Agency Making 50% margin

[NoviceContractor]

Hi All,
I have just started a contract. The agency played really hard and made me cut my rate by 25% only for me to realise that agency is making more than 50% margin (~£400 a day) on my daily rate. The work I do allows me access to this data so I am easily able to see how much I am being paid and how much agency is being paid.
I am in my first week of the contract. I want to find out what is the best way to push agency to increase my rate? I know its a business transaction and we all try to make as much as possible and in this case I want to see how can I get the correct rate back?

Thanks,

[Lance]

Hi All,
I have just started a contract. The agency played really hard and made me cut my rate by 25% only for me to realise that agency is making more than 50% margin (~£400 a day) on my daily rate. The work I do allows me access to this data so I am easily able to see how much I am being paid and how much agency is being paid.
I am in my first week of the contract. I want to find out what is the best way to push agency to increase my rate? I know its a business transaction and we all try to make as much as possible and in this case I want to see how can I get the correct rate back?

Thanks,

- are you willing to explain that you've accessed, and read, sensitive commercial data that you shouldn't really see?
- are you willing to walk when they say no to a rate rise?
- are you able to make them believe you when you say you'll walk?
- are you willing to defend your position when you've accessed the data, tried to get a raise, and then get walked off site for accessing said data?

Just suck it up. You've been sold for a price you agreed to.

Someone else is making money? So the **** what?

[Old Greg]

Hi All,
I have just started a contract. The agency played really hard and made me cut my rate by 25% only for me to realise that agency is making more than 50% margin (~£400 a day) on my daily rate. The work I do allows me access to this data so I am easily able to see how much I am being paid and how much agency is being paid.
I am in my first week of the contract. I want to find out what is the best way to push agency to increase my rate? I know its a business transaction and we all try to make as much as possible and in this case I want to see how can I get the correct rate back?

Thanks,

Firstly, make sure you have got this right and you haven't forgotten to account for VAT etc. Secondly bide your time until renewal and then decide whether you are prepared to walk if you don't get an increase. Then act accordingly.

[Old Greg]

- are you willing to explain that you've accessed, and read, sensitive commercial data that you shouldn't really see?

That may or may not be true. PMs sometimes see their own cost for budget management purposes.

[Lance]

That may or may not be true. PMs sometimes see their own cost for budget management purposes.

True. But there’s likely a clause in the agency contractor contract that precludes use of this.
In general you only find out your real rate by accident and you can’t use the information.

[northernladuk]

Are you absolutely sure you can see what they've been paid and not what your budgeted value is to the project? They often aren't the same. Let's assume you can see what the client has paid the agency.

So you've been stung by newbie tax. Most do on their first few gigs. The agent gets a sniff you are new, desperate, gullible and they'll pounce. I have to say 50% is pretty outrageous though. I am certain the client will be pretty hacked off to know this as well BUT you can't get them involved. It's between you and the agent. Dragging the client in will look bad.

Sadly you've signed the contract and started work so except give notice and leave there is nothing you can do. You are going to have to suck it up until renewal time but I've a feeling this is going to eat you alive and spoil the gig for you.

I would be either ringing or mailing someone pretty senior in their organisation voicing my displeasure to be being screwed for so much though, indicating you can't believe the client would be overly pleased about this either.

I've got to wonder why the client is paying such a high rate though. That's consultancy figures, not bum on seat contractors...

Now I've just thought about it.. Are you in as part of a consultancy agreement or just a single contractor. If the agent is acting as a consultant they've (or they reckon they will) have an account manager to pay for and other internal work. The big consultancies regularly charge £1200+ just for 40k contractors.

[Old Greg]

True. But there’s likely a clause in the agency contractor contract that precludes use of this.
In general you only find out your real rate by accident and you can’t use the information.

You sweet summer child.

[NoviceContractor]

- are you willing to explain that you've accessed, and read, sensitive commercial data that you shouldn't really see?
- are you willing to walk when they say no to a rate rise?

I can certainly try as I was the only one agency could find for the role.

- are you able to make them believe you when you say you'll walk?

I have already done that when agency were not ready to correct the terms of the contract. They wanted me to invoice them once per month and then pay in another 30 days. I said I will not accept this term and they said that we will have to cancel the process. I agreed that lets stop it - 30 mins in and agency bended to agree the payment terms.

- are you willing to defend your position when you've accessed the data, tried to get a raise, and then get walked off site for accessing said data?

My job itself allows me access to this data. I have not accessed it just by accident or by mistake. I have access to this data. I work on the very same data for the organisation.

Just suck it up. You've been sold for a price you agreed to.

Someone else is making money? So the **** what?[/QUOTE]

[NoviceContractor]

Firstly, make sure you have got this right and you haven't forgotten to account for VAT etc. Secondly bide your time until renewal and then decide whether you are prepared to walk if you don't get an increase. Then act accordingly.

Agency do not have to pay me VAT form the pocket. They get to claim it back every quarter.

[NoviceContractor]

Are you absolutely sure you can see what they've been paid and not what your budgeted value is to the project? They often aren't the same. Let's assume you can see what the client has paid the agency.

Its not budget cost, its actual daily rate the client is paying to the agency.

So you've been stung by newbie tax. Most do on their first few gigs. The agent gets a sniff you are new, desperate, gullible and they'll pounce. I have to say 50% is pretty outrageous though. I am certain the client will be pretty hacked off to know this as well BUT you can't get them involved. It's between you and the agent. Dragging the client in will look bad.

I have been doing contracting for last 10 years. I have managed to involve my clients in previous projects where I wanted to raise the rate. I have never gone to agency to ask for a rate rise rather clients have gone to agency and agreed for a rate rise. In last 10 years, in every contract, I knew the rate the client was paying to the agency and I knew the agency margin.

I would be either ringing or mailing someone pretty senior in their organisation voicing my displeasure to be being screwed for so much though, indicating you can't believe the client would be overly pleased about this either.

I know client will not be pleased about this once they know and may push agency to increase the rate. The only issue is that agency may or may not agree and as you said I may have to leave the gig completely.

I've got to wonder why the client is paying such a high rate though. That's consultancy figures, not bum on seat contractors...

Now I've just thought about it.. Are you in as part of a consultancy agreement or just a single contractor. If the agent is acting as a consultant they've (or they reckon they will) have an account manager to pay for and other internal work. The big consultancies regularly charge £1200+ just for 40k contractors.

I am a single contractor. There is no consultancy agreement. This is bum on seat contractor. There is no account manager or any such thing. The agency is simply making 50% of my rate.