Renewal increase vs percieved to be greedy

[Barley]

Looking for some advice on the following question:

I was offered a role a few months ago. Before contracts were signed the client had a reality check concerning the rate and only agreed to proceed with a £50pd reduction. It was also agreed that the agent would step away after the initial 3 months and any extension would be on a direct basis (saving client agents 15% fee).

Client is a small organisation and I am the only contractor, hence their reality check and to a degree the HR & Budget departments feeling uncomfortable paying what to them seems like 3x the cost of a FTE. They have taken on further new resource but all on Fixed Term Contracts (half my rate on an annualised basis)

I thought it was 50:50 whether id get an extension offer, that has now come through and for 12 months. Its at current terms (i.e. 50pd lower than the agreed rate at interview and what im on now).

Question is - Do I pitch for a small increase (say £25pd) based on me taking the hit for the initial period, it being nearer market average, that theyre now saving 15% agent margin etc? Ordinarily I would ask but am hesistant as the client is very cost sensative and id imagine their has been intense negotiation to retain me on a per day basis (I made it clear id not accept Fixed Term). I fear asking for an uplift could make me come across as greedy in this small client and impact longer terms prospects here (potential for 18 months)? Also aware that im probably on double what the HR/Budget Manager and/or the Project Manager I report to.

I know some will tell me to justify what im doing differently to justify more, but my rationale is I took a lower cut in my usual minimum rate as a good will jesture.

Just concerned about the perception of greed?

[Bellona]

It was also agreed that the agent would step away after the initial 3 months and any extension would be on a direct basis (saving client agents 15% fee).

They have taken on further new resource but all on Fixed Term Contracts (half my rate on an annualised basis)

I fear asking for an uplift could make me come across as greedy in this small client and impact longer terms prospects here (potential for 18 months)?

For me, perception isn't the point : it's the earning potential.
When you reduced your rate was it to something that still gave you enough profit to keep you happy ? I would suggest it did or you probably woudn't have taken the gig.

The key points for me are :

If they up your rate, any saving they made from the agent being out of the equation is lost.

They are taking on FTCs at half your rate but are happy to give you a 12 month extension.

This shows they want to keep you - do you want to keep them ? If 12 months at a decent ( if below your usual ) rate looks ok, then I would take it to retain the goodwill.

Everyone of course is different, only you can decide

[cojak]

Why do you think that you deserve the rate rise? Are you doing anything differently (and better) now from what you were doing at the start of the contract?

[DirtyDog]

Why do you think that you deserve the rate rise? Are you doing anything differently (and better) now from what you were doing at the start of the contract?

Probably not, but they are doing something at a rate which is different from the one which was originally agreed.

[TheCyclingProgrammer]

Nothing wrong with increasing your rate generally; I increased mine by 20% at the beginning of this year, however my policy is to keep existing clients on my old rate unless I have a good reason not to as I like my clients to think that I value them and wouldn't want to jeopardise future business with them, especially an ongoing contract.

That's not to say they will pay my old rate forever, but I wouldn't up it at extension time unless the scope of the work had significantly changed.

[northernladuk]

I was offered a role a few months ago. Before contracts were signed the client had a reality check concerning the rate and only agreed to proceed with a £50pd reduction. It was also agreed that the agent would step away after the initial 3 months and any extension would be on a direct basis (saving client agents 15% fee).

Who agreed the reduction? The agent? In which case you have been had over by the agent. That £50 is going in his pocket and there probably hasn't been any reduction in what the client has been charged. Common agent trick. Very important to understand what has happened here as it affects the whole negotiation of a rate rise. Did you take a hit due to market rates or because someone pocketed it?

Also who agreed the agent stepping away? I am surprised by this decision and wonder if the agent is happy. You could get in to a lot of trouble with handcuffs by going direct after the agent for the same gig. Am surprised the contract between agent and client allows this. Something doesn't sound right at all here.

Client is a small organisation and I am the only contractor, hence their reality check and to a degree the HR & Budget departments feeling uncomfortable paying what to them seems like 3x the cost of a FTE. They have taken on further new resource but all on Fixed Term Contracts (half my rate on an annualised basis)

I thought it was 50:50 whether id get an extension offer, that has now come through and for 12 months. Its at current terms (i.e. 50pd lower than the agreed rate at interview and what im on now).

