Day rate negotiations to account for high inflation

[foxyy]

Looking to negotiate a new day rate for an inside IR35 contract extension. I'm hoping to negotiate at least an extra 7-8% to account for some of the higher inflation and increased cost of living. However I expect the usual push back from the client.

Just wondering how other contractors are faring in similar situations, are clients generally being receptive to requests for higher than normal rate increases to account for this?

What is a realistic and reasonable increase to ask for (assuming you were previous getting around market rate)?

Thanks

[Fraidycat]

There is asking and demanding, you can always ask for 8%, current inflation will mean you don't appear greedy, client can say no and might offer something less.

But demanding an 8% increase is another matter. If you can easily walk into another contract at 8% above your current rate, then you could demand 8% .

[northernladuk]

But won't the client be looking to save costs on paying suppliers because their office bills have gone through the roof and they've got to pay their perms more to counter their increased costs due to inflation?

What extra are you delivering to the client that warrants a rate increase should be the question you are asking. Contractors are paid very well so the client is going to take a pretty dim view to you upping your rates to cover an issue that is affecting every single one of us.

Clients aren't very receptive to rate increases in general, let alone for cost of living. If they are going to stump up cash it's because the budget allows them to and your services are worth it, not just because the cost of living has temporarily (we hope) gone up.

If you are getting market rate then you'll get market rate. If market rate is going up you've got an argument. You alone to be paid above market rate because of inflation isn't going to wash.

Fraidy nails it as well. You can't ask them. You demand it or you walk. If you aren't willing to walk then just don't bother. You'll look a bit of a pillock if you ask nicely, they say no, you say fair enough and carry on.

[PCTNN]

Unless you are working direct with the client, rate increase has nothing to do with the end client.

End client pays the recruitment agency, and you get a cut from what the agency gets. This means your rate increase will only be achieved if the recruitment agency is willing to take less money.

What is likely to happen is you ask the agency for an increased rate and then out of the blue you'll see your role advertised again at your old rate. I wonder what's happening.

[jamesbrown]

You can expect as many answers as possibilities.

Pricing, in all background economies, comes down to who's in the position of power. If you're not particularly in demand and working an inside BAU role with a widely available skillset, you're not in a position of power and your success in pricing your skills will reflect that, plus your starting position (e.g., if you're on the low-end of market rates for your skillset or the agent is on a particularly large margin, you may have more luck). If you're a specialist and essentially choose your own clients, then you also price with freedom and the clients can like it or lump it (they will generally like it). There's everything in between too. In other words, I doubt you're going to learn much from this thread because a reasonable increase is anything between nothing and a lot.

[northernladuk]

Just to note there is a long thread discussing this exact topic in great detail not 6 threads below this one (currently)

[SussexSeagull]

If you don't ask you don't get but inflation is true for clients as much as us and be prepared to walk away if you think you can do better elsewhere.

[ShadyBA]

I have asked for an 11% increase for my renewal. I have never mentioned inflation or cost of living as justification, just made myself indispensable on the project I am on which has just secured funding til end of Dec 2023.
In true BA fashion I have done my research, I couldn't believe my luck when I was asked to help the PM with his budget for next year. All of my peers day rates were on there!
I also interviewed at a competitor for practice, networking and general nosiness, I determined my market rate from their offer, added £50 and bobs your uncle. That's my desired rate increase.
wish me luck ?

[northernladuk]

I have asked for an 11% increase for my renewal. I have never mentioned inflation or cost of living as justification, just made myself indispensable on the project I am on which has just secured funding til end of Dec 2023.
In true BA fashion I have done my research, I couldn't believe my luck when I was asked to help the PM with his budget for next year. All of my peers day rates were on there!
I also interviewed at a competitor for practice, networking and general nosiness, I determined my market rate from their offer, added £50 and bobs your uncle. That's my desired rate increase.
wish me luck ?

Every single contractor ever thinks they are indispensable to their client/project. The reality is absoultely no one is indispensable.

[dsc]

Ah yes the famous "they can't get rid of me, the whole project will collapse"

I've asked for an uplift twice but I was direct, got it twice but managed to ruffle up some feathers at the upper mgmt level, so I'd advise to thread carefully. Also remember that whoever you talk to needs to then sell it to their bosses and in the current climate, with everyone looking to make savings, contractor rates can really stand out like a sore thumb.