it to their advantage. By doing this, they undercut other - more experienced - contractors.
Find out by all means what the margin is, but best try and get in a strong position to negotiate. 3 months is just for starters. And don't even think about telling the client. They'll think you've been snooping around (which you have)

**gingerjedi** · 14 January 2008, 11:32

Originally posted by MrRobin View Post

I had a shock when I found out my agency margin on my second contract - it was about 33% also.

I had a shock when I found out my agent was taking 15%... I wasn't shocked by the amount but the fact that he had told me it was 15% and he was telling the truth!

First Time Contractor Rate Question