Understanding Model Agency Rates

This week I recieved an inquiry from Natalie Fletcher, a former student in Producing Photo Shoots. PSW instructors love it when students keep coming back to ask pertinent questions - then we know they are continuing to develop their careers!
"I took your producing class last year; I really enjoyed the class. I am refreshing my estimating skills and have a question for you regarding modeling agency rates. For example, an agent mentions their rates for a 2 hour minimum ($150/hr.), one year print and web ($1,200), and a 20% agency fee. Is the model making the $300 and the $1,200 or just the $300? If so, the only profit the agency is making is the 20% from the usage?
"I also have seen an agency mention a 20% agency fee with the 2 hr. minimum in addition to a 20% agency fee with the usage. Is that common or more rare?"

Here is my answer to Natalie:
Generally agencies charge 20% to their clients for any booking they do, including the hourly rate and additional usage fees. This is paid in addition to the model's fees. This is the income for the agency, for overhead, expenses, and profit. It is also a motivation for the agent to negotiate a good rate for the talent, as their percentage increases, especially when the talent does a commercial or ad with long usage and more residuals. The talent benefits obviously when this is well-negotiated, plus they don't have to deal with the negotiations. The client prefers when they can negotiate a smaller fee of course, but they also want to be fair. When the talent is less experienced and recognizable it is possible to agree to a lower rate but sometimes the successful face is what is best for the campaign. And therefore, worth it.
In addition, the agency takes a 20% fee from the talent's rate. So you can calculate that the model will be recieving $240 of the $300 and $960 of the $1,200. The agency recieves in total 40% of the amount that is agreed for the model.
Be sure that you or the client representative who will sign the model's voucher understands the conditions so they can be written into the form. Sometimes the talent are not aware of these conditions but the producer is. This serves as a legal agreement between the client and agency. Be sure a copy is provided to the client or photographer. Susan Linnet Cox