[netjiro]

These umbrella sales / networking / socialising organisations are fun. I've tried a few. But 15-20% is highly inefficient.

My overhead for cold-finding new clients is <5% (against those projects), and I'm not a good salesman: I'm overly direct, opinionated, and have very low tolerance for nonsense. My overhead for recurring clients and referrals is <1% (against those projects), which is also the majority of my business.

Admin, billing, accounting, etc is also <1%, so it's a non issue.

These sales organisations have _much_ better salesmen than me, yet they need >3x the cost to do the job, and they produce worse results?

My guess is: if you actually tried to spend one day per week (20%) for sales and networking you will get a better result. But for many (including me) it is uninteresting / uncomfortable / annoying / etc and therefore many of us overestimate the difficulty of sales.

There is also very likely a notable difference in interest alignment between the sales partners/employees and you. They will make more money/h the faster they sell you and therefore have greatly reduced monetary interest in working significantly more for a higher quote or a more specialised project. They also do not have the deep domain knowledge you do in your areas, and you are much better at judging how well you will enjoy working with a prospective organisation and how interesting you will find any given project.

My experience: Yes they can sell you. They will get lower quotes than you will get yourself. They will find worse projects than you will find on your own. And they cost too much. Still, I had fun with all the groups I've tried, and I still recommend them as a social luxury. Fun, overpriced, business friends.

[wastholm]

A very significant part of the pool of interesting projects in "my" market is only available under framework agreements for which solo consultants will not be considered (but Kvadrat will). If I were completely solo, I would have to bid for such projects through brokers who would happily charge me between 5% and 20% without really giving me anything back besides acting as gatekeepers.

Instead, all my cold calling, contract negotiations, billing and accounts receivable — things I'm not good at and don't enjoy doing — get taken care of. I'm happy to pay for that. The "luxury" of "business friends" is included.

[vekker]

Indeed, this sounds highly inefficient. Say, 15% of a daily rate of 800 euro for 200 working days equals 24,000 euro, recurring every year. Seems like a ton of money for just matching a candidate with a job, given that the freelancer still has to sell themselves and do all of the actual work.

Being a freelancer myself, I've often asked recruiters about this, and they always dodge the question or reply something like "there's much more to our job than you think". I have not yet figured out what that is exactly.

My best guess, from personal experience, is that they charge 15% and upwards because... they can. Because a lot of (especially technical) contractors are really bad negotiators and just accept whatever is offered.

Given the huge competition between recruiting agencies nowadays (at least where I live in Europe, it seems like there's 10 recruiters for every senior developer), I would think that a new recruiting agency could gain a huge competitive advantage by simply advertising clear & fair commissions.