RE: How much should staffing agencies get above my hourly billable rate?

I am a 24 veteran recruiter ranging from contingent, retained (VP
Level), In House HR and contractors. I now am providing contractors. You
reply, while very good, had some errors in fact. I placed my comments
after yours 


_____________________________
Larson J. Rider
PrideStaff
(408) 298-6775 office
(408) 661-7260 cell - after hours
www.pridestaff.com 
 

-----Original Message-----
From: Tom Metro [mailto:[email protected]] 
Sent: Monday, January 30, 2006 3:23 PM
To: Terrence Brannon
Cc: L-Perl-Jobs-Discuss
Subject: Re: How much should staffing agencies get above my hourly
billable rate?

Terrence Brannon wrote:
> ...the agency that contacts me has a clear understanding of the...
> rate that the company will pay per hour.
> ...instead of telling me this and how this will be divvied up between 
> me and them...

It's obviously not in their interest to divulge that information, and
unless you've developed a long-term relationship with an agency, it is
unlikely they will ever disclose the details.

*You are spot on here. Trust is a key issue and I have found that
candidates and agencies are about the same in trustworthiness.*

> So, my feeling is the agencies sometimes (a) don't put all the cards 
> on the table (b) try to bid me down so that they can clear a higher 
> margin.

They absolutely do on both points. Obviously they have a financial
incentive to do so.

*Usually NOT true. Most common reason for bidding you down is that your
rate does not fit what the client thinks they ought to pay with a
reasonable, not lavish margin to the agency. Also Agency management sets
the low end of acceptable margins and your situation probably just does
not fit, mostly because client companies low ball rates.*


> "How much would you take for this position?" And of course my
> answer is: "As much as I can get, I will never be satisfied unless I
> am getting 1 million or 2 (or 10!) per year for my work" And then they
> reply, "Ok, but how much would you find acceptable for this?" And then
> when I relent and give them a figure, they usually seem to try to bid
> it down 5 or 10 dollars.

At one time I heard it was typical for agencies to add a 30% markup on 
the hourly rate, but in reality it varies widely, and in the end it 
doesn't really matter what the number is. If an agency is taking a huge 
cut, and you happen to find out about it, your only recourse is to avoid

doing business with that agency.

*Since 1990 only the complete bottom feeders mark up 30%. Markups range
from 40% to 55: generally. Some charge up to 70%. Second part is spot
on. You are WAY off base here. Maybe 30% above COST (page plus taxes,
insurance, etc)*

Ultimately this comes down to a matter of pricing your services, which 
is independent of whether an agency is involved. If you've determined 
that you are worth $x/hr and the agency is offering less than that, and 
you can get that rate elsewhere, walk away from the deal. If you can't 
get a better rate elsewhere, then the market is telling you you need to 
adjust your rate.

* Well put!*

What the agency might be making out of the deal is irrelevant. The 
difference should show up to the employer, who, for whatever reason, has

decided that the (perceived) extra services the agency provides are 
worth the extra cost.

*again, spot on*

Similarly, if you think the agency offers benefits to you (insurance, 
W2, whatever), then it would make sense if you discounted your rate. For

example, it's common to knock off 15% when going from 1099 to W2.

*True, but most will only drop their rate 10%...*


> ...I agreed to 47/hour w-2. But a staffer just posted the same
> position on the la perl mongers list for 55-60 per hour. 

If you think that same employer is doing direct hires at a higher rate 
than you're getting from the agency, then it's up to you to find those 
job postings and apply directly.

If you found this job posting, then what do you need the agency for?

*Very True*


My personal experience has been that a lot of agencies that used to be 
in the contract field have moved into permanent placement, and the 
Internet has somewhat helped facilitate a direct market between 
consultants and employers, making agencies less relevant. It's still a 
long way from where it should be, though...

*Actually the trend is due to the Internet propelling the off shoring
phenomena. Plus, the permanent market is hot.
The trend was the opposite in the 1990's. The contract market boomed and
engineers could make much more contracting. That is not so much the case
anymore. So while the Internet was what enabled it, it was not the
direct connection to companies that became the phenomena, it was the
ability to have the work done offshore for $15 an hour that would cost
$80 an hour in California.*

Lars

  -Tom

-- 
Tom Metro
Venture Logic, Newton, MA, USA
"Enterprise solutions through open source."
Professional Profile: http://tmetro.venturelogic.com/