Contractor Rates

[NewBoy]

Hi all

I'm currently reviewing the contractor population for one of my clients and part if the review is to determine whether or not they are paying the right amount.

I have always believed that it is possible to measure the quality a company expects by their permanent salaries, and as such, assuming they are looking to simply meet demand with contractors (rather than dramatically raising the standard), the simplest way to work out what they need TP pay for contractors is to compare with perm salaries.

The calculation I used to use for this (back when I was a permie) was to take a Perm Salary for a role and remove two zero's to establish the day rate. So, if Perm PM's earn £60,000 per year, the company should expect to pay £600 per day for an equivalent contract PM. Clearly it depends on many variables such as conditions, length of contract and perm benefits...but across a community of several hundred people, does this sound about right in the current Market?

Cheers as always...

[v8gaz]

Adding two zeros is one way, anothe is to make the hourly rate 1/1000th of the annual salary - however bear in mind that salaries imply a long term mrelationship, whereas contractors are (normally) there to fill a short term requirement. This can skew the costs in either direction, based on such factors as location, skillset and rarity of, personality, and a whole host of ther things.

Make sure that the client appreciates that whatever metric you use, it's simply a rule of thumb and no more scientific than that, and that they must accept that rates may vary, in either direction, from their assumed norm.

[craig1]

Contractor rates are different to permie rates in many ways making simple comparisons difficult.

A good agency should be able to give you a guideline on the market but it'll all depend on:

- role (e.g. challenging role or backfill for permies seconded to a big project)
- location (central London will get the biggest net of candidates and is often cheaper than out in the wilds where you need to pay a premium to get decent candidates)
- working conditions (long hours, travel, etc)
- client reputation (this is hugely important, some clients just can't get the right candidates to apply because of reputation)
- expected standard of contractor (top-end, competent, backfill or cheap and desperate)

Also, many clients have solid generalists as permies and hire in contractors for specialist stuff meaning that, if the contractor were employed as a permie, that he'd be right at the top of the skill-set and probably bored with the business-as-usual stuff that permies do.

[jmo21]

Contractor rates are different to permie rates in many ways making simple comparisons difficult.

A good agency will try and inflate the price as high as possible

FTFY

[MrRobin]

I would say £600 per day is pretty generous for a role that would usually pay £60,000 as a perm employee.

Put it this way... If I was on £600pd and was offered to be made perm at £60k I would be slightly offended!

[MCC7]

I would say £600 per day is pretty generous for a role that would usually pay £60,000 as a perm employee.

Put it this way... If I was on £600pd and was offered to be made perm at £60k I would be slightly offended!

I am relatively inexperienced but agree that it is slightly off (but not earth shatteringly far away). I've just started at £300 a day and would only consider a perm job around the 40k mark.

[eek]

I am relatively inexperienced but agree that it is slightly off (but not earth shatteringly far away). I've just started at £300 a day and would only consider a perm job around the 40k mark.

On the 1/1000th hourly rate rule that is about right. I left a perm job paying more than that tho for a 300 a day contract and I was much better off.

[Wanderer]

I would say £600 per day is pretty generous for a role that would usually pay £60,000 as a perm employee.

Your maths isn't quite right here. £60k salary = £60/hour = £450/day which I think is fairly reasonable.

[JamJarST]

Your maths isn't quite right here. £60k salary = £60/hour = £450/day which I think is fairly reasonable.

Do you only work 7 and a half hours a day?

[monkeyrhythm]

Do you only work 7 and a half hours a day?

I do, how long do you work?