Renegotiate a contract?

[hostage]

I am currently contracted to a large corporation. The contract house gets a lot of money from the corporation, and they give me about ~75% of what they are paid. A small portion of that goes to pay the gov mandated stuff and the rest is pure profit for them. I am coming to my 3rd stint, I previously negotiated a $1 raise and 11 paid vacations/holidays. They told me take it or leave it, so I took it last time. Well another 18 months has passed and the corporation has a strong interest in renewing my contract. This time I know the bill rate. Oddly enough, the contract house and the corporation I am contracted to both agree I am invaluable. The contract house is trying to act as if they are barely breaking even. Though I know they are doing very well. They want to get more money out of the corporation, before they give me another raise, but it is highly unlikely they will succeed. If I were to walk, the contract house would loose the contract completely. How much should I push this, should I tell them I know their bill rate? The head hunter who recruited me for the first term is no longer with them and they were surprised/impressed when the company wanted to renew my contract. They also don't give me any benifits except those 11 paid holidays/vacations. They feel like nothing more than pimp, wish I could just fill out a 1099.

-Hostage

 

[PiratePast40]

Re: Renegotiate a contract?

When you're a "rent a body" the contract company is also paying a portion of payroll taxes, unemployment compensation insurance, liability insurance and workmans comp. Not that you're not worth more but they have expenses as well. See what it would take for you to get the contract yourself and you might be surprised at both the initial and recurring expenses. Plus, some of the initial expenses are going to be the same whether you get the contract or not.

They can't offer you a full suite of benefits because there probably isn't enough left over. And when the contract ends, they have no way of paying for you. Go ahead and negotiate to get your best deal but remember that zero profit is not a motivation for them to keep the contract.

Hate to say it, but they really are your pimp. It's not a bad way to make a living and many hundreds of thousands of people are doing the same thing - especially in the energy sector. Just understand it for what it is. If your desire is to go direct, then work toward that goal while you're still putting food on the table.

 

[wifisher]

Re: Renegotiate a contract?

After 18 months you should get a cost of living increase of 2-3% if nothing else. A lot of it depends on how much you like the job, and how hard it would be for you to get another job. If there are a lot of jobs around, you can push a little harder as you know that you can eat if they decide to let you go.

 

[Jeep Man]

Re: Renegotiate a contract?

You know how much you get paid, and how much they bill you out at. Now you need to figure how much they are paying out for your unemployment insurance, licenses, permits, etc. then add in their expenses to have their employee manage your contract, and then add in a reasonable profit for the work they do. After all is factored in, then you can see what margins your working with.

 

[Huron Angler]

Re: Renegotiate a contract?

If you truly are "invaluable" to them you should have the according leverage to use during negotiations. Good luck to ya!

My landlord once told me that he was "barely breaking even" after taxes, maint, etc...right before he stepped into his very nice silver 500 Benz.

 

[fat fanny]

Re: Renegotiate a contract?

Get them to put you on thier payroll with benifits!

 

[PiratePast40]

Re: Renegotiate a contract?

During your negotiations, remember that the squeaky wheel doesn't allways get the grease, sometimes it gets replaced!

 

[dockwrecker]

Re: Renegotiate a contract?

I'm a mercinary General Superintendent for a living. We refer to the difference between salary and billing rate as "burden", inclusive of all insurance, taxes, expenses, licensing, vehicles etc. It's typically a # that is stated in the general conditons of a contract that is supposed to remain static for the duration as part of a Guaranteed Maximum Contract Price. Given a contract with several years duration, it would be prudent on your employer's part to anticipate rising costs of insurance, your consumables, depreciation of equipment etc. at the establishment of the rate to cover you in the future. In my case, my billing rate they show in the contract is more than triple my income to cover the additional expenses. Remember the rates typically can't be renegotiated so padding is a must. I'd be fat dumb and happy to be working steadily if I were you, and if they like you that much, you'll get a better deal on the next contract. Be patient.

 

[PiratePast40]

Re: Renegotiate a contract?

Agree with everything Dockwrecker said. I've sat on both sides of the desk and have been out in the field as well as negotiating and staffing contracts. If the contract is up for renewal, let them know beforehand what you'd like to see so they can attempt to get that money from the client.

 

[Tim Frank]

Re: Renegotiate a contract?

Why not just work for the client directly??

 

[MTboatguy]

Re: Renegotiate a contract?

Is there a no compete clause in your contract?

 

[dockwrecker]

Re: Renegotiate a contract?

