Recruiters' Percentage of Bill Rate

[joriki]

Some agencies take around 50% (more?) of the bill rate. Over a year or so, that's a lot of money out of the clients' pockets and out of your pocket. Multiply that by the number of active contracts for an agency. Is a cut that large worth it to you and the client?

Example: 18 month contract that maybe started out as a 6 month gig. Pay rate is $35/hour. Agency is taking 50% of the bill rate. Assuming 3 weeks vacation (haha), agency makes:

35 $/hr * 40 hr/wk * 50 wk/yr * 1.5 yr = $105,000.00

Agencies almost always refuse to disclose percentages. Is there any other plausible reason other than that they are getting too much? I've asked lots of recruiters, and I've yet to hear an answer that didn't amount to: we filter the applicants; you're getting paid, why do you care?

From the clients' perspective, the split means nothing, as they are paying $/hr for a capable person and do not have to cull thousands of applicants.

If an agent finds a person for a FTE spot, the placement fee may be large, but is limited to a fixed amount (half the annual salary? anyone?). A contractor gets milked every hour they work, year after year.

Does it make sense that the agency's fee for a single contract is unlimited?

Are contractors just getting cowed into accepting too low a percentage?

[PL]

I am a Technical Recruiter...I help good qualified people to get all type of jobs. Whats wrong with a fee for me if I find you, and get your foot into the door of a wealthy corporation. And then its the candidates job to show what they are worth and will only take the job if they match my salary requirments. And yes we are out for money, this is a job and someone has to do it, i placed many people making money that they are comfortable with and are even thank me. So im not taking food of nobodys table. If anything we help put food on your table. And the I.T field dosnt suck, its all about what you know and where you are and who you know.

[softy]

The statements are generalizations, however, nothing personal with your career choice, to each his own, someone has to do all types of jobs. The point is this, if someone was not taking out a cut of the "market value" for an individual, that individual would have more in their pocket.

[Pointerman]

I do not see why this is upsetting to you. I am not a recruiter but this has been going on for years in other job fields. This is realtively new to IT/Telecomm. The accountants for example here is one that I know of since my wife is a CPA.... She gets paid 22.00 per hour. When she goes to a customer of the firm site they bill up to $250 per hour for her services. That is why it is called business. They are not in it to give all the money to the worker. The company you are contracting/working for probably has a benefit package and that is a additional 33% of the pay rate you are getting. They are making money just not as much as you think.

[MichaelRPGJDE]

I think a recruiter is entitled to 15-25% of the billing rate. Anything over that is exploitation in my opinion. There are some companies that try to get 50% and sometimes you don't have a choice but to deal with them.
I really resent the way recruiters mostly refuse to tell me the rate, giving me double talk like a used car salesman.
If they are so self righteous claiming it's a business so deal with it, why in this "Business" are they unwilling to divulge the rate? The ONLY reason is that they know they are making too much and fear if you know they are getting 50% you will ask for more.
So the best thing to do is to find out what the market rate is in your field. Say you find out it's about $100 an hour, ask for $85 and they might give you that or come down from there.

[MichaelRPGJDE]

Most agencies I've worked for have no benefits for contractors. It sounds like your wife has a full time salary and I don't think the original poster was talking about that. Her salary calculates to $22 per hour and she gets benefits, and she knows her company gets $250 per hour. It's out in the open as it should be.
The original poster and people like me are kept in the dark as to the biling rate and unscrupulous recruiters wheel and deal to get the cheapest guy to maximize their percentage rather than look for the best candidate, in my opinion and I've seen examples of it happening.

[Pointerman]

Well if you look around there are plenty of agencies that do hire contractors and have benefit packages. Kelley, TEC Systems, RTH just to name a few. I personally do not answer any unsolicited email from recruiters. Those are the ones you need to watch out for. Another thing about them is that if they get in a place and you apply on line to it, it gives them a legal standpoint to have a case against the company for hiring you and basically locks you out.

[apiv]

I am a contractor will skills that are in high demand. I get calls all the time from recruiters. I used to get burned by the recruiters charging as much as 100% (I was making $30/hr and they charged $60/hr - no benefits). When I found this out, I tried to renegotiate and they said no, so I quit.

Now I won't work with a company unless it is 15% or less. I will accept a little more if they offer benefits. I am now working with a company out of St. Louis that charges a flat rate of $15/hr (with benes - including a matching 401k). They have figured out what it costs them to do business (benefits, taxes, etc.) and they use that business model. I don't want to advertise for them because I don't want it to diminish my message. But suffice it to say, they are the biggest firm in StL.

If you are a good fit for the job, they will either adjust their business model for you or you will be contacted by someone else. You are in control so make the most of it!

As for the woman that works for a Big 5 (Big 3 now).... It is true that big accounting firms charge much more than the employees salary, but that is because that is their business model. It is not a surprise to anyone. I used to do that too, and I accepted it because I was a perm employee and I had the stability of working for a big company (that is, until my job was cut and I was laid-off)...

Hope I was able to help!

Cheers,
--APIV

[Kapil]

There is no doubt that recruiters will take unfair advantage, if you do not know yourself what you are worth and if they can figure out that you are either in a desperate situation or just not smart about career issues. But you can't just sit and blame them. You have to do your own homework and take your own risks if you want to get the salary you think you deserve.

[solinear]

15-25% of billing rate? Do you have any idea what it costs to have an employee?

Yes, tech recruiters are really nice jobs because they know that they're billing for the same number of hours that they are paying you for. Were you under the impression that their overhead is $0 and the difference is all profit? There are plenty of expenses that go with having an employee. Don't get me wrong, they shouldn't be keeping more than a third, but only 15% and they would be losing money for having the privilege of hiring you.