How it Contractors should Negotiate a Daily Rate
IT contractors enjoy excellent working conditions. There can be enormous flexibility of work at well-paid rates. The ability to manage this on a self-employed basis brings with it much more freedom. What that means, of course, is that the contractor must manage his time as an asset and charge for it appropriately.
Daily rates increase and decrease all the time, according to a number of different factors. Certain skills are always in demand and, in certain areas, contractors can charge a premium for this. Indeed, for any IT contractor, the ability to negotiate an appropriate daily rate is probably one of the most crucial business skills. So how do you go about negotiating that rate?
Know the market
Sign up to job alerts and research web sites that keep you fully appraised of current rates. A number of sites maintain and regularly publish average market rates by sector, by skill set and/or by location. If your skill set is based round a particular software or programming language then you need to expertly understand the rates of pay other contractors are attracting with the same skills as you. This gives you a benchmark from which you can start to negotiate. Ensure that you have clear evidence/data to back up the current market rates. You may be challenged.
Know your skills and capabilities
There’s no point understanding the market rate if you don’t understand what your personal skills are in line with this. A very experienced contractor may be able to charge more. A contractor with management experience may be able increase his premium and so on. Ensure that your resume and/or web profile accurately reflects what you can do and what you have done and then you can pitch yourself in relation to the market. Be realistic about it. Like any business you need to be competitive but you also need to maintain your brand.
Focus on added value
What you can bring to a role is so much more than IT skills. Talk about how you have shaped business plans. Consider your communication skills. Identify opportunities to demonstrate your commercial awareness. It’s a competitive market out there and you need some thing that gives you the edge over your competitors. In the IT field, your skills in documentation and process can be vital so stress how you bring a more rounded, polished product to the table.
Evidence
Be prepared to present detailed examples of what you have achieved. Where possible, demonstrate your previous output and bring it to life in front of your clients. This is quite easy with web sites and social media tools but other products may be harder to present. Remember that many of your products will be for internal use only and your client may be unhappy if you share them outside the business. An anonymous version with all data and branding removed might be deemed acceptable, for example.
Be reasonable and flexible
If you approach negotiations based on the ‘take it or leave it’ argument your client will probably leave it. Look for ways that you increase scope and protect your bottom line. Don’t take on additional costs without careful thought but you might be able to absorb additional responsibilities. Look at the detail of the assignment too. Can you accommodate fewer days if it means protecting the daily rate? You may be able to backfill this with other assignments. Alternatively, can you shrink six months into five? Opportunities to extend are often available and getting the contract in the first instance is probably the most important thing here.
For contractors, negotiating a new contract is something that needs to be done regularly and effectively. Like any other business transaction, it’s a well-considered balance of various factors and considerations. IT contractors may need to be technically competent but they also need to be expert negotiators.