"Burden" is normally 25% to 30% for any employee. I don't see your having any real complaint here. Your employer has on going costs even they are not directly tied to you. Consider that when they brought you on board some other contracted employee provided them with the profit they needed to do it.

Burden is RISK specific. An office of 25 bookeepers is infinitly cheaper to insure as a business risk than a crew of 25 high steel erectors. Many trades have liability to the business owner via licensing, training, personal hazard, equipment wear or public exposure. These are real costs that have to be included in the work.

 

[kenmyfam]

Re: Renegotiate a contract?

Sounds like you should be able to negotiate to be directly hired.

 

[avenger79]

Re: Renegotiate a contract?

not to slight you in anyway but remember no one is invaluable or irreplaceable. every company has a limit to what they will spend for someone of experience. once that threshold is crossed it is easier and cheaper to find someone out of college and train them to do what's necesary.

we do very specific projects here and just let go 30 % of our very exp staff and replaced them with contractors who couldn't find their way out of a cardboard box. we will train them. these were people with 15 - 30 years here and felt very secure.

you know where your pay rate is. if your at the top of your market then there isn't much room for an increase. it never hurts to try, but I wouldn't put myself in an ultimatum type position unless you feel very under paid for what you are doing.

 

[hostage]

Re: Renegotiate a contract?

I am unable to contract directly, due to some policies at the corporation. I don't think there is a non-compete, though I will need to double check, haven't read the contract since I signed it 3 years ago. Also they like to keep people as contractors for years. One guy who just got converted was here for 8 years as a contractor.

I did calculate all their costs for me that they have to pay the gov, I am estimating they make about a $25k profit. Other than that they process my paycheck and don't talk to me.

Don't get me wrong I am glad to have my job and I like it here. Though it feels they are getting a lot of money for doing very little. The person that I felt dedicated to, because she help me get the job is no longer at the contract house. Also their referral fee for other contractors is insultingly low, compared to other contract houses. My coworker gets $1,500 for referring someone to his contract house. I get $25! Not even worth my time to send an email to people I know. My dedication is to the Corp, not to my contract house. I am thinking of asking for $2-3 raise/hour. Would be happy with $2. Not asking for much, just something to help cover small amount of the expenses of buying health insurance for my self, since my g/f will be loosing our coverage, since she is going back to college.

Mean while I posted my resume on Monster and I an getting emails and phone calls from local head hunters.

 

[avenger79]

Re: Renegotiate a contract?

keep in mind when you make that request from your contract house, they in turn ask your employer for that plus a little more.
2 or 3 /hr? if I were your manager and you made that request I would consider you unhappy and begin looking for your replacement should you decide to leave. maybe in your area it's different but here unless you are a very highly paid person that raise would be out of the question.

 

[PiratePast40]

Re: Renegotiate a contract?

I don't think a 2-3 dollar an hour raise is unreasonable at all if you look at the cost of health insurance. A dollar an hour is only $40 a week.

 

[avenger79]

Re: Renegotiate a contract?

companies don't look at your cost though. it comes down to percentage. If he makes 30/hr now that would be a 10% increase. not too many of those going out these days.

never hurts to try but..

 

[PiratePast40]

Re: Renegotiate a contract?

It's not unusual for a contract to increase in price over 10-15% at an 18 month renegotiation. The point is that it's in his best interest to let them know what he needs so they can negotiate that into the contract renewal - if it's possible. Managers don't live in a bubble. They live in the real world just like the rest of us. It could be that they are allready aware that after 18 months, an increase may be justified. It sounds as if the client is satisfied with subcontracting out some services. Even with a substantial bump in the contract price, it may be to their advantage to continue doing business that way. If you don't ask, the answer is allways no.

 

[roscoe]

Re: Renegotiate a contract?

I'm thinking he's making a lot more than $30/hr, probably more than double that if I'm reading the numbers correctly.

Asking for the 2-3% increase is not a sign of being unhappy, it is negotiating from strength.

I would contact the original woman that brought you in. See what she suggests, Perhaps she could place you somewhere else. You like her, trust her, test the market. If you are on the way up, building a name for yourself, gaining experience and reputation; then now is the time to build your income level. Don't wait 10 years, you will look stagnated.

Switching jobs is a pain, The job screening and interviewing alone is enough to drive you batty. My nephew has jumped ship 3 times in 5 years, just turned 31 and just landed a job with The Rand Corporation, and has finally got his income (about 130k) where he thinks it should be. And he's doing the work he really wants to do.

My point is, regardless of the current economy, this is the time in your career to grow, take a chance, try something a little different, build your experience, and set your income level, hopefully for the next 40 years.