Agency Money for Nothing
A contractor reckons that he is giving an agency money for nothing.
This was posted to our Agency Affairs Forum by DJE71.
Contract Renewal
This is what happened during my latest contract renewal:
Client – “We’d like to renew your contract at the end of the month”.
Me – “That’s good news. So, can I have a rate increase please?”.
Client – “No.”
Declines Contract Offer
Me -“In that case I decline your offer to extend and will be leaving at the end of the month”.
Client – “If you leave then I won’t meet my completion deadline, upper management will stop the project due to non-delivery and we will be throwing away a years’ work”.
Me – “That is correct”.
Client – “Ok, how much do you want?”
Me – “I would like a 25% increase please”.
Client – “Let me ask my boss”.
Contract Renewal Increase
Half an hour passes.
Client – “We agree to a 25% increase”.
The next day I get a call from the agent.
Agent – “Well done on the contract extension”.
Me – “Thank you”.
Client Got Figures Wrong
Agent – “One small matter: it appears that the client got his figures wrong when he asked his boss to authorise more budget expenditure. He agreed to increase your rate by 25% but apparently did not tell his boss that we, the agency, will also want a 25% increase.”
Me (bemused)- “I see.”
Agent – “Anyway, the client tells us that he cannot pay us more than he quoted to his boss. If we do not get a 25% commission increase then our margin as a percentage of the total billed to the client would be pushed down to an unacceptable level. So, unless the client agrees to an increase for us too then we will take some of your money to make up for it.”
IT Contractor Comment
One question that immediately springs to mind here is ‘What added value was the agency bringing here’?
One can understand that the agency would take a cut of the original contract.
Less understandable, but its standard practice, is taking an increased amount of money after renewal, even if they have negotiated it.
However, in this case the agency did nothing. The contractor negotiated his own renewal and his own new rate.
So why should the agency get an extra 25% as well? What did they do to deserve it?
There appears to be something badly wrong here. He is effectively giving the agency money for nothing.
For more advice on dealing with agencies click on Agencies.
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