Rate glass ceiling

[ChimpMaster]

As others have said, £500pd is by no means bad and for many probably as much as they can realistically earn in their relative areas of expertise. It's a comfortable, but not extravagant, life. To get to £1,000 per day as a contractor you need to be very senior or a known expert in your field.

Otherwise you need to look at other models...
Can you run a training course (like Certified Scrum Master) and charge £1,000 per person to 10 people at a time?
Can you write an e-book and sell a few thousand copies on Amazon per year?
Can you bring people in on £50K/year or £300/day and charge them out at £1,000 per day?
Can you package your service into a product and generate recurring revenue?

Nothing in life comes easy, but contracting is a pretty easy life!

I bet if a few of us joined forces, we could do something like this.

[d000hg]

To get to £1,000 per day as a contractor you need to be very senior or a known expert in your field.
...
Can you bring people in on £50K/year or £300/day and charge them out at £1,000 per day?

If you can find people for £300/day that you can charge out at £1000/day, surely you could get £1000/day yourself?

[TheFaQQer]

Can you bring people in on £50K/year or £300/day and charge them out at £1,000 per day?

To do that, you're going to need to build some kind of brand, though. Why would clients pay your company £1000 a day when they could go to a bigger consultancy?

Once you have the brand, then you can do something like this, but the problem is having to take time off billing to build that brand. I considered it with a friend of mine, but in the end we couldn't work out how best to approach it, so the idea fell apart.

[yasockie]

If you can find people for £300/day that you can charge out at £1000/day, surely you could get £1000/day yourself?

That - my original question was sort of why can't I get more than 500, so getting 1k is out of the question I think or maybe I'm not bold enough to ask..

Also like others have said, subcontracting to other contractors works out cheaper, on average, in my case.
I sometimes subcontract to people who charge more than me because it takes them less time to get the job done and the quality is superb.

[beaker]

To do that, you're going to need to build some kind of brand, though. Why would clients pay your company £1000 a day when they could go to a bigger consultancy?

Once you have the brand, then you can do something like this, but the problem is having to take time off billing to build that brand. I considered it with a friend of mine, but in the end we couldn't work out how best to approach it, so the idea fell apart.

To get started you don't need a brand, you need a client (a big, rich one, usually one you've stolen from the place you used to work). You can then build a brand based on that case study (if you don't screw it up)

[beaker]

If you can find people for £300/day that you can charge out at £1000/day, surely you could get £1000/day yourself?

Sure, but once you can charge out 2x people at £1000 each and pay them £300 each, you're better off (oversimplified of course, but you scale as you grow and you don't have to "work" for money anymore)

[TheFaQQer]

To get started you don't need a brand, you need a client (a big, rich one, usually one you've stolen from the place you used to work). You can then build a brand based on that case study (if you don't screw it up)

Yes, good point. But when that one project dies, then you need to have something else to go and do.

I know some guys that did this, though - when Oracle ditched the product that they were working with, they left and went direct to the one big client. Years later, they are still milking the cash cow, and have now grown enough to be doing other things as well.

[TheSurfer]

You can usually increase your rate to some extent, but to effect a real sea-change, you have to change your model.

At the lower earning end of the classic contractor, there are those on £30k-£50k a year say. With the skills they have, they might be able to do 10% better, but chances are they won't. Their only option is to reskill with something worth more. That'll get them up to the next level £100k-£250k or so.

I did this when I went from VAX/VMS programming to SAP.

The level after that is around the £1M mark. To get near there, you'll need to be making money while you're sleeping - i.e. passive income. That's either done through products or having employees. Another possibility is to be an industry known guru, and consult for a few days a week with many different clients.

I'm possibly beginning to be at this level through products and consultancy. Last year I made ~£35k from software sales. This year I anticipate rather more.

There are very few people using the classic contractor model who make more than £200K. You need to change the way you do business.

This answer is closest the the mark IMO. I view contracting as giving me a base cash flow, plus of course new contacts and the chance to learn new stuff. and don't even attempt to contract the whole year.

My non-contracting income comes from: staged pay out of a company I sold, sales of a software product (now my biggest side income), ongoing support contracts (I'm now starting to outsource these so I can take in more) and the odd remote contract/project, which I have sometimes doubled up with a regular contract.

Having said all this my income the last year wasnt any bigger then what I'd estimate if I had contracted for the full year (i contracted for just under 5 months)...although it was more interesting, more secure for the long term and I got to do a lot more travel etc. You sometimes need to take a step back to take a step forward though... In that it's sometimes difficult to get these things going if your on a contract ( although I've had contracts where I could get through my work in 3 hours leaving me the afternoon to do my own stuff )

[kaiser78]

...It seems like starting my own business is the only way to start earning more. Whilst I am really keen to start my own project management firm, I'm finding the jump from single contractor to small firm quite daunting. But I do think in summary, its the only way to start earning more.

I look into doing the very same thing a couple of years ago and went to a business startup advisory service to bounce some ideas and help me assess the viability. From their views and research undertaken, I concluded the best way this could be done was to work with fellow PMs on a consultancy basis, as the costs in terms of overhead for going down the fte route would not stack up. So in effect the company would just be a resourcer of PM skills, which due to the nature of being contractors I would not have much of a mark up and so deemed not really worth pursuing.

Interesting thread this !

[TheSurfer]

So in effect the company would just be a resourcer of PM skills, which due to the nature of being contractors I would not have much of a mark up and so deemed not really worth pursuing.
!

Why do you say it would it not be worth it? You will probably make a 15%+ margin (minus the cost of the factoring), which should be £90+ a day for you for a PM role. Now whether it's worth it from a 'hassle' viewpoint now that's another question