How to calculate the agency percentage fee How to calculate the agency percentage fee
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  1. #1

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    Question How to calculate the agency percentage fee

    Hi All

    Being in IT and mucking about the other day, I figured out how to access the finance figures for all the contractors at the client site. The agency charges the client a daily rate of 6 and a bob for me. I earn a £450 daily rate. As a comparison, the blonde sitting next to me with the short skirt but does nothing useful, you know, the one who always join the managers for after work drinks, gets a daily rate of 6.5 with change. I figure she's on 500 a day. We are both represented by different agencies.

    Can anyone with some experience in these matters tell me how to calculate how much the agency takes? I'm assuming the agency charges the employer's tax - 13.8%. Not sure whether there are any other taxes or fees to consider.

    TIA

  2. #2

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    Quote Originally Posted by smooth_ops View Post
    Can anyone with some experience in these matters tell me how to calculate how much the agency takes? I'm assuming the agency charges the employer's tax - 13.8%. Not sure whether there are any other taxes or fees to consider.
    The agency doesn't pay any tax on your behalf unless you are on their payroll paying PAYE (which would be rare). The amount they take is the difference between what the client pays and what you get. Generally they take anything from 5-25% of the contract value with 10% being a reasonable amount to aim for.

    Don't let the amount the agency takes eat you up but use it as a bargaining chip to use when it comes to renewal. Tell the agent straight up that you know how much they are charging the client and you want a rate increase out of it. Make it clear that this should be at no cost to the client. Point out that if you don't renew then the agency are going to get nothing as every agency in town will know that the client is recruiting and you will tell the client how much the agency are taking. Indeed, the agency may even lose business with the client if the client finds out that their margins are excessive. That's a high risk game though and you have to play it by ear a bit.

    Good luck.

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    WHS - but get your head around one thing. It's the agency that won the business, not you. They don't get a percentage of your anything, you get an agreed percentage of theirs.

    Changing that percentage is subject to the same argument as getting a rate rise from the client; the exam question is "what has changed that means you deserve more". You ensuring repeat business by getting a renewal is one such thing of course.
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  5. #5

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    Quote Originally Posted by smooth_ops View Post
    Hi All

    Being in IT and mucking about the other day, I figured out how to access the finance figures for all the contractors at the client site. The agency charges the client a daily rate of 6 and a bob for me. I earn a £450 daily rate. As a comparison, the blonde sitting next to me with the short skirt but does nothing useful, you know, the one who always join the managers for after work drinks, gets a daily rate of 6.5 with change. I figure she's on 500 a day. We are both represented by different agencies.

    Can anyone with some experience in these matters tell me how to calculate how much the agency takes? I'm assuming the agency charges the employer's tax - 13.8%. Not sure whether there are any other taxes or fees to consider.

    TIA
    And the numpty that signed the contract is?

    By the way, you're potentially in breach of contract for accessing that data and potentially committing an offense under the computer misuse act.....

    M

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    Quote Originally Posted by TheFaQQer View Post
    smooth_ops Nervous Newbie Join Date Nov 2007 Posts 1
    Very nervous by the looks of it. A belated welcome to you, smooth_ops.

    Quote Originally Posted by remoh1972 View Post
    By the way, you're potentially in breach of contract for accessing that data and potentially committing an offense under the computer misuse act.....
    As for the legal side of things, this is business, not kindergarten. One would be foolish to admit committing a crime in the process of obtaining commercially sensitive information but if the information can be found then go right ahead and use it to your advantage. Shrinking violets will get nowhere in this business.

    Signing a contract and finding that the agency is getting a fat margin doesn't preclude you from re-negotiating at renewal time. I'd be willing to sign up as a loss leader and then negotiate the margin down at renewal, that's the way everyone should operate. People who think that the agency margin is a done deal or none of their business are missing out, big time. The agent gets paid for finding you the contract and if you get offered a renewal then they can cut their margin to the minimum because they've got their fee and they are now just factoring payments for you.

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