Question is - Do I pitch for a small increase (say £25pd) based on me taking the hit for the initial period, it being nearer market average, that theyre now saving 15% agent margin etc? Ordinarily I would ask but am hesistant as the client is very cost sensative and id imagine their has been intense negotiation to retain me on a per day basis (I made it clear id not accept Fixed Term). I fear asking for an uplift could make me come across as greedy in this small client and impact longer terms prospects here (potential for 18 months)? Also aware that im probably on double what the HR/Budget Manager and/or the Project Manager I report to.

I know some will tell me to justify what im doing differently to justify more, but my rationale is I took a lower cut in my usual minimum rate as a good will jesture.

Just concerned about the perception of greed?

You can only try for a rate rise but if you are going direct to save the client money and then up your rate the clients savings are being reduced which they won't be happy about. Also very difficult when you are the only person and are perceived to be too expensive already. Sometimes it might be worth not rocking the boat for small amounts. If you do want a rate rise you are going to have to nail it to them and be prepared to walk if they don't give it you. If you don't do it properly and they see you just as a money grabber it could come back and bite you. There is a big difference between hard negotiation for market rates and being a money grabber. Do it wrong and the perception of you by the client could easily change.

You are aware of the 24 month rule aren't you? It looks like it is going to catch you out at some point, particularly when you are talking 12 month extensions.

I don't think I would be rocking the boat of a long term gig for £25 extra, particularly when there appear to be other factors here that are not clear. Up to you though. Remember you won't see the full £25 in your pocket either so it have to weigh up exactly how much it is actually worth to your pocket.

[DirtyDog]

Question is - Do I pitch for a small increase (say £25pd) based on me taking the hit for the initial period, it being nearer market average, that theyre now saving 15% agent margin etc? Ordinarily I would ask but am hesistant as the client is very cost sensative and id imagine their has been intense negotiation to retain me on a per day basis (I made it clear id not accept Fixed Term). I fear asking for an uplift could make me come across as greedy in this small client and impact longer terms prospects here (potential for 18 months)? Also aware that im probably on double what the HR/Budget Manager and/or the Project Manager I report to.

What happens if you ask for a rate increase and they say no - what are you going to do? If you are going to stay anyway, then it's probably not worth the risk of termination in asking for something that you are content with in the first place. If you are going to walk, then be prepared to do that.

Only you can answer the question of what to do - how likely are you to find a new contract at the higher rate? Is that going to happen straight away? For example, if you walk and earn nothing for two months while you look for a new project, would you have been better off just sticking to where you are and the extension on offer?

Also, how lazy are you? For me, £25 a day isn't worth the hassle of looking for a new gig, talking to agents etc. if it gets canned. It might be enough for you, but at the end of the day, you're talking £25 for a year so £6525 if you worked every day of the year (excluding weekends).

Finally, this becomes a different matter if you aren't enjoying the work. If I hate a project, then I'd risk losing the work for an increase.

[DirtyDog]

You are aware of the 24 month rule aren't you? It looks like it is going to catch you out at some point, particularly when you are talking 12 month extensions.

Three months originally plus 12 month extension. Plenty of time before the 24 month rule kicks in.

[SteelyDan]

If it was me, and I was happy with the work, the client, the location & the rate, AND I'd just been offered a 12-month extension, then I'd be inclined NOT to rock the boat & not risk pi55ing the client off.

I also think, given they have recruited others but on FTCs, that I would count myself fortunate. They could have offered you a FTC, but seems you've made them aware you wouldn't have accepted that. Clearly they don't want to lose you, so are prepared to let you carry on outside of a FTC. Again, I think I'd consider myself fortunate.
What's the alternative? The bench? Back in the pool? Not a pleasant place to be.

My advice (FWIW): Put the green-eyed monster back in the box.



P.S. Oh, and sort out your spelling and punctuation; it's effing dire. Rant over.

[jmo21]

Who agreed the reduction? The agent?

This.