Is a rate increase after 3 months liberties?

[Crossroads]

As per Malvolio, I've never agreed with this "increase at extension time" argument.

Your company is brought in to provide a service on a T&M basis at a quoted daily rate. Unless the role changes, or market forces change significantly why should your rate change?

And if the argument is that "you're worth more than £xxx" then you shouldn't have taken the contract in the first place. It's not about what you are worth, but the market rate for the role.

I'm currently in a less senior role than I would normally do, and it is probably costing me £100 - 200/day...yes I am worth the extra, but the role is not. I am probably getting paid a little over the market rate, as my additional skills / experience are recognised, but that is the clients choice.

Come renewal time I don't expect an increase...the role won't have changed to justify it.

[VectraMan]

I agree, but how long would you go without asking for an increase? I'm mid way through my second 6 months at the same client. I didn't ask for an increase for the extension, but if I'm kept on after this (i.e. after a year) I think I probably should.

[chicane]

And if the argument is that "you're worth more than £xxx" then you shouldn't have taken the contract in the first place.

I'm not sure I agree. The "market rate" is dictated by supply and demand, not by the original rate at which you took the contract. Some contractors may accept a low rate initially in order to develop a working relationship with the client.

If I had initially decided to work for £40/hour, and the majority of people with my skillset and experience were working for £50/hour, I would feel perfectly comfortable requesting a raise to £50/hour following the initial contract period. The client is free to choose whether or not he continues to work with me.

The client may be concerned on an personal level that he would be shelling out an additional £10/hour for my services - but that's the nature of business. He would soon find out that contractors of a similar caliber would expect £50/hour and would therefore eventually be forced to pay the market rate of £50/hour, either to myself or another contractor. Alternatively he could outsource for £5/hour, but that's a different story.

The client took the risk of only signing a 3 month contract initially, knowing full well that the project may run beyond that, and the client must accept the consequences for that. As long as you are prepared to walk away when/if he says no, I believe you have nothing to feel bad about.

[malvolio]

I'm not saying you shouldn't ever ask, and I'm not saying that a rise is unjustified at renewal time if the market has changed and it would cost them more to replace you on a one-for-one basis. I am saying that you need to be very sure of your facts before you do, and you need to understand the opposing viewpoint, that you agreed to work for a known rate.

Unless you are a serious specialist in some area, or have done something very clever on top of your stated role, none of that is very likely to apply after three months, and certainly not in a market where rates overall are actually falling. The commercial logic is that it's better to have three more months at an acceptable rate where you know the job than to have nothing while you find something else.

[Muttley08]

I've always gone for a raise at around 12 months (whenever the nearest extension is) - at least an inflationary 5%. Never had any problems with that.

[chicane]

you need to understand the opposing viewpoint, that you agreed to work for a known rate.

I don't believe this is particularly relevant. Yes, the OP agreed to work for a known rate, but only for the initial three months. There is no ethical or moral dilemma here - the client took what they knew about the project, and made the decision to take the OP on initially for three months because they thought that's how long the project would last.

The client is well aware that the terms of any contract renewal are subject to change and should have signed a longer contract if they wanted more financial certainty or security (this approach of course having its own downfalls).

The commercial logic is that it's better to have three more months at an acceptable rate where you know the job than to have nothing while you find something else.

Agreed.

[dotnetter]

Suppose the way I see it is, I have other offers with a better rate, I know the market is booming and I can get a role elsewhere so why not ask for a rise?

At the end of the day it is business, I'm a small business providing a good service and they are a big business trying to get my services for as cheap as possible. If they don't want to pay my rate then I'll go elsewhere. I'm not a fan of holding companies to ransom and I don't make a habit of it but I also don't want to be Mr nice guy all the time, because 9 time outta 10 your gonna get walked over.

I've not once met a client or agency that actively offered me a rate increase, why would they? If you don't ask you don't get, and if they don't pay then I go elsewhere.

I would have completed the project I was given at the end of my contract so it's not like I'm walking out and leaving them in it. If they want to offer me another contract for something else, then they pay the increased market rate as far as I'm concered, I've proved my worth.

[Mustang]

Rates are always an interesting dilema! Having been on the bench on this occaision a little longer than I would have liked I have changed my approach. I am of a view that it's better to be on a contract at a lower rate than you think you are worth than not on a contract at all.

No one likes to be undervalued but there are ways to compensate for this anyway. You can always put it in the contract that a review wil be held after x months or at the end of the contract. After all, a review doesn't commit the end client - if they haven't got the budget you cant get the increase.

[Crossroads]

I'm not sure I agree. The "market rate" is dictated by supply and demand, not by the original rate at which you took the contract. Some contractors may accept a low rate initially in order to develop a working relationship with the client.

Fair enough. I agree that if the market shifts then that is a valid reason for an increase.

I have discounted my rate in the past to develop the relationship - but I made it clear from day one that I would be doing this, and put some parameters around it, so that the client knew I was expecting an increase.

My point was that the client is paying for a specific task to be completed and they will pay the market rate. I could go do 3rd line support, but there is no way the client would expect to pay my Architect rate just because I'm "worth it" because I could get it elsewhere.

[chicane]

Fair enough. I agree that if the market shifts then that is a valid reason for an increase.

If you've agreed (and managed) to deliver the requested deliverables within the agreed period, I struggle to understand why you'd feel obliged to provide a reason for a rate increase following that period.

The internal financial matters of your company should be of no concern to a client. All that matters is whether they're willing to pay your requested rate.

Would you really go into the local sandwich shop and ask why a cheese and pickle on granary has gone up by 30p since your last visit, or would you just make the decision to either pay the extra or go somewhere cheaper?