Quote:
Originally Posted by Grue
My desired outcome is to maximize my EV in a buyer's market. But its very very difficult to determine what that is exactly. For example I'm currently working a contract where the number offered to me seemed fine/OK, and I accepted it and am working, but just by overhearing things I'm fairly certain that I'm not even close to making 70% of what the recruiter is billing.
But what is the right way to go about making the most money here? Insist on "transparent billing"? Honestly at this point in time I have no problem in working 1-3 or more month contacts to make the most money as possible. But its tough to figure out the right path to making that happen.
In my time "selling contractors" I brought in 100% net new accounts, so I was always in a very competitive position against other companies. When you are trying to break into a new account, you obviously want to keep things as industry standard as possible, because there are literally 1000's of companies that have access to the same candidates as you.
Because of this my average margin was ~27%. The lowest contractor I placed was something like 12% gross, and the highest was something like 45% gross. The one for 45% I was basically charging double what the employee was making, honestly not a great situation for anyone but my company.
The account manager types were working only with repeat customers, some of which we had for years. They averaged around 33%, deals would come through at a higher margin, but that was pretty rare and usually not something that was broadcast loudly, because of the ethical dilemma.
I have been out of that game for about exactly 1 year, so my numbers are probably still very relevant. Here is a super basic chart of the breakdown of people I had working for me and what the numbers broke down as:
Skill Set | My Billing | Contractor Wage |
0-2 year front-end engineer | $50 | $27 |
3-5 year java developer | $80-$90 | $50-$60 |
5-7 year java developer | $90-$105 | $60-$70 |
5-7 year QA engineer | $75-90 | $45-$60 |
5-7 year informatica developer | $95 | $63 |
15 year data architect | $200 | $150 |
7-10 year front-end UI | $104 | $70 |
Hopefully that chart provides some general value. Now for your situation, here is what usually happens:
A manager/ director hints toward what you are making. I had one contractor get into an argument with his manager and said they needed to be using a specific project management software on the project, and he spent 2 hours setting it up. The Director said, "you just cost me $225 fooling around with that". Luckily, I was at standard margin and the contractor was cool with us being able to charge that much for him.
However, what usually happens is people talk to other contractors. You get a beer after work, etc. and you ask what the deal is, and you bump into someone who has been working with a single recruiter for a long time. That relationship is very transparent and the contractor may know a lot of info that you don't know, such as the budget for the entire project, and how much more or less everyone is making. Usually that is their recruiter telling them, and the have a very transparent relationship. He knows what the recruiter charges for him/her, and may even be a W2 employee for that recruiter with benefits and a 401k.
The basic options to you are this:
1. Ask your recruiter for a raise. Right now, as soon as you are done reading this. It happens all the time, a contractor is on a project for 1-2 weeks of a contract, and they see they are in a fancy office, with great equipment, etc. and they think "wow this company has money, I might be getting ripped off" and immediately ask for more.
2. If you are coming to the end of the contract and will be extended, say you require a raise to stay on the project. This usually always works.
3. Next time you are actively looking for a job (you are a contractor you should be looking all the time), add +20-30% to your required wage, and see what the recruiter says. Say you typically charge $50, say you are currently making $60, and would need $63 on a new project. If they immediately shut you down as too expensive, you may be getting a better deal than you think.