atw: Re: Agency rates
- From: "Donald Halley" <donald@xxxxxxxxxxxx>
- To: <austechwriter@xxxxxxxxxxxxx>
- Date: Wed, 3 Nov 2004 10:16:20 +1030
Payroll tax
In South Australia, if an agency has a payroll over $504,000 and
employs a contractor for more than 90 days (regardless of whether the
contractor has an ABN) in a financial year they have to pay payroll tax.
It's probably the same interstate.
Donald halley
-----Original Message-----
From: austechwriter-bounce@xxxxxxxxxxxxx
[mailto:austechwriter-bounce@xxxxxxxxxxxxx] On Behalf Of Michael Lewis
Sent: Wednesday, 3 November 2004 10:14 AM
To: austechwriter@xxxxxxxxxxxxx; austechwriter@xxxxxxxxxxxxx
Subject: atw: Re: Agency rates
Donald Halley:
> A $30 margin on top of $60 is not 50% it is 33% of the rate charged to
> the client.
True. It's 33% of the client rate -- a 33% margin. But it's also 50% of
the input cost -- a 50% markup.
> Which is not unreasonable if you are trying to run a sustainable=20
> consulting business.
Perhaps; for me, the agency is a sideline. (As is tech writing, come to
that!) So I don't apologise for having a low markup. But, as I mentioned
earlier, if I have to do more than the basic intermediary stuff, I'll
charge more. 50% markup just for admin is a high markup -- though of
course an agency has to cover its own overheads and generate a return on
investment. Whether any given agency has excessive overheads, an
extortionate rate of profit, or a reasonable margin, is anyone's guess.
> As for an agency only taking a $10 per hour margin, they won't stay in
> business.
> Regardless of whether you quote an ABN, the agency still pays payroll=20
> tax of around 6%, then if you don't quote an ABN you are looking at 9%
> for super.
The agency should not have to pay payroll tax; if they do, clearly 10%
markup is inadequate. If they are paying 9% for super, that should be
acknowledged in the contract as part of the total deal, not as an
overhead.
> Contractors want to be paid fortnightly or monthly so the agency has=20
> to bankroll the deal, most agencies probably factor their invoices, so
> there is another 2 or 3%.
At least. I normally expect my clients to pay me with the same frequency
as I pay the contractor, so I'm not factoring or carrying a cash-flow
burden. Others will certainly have a big problem there.
> If you find the whole thing so objectionable, why don't you try=20
> running an office and find your own work?
It's called "outsourcing" -- party A sticks to her own core business of
being a tech writer, and outsources the "marketing" to party B.
Outsourcing is competitive; party A is within her rights to want a party
B who is both ethical and good value. (And, of course, high prices and
poor ethics are not mutually exclusive . . .)
Michael Lewis
--------------------------------------
Brandle Pty Limited, Sydney, Australia
www.brandle.com.au
--------------------------------------
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