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Increase Day Rate

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    Increase Day Rate

    Hi,

    I'm fairly new to contracting. Have switched couple of times and didn't really have to renegotiate my day rate for a contract. Been in the current contract for an year now & the extension date is approaching.

    As you already know, cost of living has drastically increased and the NI increases (Inside IR35, paying both Employers/Employee NI from day rate) aren't helping. I'm planning to discuss an increase to my day rate. As I have no experience in this, can you share your thoughts on:
    1. How often do you renegotiate your day rate.
    2. After an year, how much % do you usually increase?
    3. If you're in the same boat as me (with current cost increases) how much % are you planning to increase for 2022? (From my calculations, its around 10%. Covers, additional NI costs & +3% take home)
    Thanks

    #2
    Originally posted by bbp View Post
    Hi,

    I'm fairly new to contracting. Have switched couple of times and didn't really have to renegotiate my day rate for a contract. Been in the current contract for an year now & the extension date is approaching.

    As you already know, cost of living has drastically increased and the NI increases (Inside IR35, paying both Employers/Employee NI from day rate) aren't helping. I'm planning to discuss an increase to my day rate. As I have no experience in this, can you share your thoughts on:
    1. How often do you renegotiate your day rate.
    2. After an year, how much % do you usually increase?
    3. If you're in the same boat as me (with current cost increases) how much % are you planning to increase for 2022? (From my calculations, its around 10%. Covers, additional NI costs & +3% take home)
    Thanks
    You increase your rate by asking but in all likelihood you aren't going to get anything by staying.

    So start hunting for a new contract so you are in a position to ask for more money (matching the rate of your newly found better paying contract) or don't expect an increase.
    merely at clientco for the entertainment

    Comment


      #3
      Expect inertia from your agency as well.

      Comment


        #4
        Originally posted by eek View Post

        You increase your rate by asking but in all likelihood you aren't going to get anything by staying.

        So start hunting for a new contract so you are in a position to ask for more money (matching the rate of your newly found better paying contract) or don't expect an increase.
        I like the current project. Somehow I find it difficult to secure a role and then not take it. I have very niche skillset that is very important to the current project. Assuming that they'll most likely agree to a reasonable increase, is 10% too high or acceptable? (I'm on £500/day). I believe the agency charges a fixed rate so that wont change.

        Comment


          #5
          The process is much the same as it is in the permanent world
          • You get better increases by switching out to a new gig and agency
          • Your existing agency may only take you seriously if you threaten to leave and are serious about it
          • Know your leverage - do they need you or do you need them?
          • Money isn't everything - are you onto a cushy deal now that you might miss if you left? Are they letting you work from home as much as you want, no one giving you a hard time, light on hours? It all counts.
          • If you happen to spend 2 weeks or more on break between gigs then you may have to work longer than you thought to make back the money you lost versus if you'd just stayed where you were, invoicing continually
          Last edited by PerfectStorm; 17 February 2022, 10:19.

          Comment


            #6
            Originally posted by PerfectStorm View Post
            The process is much the same as it is in the permanent world
            • You get better increases by switching out to a new gig and agency
            • Your existing agency may only take you seriously if you threaten to leave and are serious about it
            • Know your leverage - do they need you or do you need them?
            • Money isn't everything - are you onto a cushy deal now that you might miss if you left? Are they letting you work from home as much as you want, no one giving you a hard time, light on hours? It all counts.
            • If you happen to spend 2 weeks or more on break between gigs then you may have to work longer than you thought to make back the money you lost versus if you'd just stayed where you were, invoicing continually
            On the last point - 1 day of not working requires 10 days under you new rate to make up the increase. 2 weeks out and it requires 20 weeks at the higher rate to catch up where you would be by continually working.
            merely at clientco for the entertainment

            Comment


              #7
              As noted above, it's all about leverage.

              The best way to get an increase as a permie is to have another job lined up that is offering more (and that you would be happy to accept), because that provides leverage with your current employer (assuming you want to stay).

              The best way to get an increase as a contractor is much the same, unless you are inherently in-demand, in which case you have built-in leverage because your client already knows you can find another contract easily without having an alternative lined up.

              Of course, if you are not inherently in demand and you have something better lined up, then you may as well move to it and avoid the faff.

              Comment


                #8
                I think you would be starting on the wrong foot if you think in that way. Business is business and you shouldn't be afraid to negociate or go back on the market.

                I believe the best approach is to just say what your new rate is, short and sweet, no discussion upon it. Considering only the inflation is about 15% in real terms and the market is booming, I would say go for the higher figure. £650pd is not too much for current market. even £750 is fair game.

                Think of it the other way, if it was them in a more favourable position it would have been a 30sec decision and we both know how that would have gone.
                And this market won't last for long, we might go in a deep recession and it's up to you to provide for yourself and your family. So milk it while it lasts.

                Of course your manager will try to fight it because he will look bad as if he lost control over you. You are no longer in his cuckhold. So he will probably dump some more work on you and act as a **** (for most of them it's first nature) then take you into his office for a chat where he will either have a very soft tongue or threaten you with cancellation between the teeth.
                The agent will be less polite about it, he'll probably raise his tone and use some big words. Don't take him as face value, he is probably manifesting withdrawal symptoms from all the coke he has been snorting off your back.

                Small outfits usually do not have negotiation power so they allow the agencies to go on flex rate. £500pd is not a lot and mot likely is an mis-sold inside role but we are not assessing that now.

                Agency might call you as well and try to put you in your place, ask you to do reviews, write documents. Think about the bad things you've done in a previous life.
                You can dodge their calls and make up a polite excuse via email. There isn't anything to talk about here. You are just adjusting your rate to inflation. Case closed.

                And most important, do not show up on site without a signed contract. Be prepared to walk if it comes to it.
                People do not like leaving but I got to appreciate time off between gigs. That is what keeps me sane.
                Working continuously to retirement is for permies and horses.
                Last edited by GigiBronz; 17 February 2022, 10:33.

                Comment


                  #9
                  Originally posted by GigiBronz View Post
                  £650pd is not too much for current market. even £750 is fair game.
                  Doing what? The range of day rates around here will be an order of magnitude, say £200-£2000. Not everyone around here is a code monkey or PM or even working in IT (or even pricing themselves with day rates); and even within those categories, there will be a broad range.

                  Comment


                    #10
                    Originally posted by jamesbrown View Post

                    Doing what? The range of day rates around here will be an order of magnitude, say £200-£2000. Not everyone around here is a code monkey or PM or even working in IT (or even pricing themselves with day rates); and even within those categories, there will be a broad range.
                    well I assumed he is a developer, 1-2 languages, some seniority. 5-10y experience.

                    yup £750 is fair game in this market.

                    Comment

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