Rather than being set in stone, the hourly or daily rates for most contract and consultancy roles are open to negotiation. Whether you are starting a new role, or about to renew an existing contract, here are some things to bear in mind when trying to optimise your contract rate.
Contract rate negotiation factors
- Perhaps the most significant determinant of the maximum rate you can secure for a role will be how ‘in demand’ your specific skills are at the time. The more scarce your skills, the higher the rate you can achieve.
- Although contract rate tools will provide a typical range of rates, the location of the role will have a massive impact on the rate you can achieve. Rates are highest in the City, Greater London and the South East.
- If you are working via a recruitment agency (as most contractors do), your agent will take a percentage cut of your contract rate. You may be able to negotiate a smaller slice for your agent, but you will need to be in a relatively strong position to do so (i.e. there aren’t 40 applicants for the role).
- As a contractor / consultant, you will need to act on a business level rather than a personal one when negotiating rates. This is by no means a natural role for many contractors, but could make a significant impact on your take home pay.
- There will be times when you are offered a role which pays below your target rate. Depending on a number of factors (such as the state of the general economy), you may be better off in the long-run by settling for a below-par rate for an immediate contract, rather than waiting several weeks for the ideal role.
- If you are applying for a contract role, don’t provide your current rate details, or let an agent know what you would expect to earn from a contract role. If you do need to provide a target rate, aim high, with a view to settling the rate you truly want to secure.
- In order to secure a renewal, make yourself indispensable to the client, and become an ‘expert’ in the project team. Keep on good terms with your manager and colleagues. Although contractors are hired for their specialist skills, good personal relationship will strengthen your renewal chances, as well as those of a rate increase.
Above all, use your intuition to decide how far you should go to secure the optimistic contract rate. You need to balance the strength of what you can offer as a contractor to a specific client against the state of the contract market at the time, and other factors such as the flexibility of your agent, and how successful you have been on an existing project if you are up for renewal.