Advice for a beginner; contract offered but no idea if its good?!

[odm]

Hi all

I've very new to the world of contracting - in fact I'm not there yet, but I'm keen to find out more about it and see if I'm being offered a realistic rate.

I currently have a stable job in a big company and I work in IT. I've been offered a contract paying £200/day, which to me seems like a lot, but I've read a lot elsewhere and think it might be quite low compared to what I should be expecting. I clearly earn less than this in my day job, hence the opportunistic approach and willingness to take on the contract at what could be a low rate.

The people offering me the contract know I'm new to this and may be taking advantage. Some background - the contract is being offered by a big financial institution in the City of London and is for 6 months. Also, I don't have much experience in what I'll be doing (yet), but I'm a faster learning and motivated to pick it up, just want to make sure I'm being sold this for the right price!

Thoughts anyone?, thanks!

[SimonMac]

Hi all

I've very new to the world of contracting - in fact I'm not there yet, but I'm keen to find out more about it and see if I'm being offered a realistic rate.

I currently have a stable job in a big company and I work in IT. I've been offered a contract paying £200/day, which to me seems like a lot, but I've read a lot elsewhere and think it might be quite low compared to what I should be expecting. I clearly earn less than this in my day job, hence the opportunistic approach and willingness to take on the contract at what could be a low rate.

The people offering me the contract know I'm new to this and may be taking advantage. Some background - the contract is being offered by a big financial institution in the City of London and is for 6 months. Also, I don't have much experience in what I'll be doing (yet), but I'm a faster learning and motivated to pick it up, just want to make sure I'm being sold this for the right price!

Thoughts anyone?, thanks!

It depends on the job, I imagine at a rate like that it would be some sort of support analyst? If you can afford to live in London on that rate, 6 months finance experience will open up a lot of doors later on

[odm]

It depends on the job, I imagine at a rate like that it would be some sort of support analyst? If you can afford to live in London on that rate, 6 months finance experience will open up a lot of doors later on

Many thanks for the reply. So do you think this is a reasonable rate? I have been under the assumption (from websites such as ITjobswatch, for example), that someone in this kind of role would be on 325/day. Is this a reliable source?

I'm also trying to work out what it might equate to after IR35 and other things I might have to pay; again, not entirely clued up here yet but I'm reading more about it every day to build up an idea.

I'm currently on a salary but not sure if I'd be taking a salary cut at 200/day once I've factored everything in. Any idea what the equivalent 'salary' would be for a permy in a similar role?

[stek]

Many thanks for the reply. So do you think this is a reasonable rate? I have been under the assumption (from websites such as ITjobswatch, for example), that someone in this kind of role would be on 325/day. Is this a reliable source?

I'm also trying to work out what it might equate to after IR35 and other things I might have to pay; again, not entirely clued up here yet but I'm reading more about it every day to build up an idea.

I'm currently on a salary but not sure if I'd be taking a salary cut at 200/day once I've factored everything in. Any idea what the equivalent 'salary' would be for a permy in a similar role?

Rule of thumb is hr rate x1000 ie about 26k.

'ODM' as in AIX Object Data Manager?

[contractoralan]

Many thanks for the reply. So do you think this is a reasonable rate? I have been under the assumption (from websites such as ITjobswatch, for example), that someone in this kind of role would be on 325/day. Is this a reliable source?

I'm also trying to work out what it might equate to after IR35 and other things I might have to pay; again, not entirely clued up here yet but I'm reading more about it every day to build up an idea.

I'm currently on a salary but not sure if I'd be taking a salary cut at 200/day once I've factored everything in. Any idea what the equivalent 'salary' would be for a permy in a similar role?

Have you looked at Calculators to give you an idea of what you can take home.

In these forums, as a general rule of thumb, people suggest that the hourly rate should be no less than 1/1000th of your annaul salary. If you are earning 30000 pa, you day rate must be atleast (30000/1000)*8 = 240. This should cover for lack of holidays, pension, other benefits, down time etc.
If you have a generous benefits in your permie land, take that also into account.

In addition to the rule of thumbs, there is practicality too. Whether you earn 200 a day or 1000 a day, some expenses do not change. Your accountancy fee(or umbrella fee), your travel and accomodation expenses to name a few.

One thing is sure. This is your first contract and the agency will exploit the situation. Why not tell your agency - 'I can take this contract if you pay 300' and settle for 275 after negotiation, unless you are desperate. The agency may dump you (if they have another newbie ready for 225) but you will know you have tried.

[LisaContractorUmbrella]

Can you give more information about the role? If you want to work out your take home (inside IR35) this will help Umbrella Company IR35 Calculator but you need to bear in mind that contracting will not guarantee you 48 weeks work a year and this needs to be factored in to any calculations that you do.

[odm]

Stek - ODM is just a random 3 letters, doesn't relate to anything :P

Have you looked at Calculators to give you an idea of what you can take home.

In these forums, as a general rule of thumb, people suggest that the hourly rate should be no less than 1/1000th of your annaul salary. If you are earning 30000 pa, you day rate must be atleast (30000/1000)*8 = 240. This should cover for lack of holidays, pension, other benefits, down time etc.
If you have a generous benefits in your permie land, take that also into account.

In addition to the rule of thumbs, there is practicality too. Whether you earn 200 a day or 1000 a day, some expenses do not change. Your accountancy fee(or umbrella fee), your travel and accomodation expenses to name a few.

One thing is sure. This is your first contract and the agency will exploit the situation. Why not tell your agency - 'I can take this contract if you pay 300' and settle for 275 after negotiation, unless you are desperate. The agency may dump you (if they have another newbie ready for 225) but you will know you have tried.

Thanks for this. Well I'm currently on £30k+ in my permie role, plus my benefits are those you'd find at a Big4 firm. Not too experienced with negotiations; tried it and it came across as 'take it or leave it' - is this normal? I'd feel really stupid if I asked for higher, risked it, and didn't get it; I'd essentially be left with nothing

[SueEllen]

Stek - ODM is just a random 3 letters, doesn't relate to anything :P



Thanks for this. Well I'm currently on £30k+ in my permie role, plus my benefits are those you'd find at a Big4 firm. Not too experienced with negotiations; tried it and it came across as 'take it or leave it' - is this normal? I'd feel really stupid if I asked for higher, risked it, and didn't get it; I'd essentially be left with nothing

The reason you are getting a take it or leave it is because it's your first contract.

The agency is taking a risk with you and so is the client. (Have a search on here for people who have left contracts or complain about travel etc.)

When you have more experience you will simply tell the agency not to bother discussing further due to the rate. They then may come back to you with an increased rate or find someone else.

[odm]

The reason you are getting a take it or leave it is because it's your first contract.

The agency is taking a risk with you and so is the client. (Have a search on here for people who have left contracts or complain about travel etc.)

When you have more experience you will simply tell the agency not to bother discussing further due to the rate. They then may come back to you with an increased rate or find someone else.

Good point; just to add more to the mix. I've managed to get this far with the process via a contact within the business, i.e. via recommendation. I've met the team multiple times and gotten to know the people I'll be working with. I have an insane worth ethic and travel a lot; they already know this, so just not sure why I'm being offered something so low, could be my naivety towards the beginning of the salary discussion.

[stek]

Good point; just to add more to the mix. I've managed to get this far with the process via a contact within the business, i.e. via recommendation. I've met the team multiple times and gotten to know the people I'll be working with. I have an insane worth ethic and travel a lot; they already know this, so just not sure why I'm being offered something so low, could be my naivety towards the beginning of the salary discussion.

Is the contract within the same company? If so you will fall foul of IR35 and have none of the benefits of contracting.