Increase at Contract Renewal Time
This article, about not getting an increase at contract renewal time, was sent to us by a contractor reader.
Eddie
I have been here over a year now and not received any increasel at contract renewal time.
I have 6 weeks to go and the client wants to renew me again.
However, I asked my agent to negotiate a rise for me. However, he told me that the client won‘t pay any extra.
They have given other contractors an increase at contract renewal time here while I have been here.
What would you do, Dr McLaughlin?
Dr McLaughlin‘s IT Surgery
Other people get an increase at contract renewal time at your client‘s site but you don‘t. Yet they keep renewing you.
And you do all your negotiation through your agent.
Hmmm!
Go Directly to Your Client
What I would do is go to your client directly and negotiate with him or her.
I would gather up all the information that you can in order to present a case for why you should get a rise at renewal time.
Have a look at ITJobsWatch and see what the current rate is for your skills.
You‘ll have several skills so only print out the ones that show you are behind the market rate.
More Valuable to Client Company
Also, tell them that, as you know their systems and their business, you are much more productive than you were when you first joined when they agreed a rate of X for you.
If you can put an estimated figure on this increase in productivity, say 30% or 50%, even better still.
Do this in a neutral environment if you can, i.e. not in the boss‘s office where he or she feels secure and in command.
Take Client Out to Lunch
It would be best if you took your client out to lunch which then gives you an advantage.
There‘s no such thing as a free lunch as they say.
Make it the best restaurant around.
You would quickly earn back the cost of the lunch if you got a rise.
Most salesmen, who are selling to a potential customer, will do this and you are selling your services.
Great Chance to Get Feedback
Don‘t be so specific and say it is to discuss a rise for you. Say it is just an opportunity to get feedback on how you are doing and about a potential renewal.
If he or she agrees to come to the lunch (and permie managers love perks like this and that is why agencies do it), know that you have a great chance of getting that rise.
After all, how awkward would it be if they turned you down just as you had asked for the bill after a sumptuous meal?
More Productive at Client Company
One other thing I would do is to say something like ‘I think I‘m much more productive than when I first got here. Yet, I haven‘t had any rise since then’.
Watch carefully for any signs from the client that this is a surprise to him or her.
After all, the client has done all his or her previous negotiations with your agent. We know how slippery they are.
If the agency has had rises and is pocketing the money (and that‘s not without the realms of possibility), the client may or may not tell you and that is why you need to look out closely for any signs that they are surprised by your statement.
Keep Quiet About Agent
If they say that they have given your agent several rises before don‘t start slagging off your agent.
Just keep that piece of information till later.
You don‘t want that to be used as a reason for you not getting a rise this time so let it just slip by quietly.
You‘ll deal with your agent later.
Just say as casually as you can ‘Can I ask how much that was?’
Timing is Important for Renewal Rise Question
Don‘t start off your sales pitch at the start of the meal when you have just sat down.
Don‘t let it spoil your client‘s meal.
The later you leave it the better, perhaps when you are waiting for, or eating, your desserts or having coffee.
The very best time would be just after you have ordered the bill but time may be short and it may look too obvious.
Good Chance for Renewal Rise
Just before that might be best because, although you asked the client out, nothing was said for certain about who would pay for it and there may be a slight doubt in his or her mind.
I think that you now stand a very good chance of getting some kind of rise, hopefully a good one if he or she is in a good mood but at least a token one.
Even if you don‘t get one this time it sets down a marker for next time when the client will be worried about not giving you a rise yet again.
Agency Negotiations for Renewal Rise
Now it‘s time for your agent.
If there haven‘t been any rises in the past then simply inform your agent that you have negotiated a rise with your client.
If the agency says they should get some of that then simply ask him or her why as they didn‘t do any work to get you a renewal.
You did it yourself.
Let the agent contact the client to try to get his 20%, or whatever it is, added on.
Tell him you have done your own negotiations to get your rise. So, it is up to the agent to do his or her own negotiations too.
Previous Renewal Rise
Now we come to the bit where the client has told you that there have been rises at previous renewals.
If you have the information of how much, it is even better.
If you don‘t, ask for a sum that is probably in excess of what they have got and get beaten down.
Do not tell the agent that you got this info from the client. Otherwise you have lost a negotiating tactic.
Also, there is also the chance of a dumb, aggressive agent calling up the client and saying that this information is supposed to be confidential according to the contract.
Previous Renewal Increases Not Passed On
But the main reason is that you can use it as a veiled threat.
What you do is that you tell the agent that you have found out from a very good source, who would know this information, that you have had previous increases at renewal time.
Say that you now want those increases, or at least your share of them passed on.
Don‘t threaten the agent with ‘I‘m going to tell the client if you don‘t give it to me’.
Be a bit more subtle and say ‘Is the client aware that you haven‘t passed on previous increases to me’.
He will infer that the client doesn‘t know yet, but there is the danger to the agent that the client might now become aware of this and lose him or her credibility with the client.
This will back the agent up a little and put them on the defensive.
Renewal Rises Backdated
You could then go further and say you want this backdated as they have been taking the money negotiated on your behalf for months now.
Say that you will complain to the head of his agency if you don‘t get it.
The boss of the agency may agree with such tactics by the agent but would not want to say that to any contractor who contacts him, or her, and might just tell the agent to refund the money.
However, the agency head may not agree with his type of thing and may think it gives the agency a bad name to be associated with this type of thing and may think it is counterproductive and may endanger a good relationship with a client.
In other words he or she may be smarter than the person working for them.
If you think you can get those increases and also backdated, go for it.
Past Payments
However, your main reason for doing it is to get your rate up now to include those past increases.
The agent is more likely to agree this if they can keep the past payments.
After all, he is going to have to inform his own agency that he has been taking those and has to pay them back.
The opportunity of not having to do this, which could cause him or her problems at the company, may make him or her more likely to give in on the rate.
The Agency Bluff
If you haven‘t been told specifically by the client that the agency has been getting an increase at contract renewal time for you and keeping them, but you think you detected that this is true from the surprise or change in demeanour of your client at the meal when you said you had had no rise so far, then you might try and bluff it.
You just say exactly the same thing, i.e. you heard from a very good source, who would know, that the client has been giving you rises.
Probably Right About Increase at Contract Renewal Time
If the agent obfuscates or is cagey then you know you are probably right and should then follow the route described above.
However, the agent may just say that your source is wrong.
He or she may be bluffing but they would be taking a hell of a chance and would be more likely to obfuscate if it was true.
After all, you haven‘t told him or her who it was who told you and you may have got it straight from the horse mouth, i.e. the client.
Pocketing Contractor’s Increase at Contract Renewal Time
One wonders how often it happens that agents get contractors an increase at contract renewal time but just pocket it themselves to increase their commission.
After all, the contractor would be unlikely to ever find out as they never get to see any contract between agency and client and the client never gets to see the contract between the agency and the contractor.
It must be very tempting for the agent – and we all know easily they are tempted.
What do readers think?
Let’s hear in the Comments section below about getting an increase at contract renewal time.
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