Reply to: Will contract rates increase to pass dividend tax increase to clients?

[Willapp]

No its more likely that the agents that they are using, are pocketing the extra cash and then dredging the market for mugs on 300 a day. Its interesting how many agents do this. I needed some architects last year and had 700 a day to spend. the CV's were bloody awful in the end I pulled a few mates in and the agency was fuming because I set the rate over their heads.

Open Book my arse....

I'm sure that does happen but it's not the case here. The client's internal agency are on a very small fixed margin and we're talking £400+pd rates, even the external agency they also use are advertising at £375+ which is a great rate for this part of the world IMO.

[SussexSeagull]

No its more likely that the agents that they are using, are pocketing the extra cash and then dredging the market for mugs on 300 a day. Its interesting how many agents do this. I needed some architects last year and had 700 a day to spend. the CV's were bloody awful in the end I pulled a few mates in and the agency was fuming because I set the rate over their heads.

Open Book my arse....

£300 a day isn't a bad rate for some!

Some of them actually didn't renew to go somewhere else so I imagine the rate was more than agreeable for them.

To flip the argument round, are some people proving themselves out of the market?

[bobspud]

I feel the same. Everyone I know is in contract at the moment, and my current client (a very large company in the East of England) are struggling to find decent developers whether contract or perm and the rates they're offering are extremely competitive so I can only assume there is a genuine shortage of the skilled resource they're looking for.

No its more likely that the agents that they are using, are pocketing the extra cash and then dredging the market for mugs on 300 a day. Its interesting how many agents do this. I needed some architects last year and had 700 a day to spend. the CV's were bloody awful in the end I pulled a few mates in and the agency was fuming because I set the rate over their heads.

Open Book my arse....

[bobspud]

I must confess when I hear of people saying the contract market is in a bad way I am surprised as most if not all of the contractors I know are in contract and have minimal breaks between engagements. Admittedly this isn't a scientific survey.

To get back to the original question, if you are on, for arguments sake, £300 a day and ask for £325 you need to adding more value than someone else on £300.

Thats easy. Just pointing out the stress of finding another resource and waiting for 3 months for them to get up to speed will get you a £50 a day bump. I think some contractors play into the bigger businesses hands to readily.

I also know many contractors that stay off the market quite well but all too many of them are quoting far too low for the job they are doing.

In contrast I know a chap that is happy to take a break or two in a year but he specialises in start tomorrow type gigs that he can hold to a 4 figure ransom.

[Willapp]

I must confess when I hear of people saying the contract market is in a bad way I am surprised as most if not all of the contractors I know are in contract and have minimal breaks between engagements. Admittedly this isn't a scientific survey.

I feel the same. Everyone I know is in contract at the moment, and my current client (a very large company in the East of England) are struggling to find decent developers whether contract or perm and the rates they're offering are extremely competitive so I can only assume there is a genuine shortage of the skilled resource they're looking for.

[SlipTheJab]

I must confess when I hear of people saying the contract market is in a bad way I am surprised as most if not all of the contractors I know are in contract and have minimal breaks between engagements. Admittedly this isn't a scientific survey.

To get back to the original question, if you are on, for arguments sake, £300 a day and ask for £325 you need to adding more value than someone else on £300.

I would say the more likely scenario is that you need to be a better negotiator, different agency margins means that the client is probably paying the same to the agency regardless.

[SussexSeagull]

In my experience the rates aren't half. It really depends on your sector.

I was getting calls earlier this year for jobs in Sheffield and Manchester which were within 20% of my London rate. Considering cost of living, it's very competitive.

And given the fact they are calling me in London, it seems the demand is outstripping supply up there.

The tech industry is still growing massively. I can only assume those of you talking about the end of contracting are in an oversubscribed sector.

I must confess when I hear of people saying the contract market is in a bad way I am surprised as most if not all of the contractors I know are in contract and have minimal breaks between engagements. Admittedly this isn't a scientific survey.

To get back to the original question, if you are on, for arguments sake, £300 a day and ask for £325 you need to adding more value than someone else on £300.

