subject: My Agency is Taking 40% - what shall I do? [print this page] My Agency is Taking 40% - what shall I do?
Contractor
I've discovered since I started my latest contract that my agency is taking 40% of the total take and I'm getting 60%. Although I was fairly happy at the rate that I am getting, discovering that the agency were taking so much has shocked me.
Surely this is unethical. I had just assumed that they were taking around 10%. Should I call them up and threaten to leave if they don't give me more money or what?
This is my first contract.
IT Contractor
It doesn't surprise me to hear you say that this is your first contract. Agencies love first time contractors.
Although you say that you are happy with your rate, I would say that it was still unethical of your agency to take so much money for you. Agencies may disagree and say that it is up to you to state what you want and for them to get as much as they can for you.
However, there must be some level where it becomes unethical. If an agency was taking 90% and the contractor was being given 10%, surely, even if the contractor suggested the initial rate, even the sharpest agent would consider this unethical.
I would say that the agency taking anything up to about 20% was ethical. You could even stretch that to 25%. However, when figures of 30% and above come into play then I would say that this was definitely unethical. Between 20% and 30% is greedy bordering on unethical.
What to Do
So you question is how you can get this back again. The agency is extremely unlikely to give it back to you at this stage as you've already signed a contract. If they are the type of agency greedy enough to do this in the first place, then they're not going to suddenly see fair play.
However, in accepting that, you should still kick up a stink. Instead of yelling and screaming, you should first of all take the moral high ground and ask if they thought that it was ethical to take 40% and ask what was normal for the industry. That'll put them on the back foot. Then you start shouting a bit when they won't give in (and they won't).
You are not doing this because you expect to get any money back now. You are doing this so that you can claw some of it back at renewal time. Don't say that you'll leave if they don't cut it back to normal. That gives them plenty of time to find a replacement for you "who is so much better". No, just say that you'll be expecting them to go back to a normal margin at renewal time and leave it at that.
Renewal Time
When you are asked to renew, tell them that you want the margin cut. If they don't, tell them that you are not renewing.
Most importantly of all, tell your boss that you are definitely renewing, and that he or she should ignore anything that the agency say on the matter that you are just negotiating with them.
What the agency will try and do, first of all, is try to get the client to pay the extra (or at least some of it). Then they may say that you will not stay if you don't get the extra.
They've already shown how greedy they are and they won't give it up easily.
However, although they would like to hang on to all the previous money, they don't want to throw it all away. They don't want to risk running you down to your boss and trying to put someone else in your place. You are the person in situ and you are the one the client wants.
All but the stupidly greedy (and there are more than one of them) will back down.
More Than One Chance
You may not get everything that you want, but you will get a reasonable chunk.
Don't worry about clawing all of it back in one go. There's always the next renewal time, and the ones after that.
When it comes to renewal time, and the client wants to keep you on, remember that you hold all the aces. Provided you reassure the client that you are merely negotiating and not to worry about anything that the agency says about you departing, you can then play your strong hand as you like knowing that the agency has nothing.
