High Agency Margins
We found the ‘High Agency Margins and How They Disadvantage Contractors’ article on the Forums of the now defunct www.ComputerContractor.com.
Computer Contractor Post
The agencies that insist on working for high agency margins disadvantage contractors considerably.
First of all, contractors that are placed at unreasonable pay levels are likely to be the first to be axed when project budgets are squeezed.
Project accounting centres need to consider the overall cost of each contractor, not just their own fee.
If the overall client to agency rate is not that high, agencies will inevitably try and reduce contractors’ own daily fees. This is to to keep the high agency margin that they have from first time around.
No Ongoing Commission
Personally, I’m in favour of agencies not getting any ongoing commission fee.
They shouldn’t get Contract Renewal Rises.
As matchmaking services, they should only get a one off fee for sending across appropriate CVs and another one off fee if they manage to place a candidate.
Thereafter, the relationship between the client and the contractor should be a direct one.
All this ongoing sales commission nonsense needs to stop.
We’re not cars for lease out on a weekly or monthly basis. We’re people who run our own businesses.
Furthermore, we’re the service providers of contractor services not the agent. The client to agent payment arrangements should reflect what agents actually do in providing a service to their clients, not what we do.
Very High Agency Margins
So what are high agency margins?
I would say that 20% or less is fine. Maybe, in some circumstances, somewhere between 20% and 25% is acceptable. If it is above 25% then they would be considered high agency margins. I would say that those margins are unacceptable.
It is arguable that agencies shouldn’t get any margin when a contractor renews. They are doing little more than making a call to the client. However, they certainly shouldn’t increase their fee from the client at renewal time.
If they have high agency margins there could be major disadvantages when it comes to renewal time for a contractor and the client is cutting back contractors.
High agency margins could mean that the contractor is out on his ear.