Considering a switch to contracting because you’ve heard you can up your income? Before you leap up from your desk and quit your full time job, do you know what you’re worth? More importantly, do you know how to negotiate appropriately?
iContract’s research of the market puts entry-level contracting roles in financial services at between £300 per day for an analyst and up to £2,000 per day for a big-hitting programme manager.
Associates can typically earn £400-550 per day, associate vice presidents £500-650, vice presidents £600- 800 and directors £800-1200.
Of course day rates reflect the fact that contractors have to pay their own insurance, tax and work expenses out of their own pocket. They receive no holiday pay or sick leave. They also need to compensate for the days, weeks or months of the year during which they idle between contracts.
No contract? No income.
The iContract team has first-hand experience in making contracting work financially, and is here to help you do the same.
iContract’s commercial director Eduardo Rastelli (below) has a few rules of thumb to follow when you’re about to enter contract negotiations… (continues below)
Things to consider:
The more senior financial roles are generally in the big cities like London and New York, and the more junior roles are often based in smaller centres like Birmingham.
Your rate should be aligned to your level of seniority, but should also compensate for the cost of living, which is not going to be offset by employee benefits offered to full-time staff.
Experience versus skill set
It’s likely that the more experience you have, the higher your chance of winning a contract. But clients don’t generally pay more for more experience. They will, however, pay more for a specialist skill that is needed in a role.
You can increase your earning potential by taking short courses that will hone your “specialist” expertise.
Scope versus price
If the client is unwilling to budge on the rate, you can instead look at reducing elements of the scope. Read the role description carefully and look for areas that could reduce your efficiency. The client is likely to be happy to remove tasks and responsibilities that do not make effective use of your time on the clock.
Be considerate, maintain that relationship
Yes, firms are increasingly staffing projects with contractors instead of full-timers, and as with all rules of supply and demand, this means there’s greater potential for contractors to earn higher rates. But it’s still a very competitive market.
Eduardo strongly advises holding off on negotiating your rate until you are absolutely certain you have won the work.
With any type of contract, there is of course room to negotiate however there needs to be a level of consideration towards the contract hirer and a degree of respect towards their budgets. Remember you are a business at the end of the day, and where you want to achieve the best rate for yourself, you have to be mindful of your long-term prospects as a contractor. Being a contractor is about building harmonious relationships and adopting a hard line approach to negotiating might leave a recruiter or hiring manager with a sour taste and they may not be keen to work with you again, or even worse word of mouth might get about to others that you’re a difficult negotiator. Understand that recruiters and hiring managers have budgets to work to and work inline with these.
You can find a whole host of guides to help you in your contracting career on our resources page.