Yes absolutely, I've been on both sides of this (the contractor being "sold" as well as employing short-term contract developers through an agency like this). I will say though that a couple of times where I was able to find out how much the client was paying for me, there wasn't as big of a gap as I had expected - I think the largest was about 6%, and when I was a lead my employer was losing about $15/hr on me. I have to assume the team as a whole was profitable enough that they weren't that concerned with it.

That seems awfully low. The times when I've found out that info, it's tended to be ~15-20-25%.

All the times I was able to find or figure out both numbers it was state government related, so that probably played a role. Wouldn't surprise me if private sector was 2-3x higher margins across the board, for everyone.

have dealt with state govt too, and yeah... that makes a lot more sense.