July 20, 2009

Forum: Mo’ money for contract jobs?

Filed under: Making money, Readers' Forum

This reader feels taken advantage of by the “consulting company” she works for. What’s your advice?

I read your article about how to negotiate with a headhunter for a better offer. But if it’s a temp or contract job, how do you ask the agency for more money? You know how they’re short-changing you to begin with: If they say the job pays $14 an hour, aren’t they really getting at least $18 from their client while they pay you only $14?

When is it appropriate to ask for an additional buck or two? Or is it best to keep your mouth shut in this economy because there are tons of other candidates behind you willing to accept the rate that is offered?

Forum: What do you think? When you’re working through a “consulting” company (aka, job shop, contractor, etc.), why should it get so much of your pay rate? Give this reader your advice!

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4 Comments on “Forum: Mo’ money for contract jobs?”
By James Riis
July 20, 2009 at 5:11 pm

If the consulting firm is paying you $14 per hour and you’re either an employee or W-2 Hourly, their actual cost is 125% of your pay rate. That means at $14 per hour, the cost to the consulting firm is $17.50, leaving them $0.50 per hour gross profit. Typically you’ll find most consulting firms are shooting for a 2:1 ratio. For example, if they’re paying you $14 per hour, they are more likely getting $28 per hour.

So if they’re getting the 2:1 ratio, you could go after a couple more bucks. It’ll reduce the consulting company’s revenue and they might give it to you because they have you, the client wants you, and having someone in is better than losing out to the competition. One alternative is that consulting companies will usually pay a bonus or override if you get more people in at the same client.

By Edward
July 21, 2009 at 2:09 am

From my past experience dealing with these companies, they are more like a middle man. Once the person is in our doors and working, we hardly hear a thing from the agency. Both times I’ve used them, we had a set range like $50-55 we were able to pay, that’s our budget and that’s that. If we need the person and they show they have skills, yeah, we will work with them as long as it is in our range. If they comeback and ask for $90, then no because our budget won’t allow it, even if we wanted them badly enough.

The candidate, if the opportunity is there and it should be, during your interview with the hiring manager, sell yourself and wow them. Most places don’t hire such people unless they really need the help and know they don’t have that skill in house or don’t want the extra cost of benefits. If you know the range and you want the upper end then a good sales job to the hiring manager should help you get that upper pay, with in the range. I wouldn’t push it over the stated range, we all have tight budgets and since it is the agency and not you talking directly to the hiring manager, you never know how that comes out. I remember I had one kid ask for $80 and he had zero experience, just a degree, he didn’t get the job. Be fair and most decent companies will negotiate. If they don’t, says more about them than you.

By Carolyn
July 21, 2009 at 9:30 am

You may have misunderstand the question. I was speaking of recruitment firms; aka, headhunters. Not consulting firms. I know they get the big bucks.

How does one even know what the recruiter is getting from their client and how much they offer the candidate?

By Kimberley
July 27, 2009 at 3:42 pm

James Riis is right. It costs recruitment firms a lot of money to find good candidates. You may be getting paid $14 and they are (most likely) charging the client $21 – $22.50 for you. But the difference is not pure profit for the recruiting firm. They are working on tight margins. And, right now especially, they are having to bid low to beat out their competition, so their “profit” may only be as much as $0.50/hour.

The question I have is, what does it matter to you how much the recruiting companys is charging? Are they not paying you a fair wage based on your skills and the duties that you are performing? If you feel that your skills are being under-utilized, then you shouldn’t have accepted this position at this pay rate.

If you feel that the duties were under-represented to you and that you are doing a lot more than you thought, let the recruiting firm know. They may be able to negotiate a better wage, but as Edward pointed out, sometimes the client’s budget is firm.

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