Current Contract Rate
Why do agents ask you for your current contract rate?
Surely they should ask you what rate you want.
We had a reader, with a couple of weeks left to go on his contract, ask us the question above.
Dr McLaughlin’s IT Contractor Surgery
Of course this is an old agency trick.
There are two reasons why they want to find out your current contract rate.
The first is to find out how much (or how little) you would take for any contract that they got you.
They now have a piece of information that weakens your negotiating position if they get you a new contract.
Getting a Better Contract Rate
They may not even use it right away.
You may be on £400 a day but want £450 as you feel you have more experience and expertise now or you have found out that you are getting below the market rate for your skills.
The agency may then put you forward at £450 a day to the company.
If you then get the contract the agency now has a good negotiating position.
Client Won’t Pay Contractor’s Rate
Even if the client agreed the £450 rate for you the agency can (and often does) come back to you and say ‘We managed to get you the contract but the client won‘t pay your full rate. They will only go up to £420 a day’.
They know that is £20 a day and £100 a week more than you are currently getting.
Some contractors will just believe the agency and take the lower rate allowing the agency to pocket an extra £150 a week on top of what they are already getting.
Other contractors may negotiate a bit more.
Other braver contractors will stick out for the full rate although it is hard to be brave when your current contract is coming to an end and you may find yourself on the bench for weeks or months just for the sake of an extra £30 a day.
Offered Contract Renewal
Now, let‘s come to the other and far more likely reason that the agent is asking you for your rate.
You didn‘t say whether you had been offered a renewal or not at your present client‘s and whether you wanted to take it.
However, if you did tell the agent your rate you may now find that you have a rival for your current position.
Contract Position Available
Let‘s see what the agent knows:-
1. That your current client hires contractors
2. The rate that this client will pay
3. That your position has become available
The agent can now contact your company offering some other contractors with your skills who are slightly cheaper than you are and whom they will say are much better.
The more unscrupulous ones may even try and run you down saying they got bad reports from other companies where you worked.
You will never know they did this.
Contract Questions from Agency
It happened to me once before early in my career.
I told a very small agency that I would be available shortly – although I was hoping to get a renewal where I was.
They seemed very excited and even arranged to meet me for a drink after work near where I worked.
During the course of the drinks, in a relaxed atmosphere, they pumped me for other questions about the current client, in a conversational way you understand.
Contract Not Renewed
They didn‘t get me any work and not only that but I was surprised that my contract wasn‘t renewed.
While I was working down my notice I managed to find out where my replacement was going to come from – that same small agency that bought me the drinks.
They had never intended getting me a contract.
They had very few.
What they were excited about was the opportunity to replace me – and they pulled that off.
Beware Agents Asking Your Current Contract Rate
Beware of agents asking you your current contract rate!
Never, ever give it to them.
It is never to your benefit!
If you feel that you have to, not to be rude, tell them the rate you want rather than your actual rate.
That way, for whatever reason the agent was asking you, you have taken away both their negotiating ploy and their ability to undercut your current rate.
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