I was also surprised at the ignorance exhibited by some of the postings
in contrast to others that were obviously written by capable
professionals. To be considered a consultant you have to have business
acumen and have a broad knowledge of business. You also need to be
able
to negotiate. Clearly some of the postings demonstrated the authors
failed on one or both counts! If I want a SAS code cutter I'll ask for
one. If I want a consultant I expect consulting capability and my
clients will pay accordingly: $45 per hour for a code cutter, 70 - 120
/hour for a consultant.

The margin is simple. Recruitment consultants are paid on commission.
(we call it having to kill to eat) The agency typically keeps 2/3 of the
revenue generated so for a consultant to earn $100,000 a year he/she has
to bill $300k+ . Top consultants have 15 - 20 contractors on the go (ie
in work, earning a margin) at a time. Lets say it's just 15. Let's also
say a year is 2000 hours. The formula for margin goes like this:
((agent's annual salary) x 3 / (working hours in a year) / (average
number of contractors in work)) / average hourly rate
300,000 / 2000 = 150. This is the total hourly margin the consultant
needs to earn his company 150 / 15 = 10. This is the average hourly
margin given 15 contractors in work. If I put $10/hour margin on
$50 / hour to the contractor then you get the picture.

The rates quoted in your postings suggest that the typical recruitment
consultant in the US gets a smaller share of the margin revenue
generated, or they don't have as may consultants in work on average.

If your agency doesn't truthfully reveal the margin when asked, then
vote with your feet. In the land of free speech the internet is a
powerful tool for communicating this behaviour. The other phenomenon
you may see is a vendor charging a vendor's hourly rate after paying an
agency who puts their margin on an hourly rate paid to the contractor. A
significant number of employers willingly pay a premium for risk
management. They don't want to bear the risk of having their sole trader
contractor being run over by a bus.

Another possibility is that as contractors you might want to consider
bearing some of the risk yourself. Offer a fixed price for a well
specified result rather than an hourly rate, just like the bespoke
development houses do. Or offer a mix. $60 per hour but if I finish by
mmddyyy pay me an extra $10 / hour.

Hey Charles I hope this contributes something to the debate! And I'm
happy to be revealed as working as a recruitment consultant in New Zealand,
and as a former Technical Manager for SAS I do know a little bit about SAS
(I lived through the release of SAS 5.08!)

Regards and best wishes for the holiday season. I'll think of y'all
freezing while I'm playing with my kids in the sunshine on some of the
best golden sand beside the most beautiful blue water in the world.

Mike O'Neil

Wheeler Campbell Consulting

PO Box 205

WELLINGTON

Phone 00 64 4 499 1500

Mobile 00 64 25 201 2410

Fax 00 64 4 499 1600

email: mike.oneil@wheelercampbell.co.nz

website www.wheelercampbell.co.nz