Margin Cut – How can I persuade my agency to take one

Margin Cut by Agency at contract renewal
Margin Cut by Agency at contract renewal

George – Margin Cut

George wants to get a margin cut from his agency when he renews his contract.

I am about to renew and the client is not likely to agree a rise. So I would like to get some of the money the agency get which is substantial.

I found out that they are taking 30% of what the client pays.

I found out from other contractors here that 20% is usually the absolute maximum. Many of them have been on contracts where the agency margin has been as low as 8%.

When it comes to renewal time I‘d like to claw some of that back.

Any suggestions?

Dr. McLaughlin‘s IT Surgery

You didn‘t say so but one would guess from your comments that you are a fairly new contractor and maybe even a first timer.

Agencies love first timers.

It‘s like Christmas for them.

First timers look upon agents as, well, ‘their agents‘ who are on their side and will get the best deal they can for them.

However, I won‘t rub your nose in it.

Managed to Break Into Contracting

The good news is that you managed to break into contracting. The rates are even better than you thought when not being ripped off by an agency.

I would be a little cautious here.

You said that it was coming to renewal time but you didn‘t say that they had actually asked you to renew.

Remember that the most important thing is to be in work.

Hold your ground till you hear that the company actually want to renew you.

Push your agency as early as you can to ask for a renewal.

Let Them Know

As soon as you know the company want you, tell the agency that you know that they are taking a huge margin from you. Say that all the other contractors at the site are only being taken for 10% to 20% of what the client pays.

Let them know that you know what they are taking.

Tell them it is morally wrong.

That will put them on the defensive.

Higher Contract Rate

Say that you have been for other interviews where the rate is higher.

If you want to push your luck a bit you could say that you have been accepted somewhere else. So, you need to know by the end of the day if they can match the rate.

You‘ll look a little silly if they call your bluff and may even be out of a job.

Rate Rise at Renewal Time

However, the chances are that the agency will say that they will try and get the client to pay a little more. Then they will come back with a better offer out of their own margin.

Agencies are always pushing contractors to decide quickly by telling them that the client needs to know by the end of the day if they are taking the contract offered to them. This works every time.

There‘s no reason it wouldn‘t work the other way round too.

The Agency Should Take a Margin cut at renewal time.