It is unusual to find a recruitment company with transparent rates. Under Xperian’s headline Agreement, it will pre-agree rates with you, including the contractor rate.
Your contractors will know how much Xperian Recruitment is paid by you. That is because many contractors have first-hand experience of agents reducing contractor payments and skimming larger percentages for themselves. We want contractors to start work, stay in work and enjoy their work. Once in post, contractor payments are fair, accurate and always on time.
A key concern when agreeing rates is to choose a margin or mark-up relationship, because calculation methods are different and mistakes made here can be costly over time. Be careful to ask which relationship you are entering into.
Mark-up vs Margin
Mark-up and margin are the two main forms of calculation used to determine fee allocations to both the contactors and the agent. The difference in the calculation methods can be the cause of much confusion.
Doing the maths
The best way to understand the difference between the mark-up and margin method of calculating rates is by working through some examples.
Starting with the contractor daily fee, mark-up is the percentage added to that fee payable to the recruitment company.
By way of example, if the contractor fee is £100 per day and the recruitment company mark-up is 15%:
Contractor fee: £100
Agent mark-up: £15 [Mark-up rate of 15% x Contractor rate of £100]
Total daily fee: £115 [Contractor rate of £100 plus Agent mark-up of £15]
Total the contractor fee plus the agent fee. Margin is the percentage of total fee that will be paid to the recruitment company.
By way of example, let’s use the total of £115 from the earlier mark-up calculation, but now use a margin rate of 15% to calculate the Agent margin and the Contractor fee:
Total fee: £115.00
Agent margin: £17.25 [Margin of 15% x total fee of £115]
Contractor fee: £97.50 [Total rate of £115 less agent margin of £17.25]
A margin relationship will cost you more for than a markup relationship for each pound spent on the contractor. Be sure to stipulate with your agent which method is being used at the time you agree terms.