Is contract renewal rate increase negotiation always with the agency not the client?

**northernladuk** · 20 November 2018, 22:17

You have no commercial relationship with the client and in some cases you aren't contractually allowed to speak to them about your rate. It's the agents money you are getting paid. Go through them.

If I was you I'd be going to market for a new gig. If you get one then ask the agent for 50 quid a day more than the first offer take it or leave it.

If you don't the agent will sniff you noobness a mile off. Its highly likely they already know this from the low rate you've been happy with. They deal with contractors complaining about rates day in day out. If you don't sound like you really will leave they'll just pull your pants down.
The only benefit here is the agent will get more commission. It won't be as much as placing someone somewhere else so it won't be the top of their priority list.

I'd go for the new gig first and then if these guys match them happy days. Don't bank on them doubling your rate for no apparent benefit to them.

**pauldee** · 21 November 2018, 08:24

I would be fascinated to know how much the agency is taking in this.

**Unix** · 21 November 2018, 09:19

Originally posted by softwaredever View Post

I'm a full-stack (mostly front-end) developer contractor in London on £300/d, have been there 13 months. I know this is massively below market rate but I was happy with it at the beginning (started on £280, raised to £300 after 3 month probation) as I had no contracting experience and had been out of full-time software development for a few years.

Contract renewal (client will definitely want to renew) is coming up at the end of the year. I'm now confident of being able to get another contract elsewhere at or closer to market rate (seems to be about £450-500/d) so I'm planning to ask for a significant increase to somewhere around here and start look elsewhere if client won't deliver. I'm at least twice as productive now compared to the first 6 months and the software is company-specific and takes quite a while to learn. I know they will pay more as the other dev (been there a few years also on contract) is on a lot more (as he's said £300 is 'far too low'). I would like to stay if they come through but will go if they don't

So my question relates to who to negotiate with. It seems to be the done thing to ask my agency to negotiate the day rate, has anyone negotiated their salary direct with the client? Part of me feels this would be better as a) I have more motivation to increase my day rate than the agency and b) I have a good relationship with the client. I've talked to my recruiter about this and he doesn't give the impression of being that bothered about increasing the rate. It seems odd to ask the recruiter to negotiate when I work with the person they're negotiating with every day.

Secondly, does anyone have experiences with large (>50%) increases in day rate when they've started below market rate? Most advice I've seen seems to be that renewal increases are small (say 10%) and you need to move contracts to get big ones.

You'll never get 50% increase, you need to move

**Cid** · 21 November 2018, 11:03

Originally posted by pauldee View Post

I would be fascinated to know how much the agency is taking in this.

As much blood as they can squeeze out of it.

**gables** · 21 November 2018, 11:58

Originally posted by northernladuk View Post

You have no commercial relationship with the client and in some cases you aren't contractually allowed to speak to them about your rate. It's the agents money you are getting paid. Go through them.

If I was you I'd be going to market for a new gig. If you get one then ask the agent for 50 quid a day more than the first offer take it or leave it.

If you don't the agent will sniff you noobness a mile off. Its highly likely they already know this from the low rate you've been happy with. They deal with contractors complaining about rates day in day out. If you don't sound like you really will leave they'll just pull your pants down.
The only benefit here is the agent will get more commission. It won't be as much as placing someone somewhere else so it won't be the top of their priority list.

I'd go for the new gig first and then if these guys match them happy days. Don't bank on them doubling your rate for no apparent benefit to them.

It's true about the commercial relationship but the real world can be different, but only you truly know the client. My last two contracts I have negotiated with the client on renewal with a rate rise, 100% in the first instance and 40% in the second. Now to be clear, the roles had changed and they recognised this, so to keep me they agreed on the rate rise. In the first instance this required going back out to market which I had to compete against. In the old days 90s\2000s it was a mixture, market was different then and rate rises on renewal were the norm (for me anyway).

Originally posted by Unix View Post

You'll never get 50% increase, you need to move

See above.

**b0redom** · 21 November 2018, 12:05

Originally posted by Unix View Post

You'll never get 50% increase, you need to move

WHS.

**LondonManc** · 21 November 2018, 13:09

If you're with an investment bank, the agency will be on a flat rate. Sounds like you're still paying the good old "First Contract Tax" after all this time. If you think you're being absolutely shafted by the agency and you have a good relationship with your hiring manager, get them a coffee and ask them what the agency are charging you out at as you've been approached about a contract at 450/day, which is a significant increase over what you're on. See how they react - if they think the agency is shafting you and they want to keep you, I've seen cases where the client will restructure the arrangement and the agency will get 10-12% instead of the 40% they've enjoyed for far too long.

Oh and your salary? Really????
Your salary is something your limited company pays you, not the agency or client.

**softwaredever** · 21 November 2018, 20:44

Thanks for all the replies.

I'm speaking to other agencies about new contracts now, my plan is in the next couple of weeks to discuss the situation with the client first, but do the final numbers negotiation through the agency. As people have said, a large % increase may be unlikely, but I have nothing to lose as I'm willing to leave.

More generally when negotiating either for a new contract or renewal, is it expected to ask for the rate you actually want and expect to get? Or a rate above what you expect realistically to get and you expect to be negotiated down to what you actually expect? I.e. will clients/agencies always try and lower the first rate you give or will they accept it if they think it's reasonable?

Re: my specific client/agency, I know that the client knows the rates their contractors get from their agencies, so I think it's unlikely the agency is getting an unusually big margin, but who knows. I think the client is just cheap when it comes to new devs.

**b0redom** · 21 November 2018, 20:48

Depends on how strong your position is and the size of you cojones tbh. I've never secured a massive rate increase staying in one place, in fact I've hardly ever secured an increase without moving roles.

You really need to show what extra you're adding and why you're worth more and/or have them over a barrel and be prepared to actually leave.

Is contract renewal rate increase negotiation always with the agency not the client?