I work at a place where about 500 independent consultants/contractors have outsourced branding, training (to a degree), office admin, and, above all, sales to a shared organization.[1] Those who want can become "partners" by buying shares (I have). Importantly, this setup also provides a community because solo consulting can otherwise get lonely at times. But essentially we're all still entirely "our own" and free to choose how much we want to work, whether we want to pursue side projects, etc.
We pay 17%. So not quite the 15% you mentioned, but also far from the 30% others talked about.
We're only in Sweden for now, so maybe this isn't immediately accessible to you. But it shows that it can be done.
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.
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.
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.
The geography does limit me (US), but wow this sounds awesome, exactly what I want.
I have talked to consulting/contracting shops here in the US before, which might look superficially similar, but there you are generally a direct employee of the company who then contracts you out to their clients. I have generally had a poor perception of such places, though I'm sure some are fine. Kvadrat sounds much better!
I picked 15% thinking about the old default for entertainment agents. I know 30% is normal for external recruiting fees, why does a "dev agent" get the same? Because they can?
If the gigs found are high paying enough I don't think 30% is unreasonable.
In my previous position we built a lot of wearable devices so having a dev system at home was no problem since they're portable by definition. Likewise at my current position, we have larger, but still easily movable development/debug systems since the product I'm working on fits on a desktop. Takes up more room with everything splayed out on a back plate, but still fits on a tabletop.
But going back two jobs where the machines we built were large, very complex and floorstanding, it would be much more difficult.
It's also much easier when the hardware is stable. When you're still in the "bring up" phase, there's a lot of shipping hardware back and forth, or occasional office days together if feasible, especially if you need a $70,000 tool that the company doesn't want you taking home.
As the pandemic has progressed, embedded development has adapted. The biggest reason it's likely to reverse is simply that a lot of companies prefer to have their people onsite.
Yeah, I think a lot of engineering managers still think it's impractical. It worked out well for me on a few projects, but I got them from people I had previously worked with in person.
However, I'd be fine with any kind of work, it doesn't have to be firmware.