[KentDogWalker]

Watch this space

Yeah, why is it that clients in London don't like you working the odd days remote and let you work part time?

[dogzilla]

In my experience the rates aren't half. It really depends on your sector.

I was getting calls earlier this year for jobs in Sheffield and Manchester which were within 20% of my London rate. Considering cost of living, it's very competitive.

And given the fact they are calling me in London, it seems the demand is outstripping supply up there.

The tech industry is still growing massively. I can only assume those of you talking about the end of contracting are in an oversubscribed sector.

[LondonManc]

"Manchester-based resource for £300-£350/day rather than a London-based one for £500-£600/day" <<< That's why

Ah yes. As you were

[LondonManc]

RBS, Deutsche, HSBC, Barclays all doing it ...

What the fluffing hell am I doing down here then. Meh.

[northernladuk]

Not wanting to ruin your world view, but the cost of outsourcing is going up very significantly. The figures I'm seeing suggest they are only just half the cost of local resource now, but the upward trend is quite strong. The day of them being the 20th of the cost of a local resource are long gone. Many businesses are beginning to look at bringing the more high value work back onshore.

Doesn't ruin my world view. Just another set of factors from a different source all affecting what we do. I was just mentioned the fundamental shift from what used to be a specialised method of engagement to the standard where clients go straight for a contractor and anyone with anything over 2 years experience thinks they can be a contractor. It's being diluted at pace so still some time before it level off but no doubt the Gov will drop a bomb on it before that happens for exactly the reasons I've just mentioned.

[LondonManc]

Not wanting to ruin your world view, but the cost of outsourcing is going up very significantly. The figures I'm seeing suggest they are only just half the cost of local resource now, but the upward trend is quite strong. The day of them being the 20th of the cost of a local resource are long gone. Many businesses are beginning to look at bringing the more high value work back onshore.

When you factor in that you could get a Manchester-based resource for £300-£350/day rather than a London-based one for £500-£600/day, numbers can be adjusted very favourably in keeping contractors local; factor in a single department to manage London and Manchester contracts with them being in the same country, no time window to do calls in, no language barriers (apart from this lot down here tawking fanny init gavner) then a "north-shoring" policy would work wonders. USA firms often run their back-office operations in a US city where day rates are lower; for me, it's a model that would work well over here too.

[WordIsBond]

Which you're perfectly entitled to do. My point is that justifying this to a client by saying that your *personal* tax liabilities have increased isn't going to get you anywhere. Then there's still the risk they just say, thanks but no thanks, and find someone cheaper.

True. But all it takes is a few contractors to decide it isn't worth it anymore, a few who are in a good position to put up their rates (they don't have to give a reason, they just have to say what their rates are), and the inevitability of supply and demand kicks in, dragging rates up at least marginally.

I'm not telling my clients, "Oh, my rates are going up because the Chancer hit me with a dividend tax." They'd laugh. I'm just saying, "I'm increasing my rates by 4%, effective April, cost of doing business has increased." If someone pushes back, I'll happily settle on 3% and grudgingly go to 2%. If they can't handle any increase, someone else will. Next year (depending on what happens) or the year after, I'll increase again.

Too many contractors have the permie mindset that the boss sets the salary. You run a business and you set the rate at which you will provide its services. If you increase your rates by 3%, and they are happy with the quality of the service you've provided, few clients are going to say, "Oh, let's take a chance on some other guy who is 3% cheaper."

If they find a way to force me into IR35, then I'll be passing through a bigger increase and saying why -- this idiot government is making a mess of my kind of business and I can't provide the service I've been providing at the price I provided it in the past. If you don't like that, maybe you should take it up with the government.

[Willapp]

OK

'I am a business and decided to put my rate up by 8%.'

Happier now ?

Which you're perfectly entitled to do. My point is that justifying this to a client by saying that your *personal* tax liabilities have increased isn't going to get you anywhere. Then there's still the risk they just say, thanks but no thanks, and find someone cheaper.