Negotiating Rates of Pay as a Contractor
Gemma Church is ‘the freelance writer who gets tech’. A web development contractor and journalist, blogger and writer for the science and technology sectors. www.gemmakatechurch.com
Negotiating your rate of pay can be tricky business, especially as a contractor. In my early days of contracting, I would be led by the agency rates offered as I was unsure of the going rate for my skills and experience.
As time went on, I built up a fuller picture of the contracting rates I could command in my industry sector. Negotiating rates of pay as a contractor is part and parcel of working in this environment. It’s a marketplace built on skills, so don’t worry about sounding arrogant.
Pay negotiations never came easily to me. Sometimes they came at the start of a project, other times when a project suddenly changed direction. That’s why I am always armed with a range of facts and figures when negotiating my contractor rates.
Understand your Worth
I like to complete a full evaluation of my worth as a contractor for the specifics of the project. I identify my unique skill sets and experiences and how will they add value to the project. If I am already involved in the project, I list what I have achieved so far.
Another useful starting point is to compare rates from previous projects. This can be done on a client-by-client or project-by-project comparison basis. I always tread carefully here, as budgets do shift regularly between projects and clients. However, if I have already worked for the client for a higher rate, this can be a useful bargaining tool.
You also need to understand your worth for the job role you were assigned. I was once working for a client under a "web designer” role. Once I began work, it became clear that I was expected to also develop and code the website, not just design it.
This shift in requirements led me to negotiate with the client as additional skills would be used and extra deliverables would have to be met. They were very open to the negotiations and were thankful that, given my design and development background, it was cheaper to increase my rate than bring another contractor on board to develop the site.
Understand Others Worth
Contractors are disposable assets, so you cannot enter a pay negotiation with unreasonable demands - the employer will just find an alternative contractor.
I scour contractor job boards, read tech publications reporting on contractor pay and obtain recruitment agency reports on contractor rates to understand my competitors’ rates. I also make a note of where this information has come from so I can quote reference points during the pay negotiation.
Understand your Industry
The nuances of the industry the work is in, will also play a part. Public versus private sector companies, for example, will have different budgets and I, again, search the internet for information on the sector my contract falls under.
Also, I carry out thorough research into the client. Have they been in the news recently? What does the media area of the site tell me about them? This level of detail helps me to understand and build a complete picture of the contract I want to negotiate over.
How to Approach a Negotiation
This is where the fun starts and it all depends on whether you are working through an agency, or a direct contract.
If you are working with an agency, always approach them first. I have found agencies are used to handling such negotiations, can advise me and argue my case accordingly. I always present an agency with my portfolio of research as to why I deserve a higher rate than the one offered, when negotiating a rate increase.
If you are working under a direct contract, you will need to create a similar written document. I also prefer to talk through such pay negotiations face-to-face and ask to see the project lead for a meeting where I can present and explain why I am asking for a higher rate.
This document, whether presented to an agency or client, should include:
- Current circumstances and history with the client/project
This is where I present my research and give the client a snapshot of the current contract. I make my current rate, length of time working for the client or project, role title and desired rate clear. I backup my salary expectations with a solid foundation of facts and research.
For example, a recent project involved moving legacy functional code into an object-oriented paradigm. However, the role description did not tell me that I would be writing the code within an MVC (Model View Control) framework. This additional requirement came out in the interview stage, and luckily I have experience in this area. I contacted the agency to tell them of this requirement - partly to demonstrate my suitability for the role but also to make it clear this was an additional skill set, and one that would require an adjustment of my rates.
Both the agency and the client were open to the altered rates as I demonstrated projects where I had worked in MVC frameworks. It meant I could hit the ground running and the client did not have to waste time and money while I got up to speed understanding the framework. This cost saving was reflected in my new rate.
- Keeping it professional
I always make sure I maintain a professional and friendly tone when dealing with pay negotiations. Even if I end up turning down a contract, I may want to work with that agency or company again - so I don’t burn any bridges.
I focus on the positives of the project. I try to make it clear what does interest me about the project and why am I keen to work with the client in question. If I am already working on the project, I never hold the client to ransom by threatening to storm out if I don’t get a higher rate of pay. I choose my words very carefully and I never make it personal.
- A review date
If a negotiation is not successful during a current project, I make sure I include a date when I would like my rates of pay to be reviewed. This makes the company aware that they are also an expendable commodity in the contractor market.
But, again, I never, ever threaten a client. I just make it clear that I will open myself up to other offers if my rates of pay stagnate. Good contractors get headhunted on a regular basis, so this should make the client sit up and notice your worth.
Clients need a solid reason to increase a contractor’s rate. This reason could be a change of role or responsibility, an additional deliverable or that the market rate for a skill has shifted. Check your facts and figures to negotiate on this basis and this basis alone.
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