How to Negotiate Your Contract Rate

How to Negotiate Your Contract Rate

My husband and I are afforded to live the contract life. We move from project to project making our own hours and rules. Yes, it was scary getting started but doing good work as a contractor means that you will never really be out of a project. My husband, Greg has worked in healthcare IT for 15 plus years. He made the leap to go consultant four years ago and he has never looked back.

The freedom that contract positions in any field including IT is not something that is for everybody. It is scary, but I find it liberating in that I, we, really have control over our own careers. It’s a challenge getting started, and you are always scheming, plotting, planning, and networking for that next contract gig or opportunity.

When you do find a contract position or project you are interested in pursuing, there’s a salary negotiation dance that follows that can sometimes be a little unsettling. For me, it’s hard to talk money, but it’s your livelihood that’s why it’s key to have a clear strategy when negotiating your contract recruiting or sourcing hourly rate.

Step 1 – Length of Contract

My rate is a range and it first depends on the length of the contract. The longer the contract, the more comfortable I am. I have to hustle less and can relax a bit so I am willing to accept less per hour depending on what the length of the contract might be.

Often times short contracts extend which is why if you are comfortable, start with the short contract and aim for a higher hourly rate. It’s easier to negotiate down than up especially when they are talking about extending your contract for a future date.

Step 2 – Number of Hours Billed Weekly

Your hourly rate also depends on the number of hours billed weekly. If I’m working a part time gig at 20 hours a week, I go in at a higher hourly rate. If the contract calls for over 40 hours like 50-60, I tend to accept a lower amount. Ask about the number of hours work when beginning negotiation. You will want to see if the weekly hours are included within the contract. Later you can inquire about the approval process if you need to go over the weekly hours cap.

Step 3 – Range of Pay

As a recruiter myself, I always like to ask the pay range question up front. It keeps everyone from wasting their time. When I’m placing candidates, I work hard to get them what they deserve, but I’m working for both the candidate I’m presenting as well as the company I’m recruiting for. It’s a balance. I always ask for the rate up front, and as a recruiter I’m realistic. I don’t like to string prospects along.

Ask for the range of pay and be prepared to share when you are asked as well. Contracts that require travel or are on site usually are billed at a higher rate with the virtual ones coming in lower. There is less travel time, expenses, and overhead. Plus, who doesn’t like working in their comfy home clothes.

Your contract rate of pay also depends on the position with very sought after skills or types of candidates you are recruiting or sourcing for to demand a higher hourly pay. If you are a wiz at finding purple squirrels in technical positions, you will be billing higher than someone who is filling management or call center workers that are easier to find.

And finally, when it comes to pay. I recommend talking to other contract recruiters and sourcers to get an average of their hourly rates. This is not always easy as many of us keep our hourly rate information under our hats and don’t often share. I recommend finding a mentor you have a long standing relationship with or someone at a corporation who hires contract recruiters to get a better idea of an hourly rate.

Step 4 – Exclusivity

I like to ask this question when I work on contract because there are times when I might be juggling multiple contracts. Maybe one is extending part-time for a few weeks that I’m coming off of. I’m not going to say no to money. That’s part of the contract game we play. However, some companies might ask that you sign nondisclosure agreements or non-competes. I’m a recruiter not an attorney so I advise that you talk to your attorney and decide what’s best for you. Exclusivity is hard especially if you are coming in at a lower rate. You want to be able to cover your bills and expenses and make a living. Being exclusive keeps you from picking up side gigs and it’s definitely something to make you stop and think. Looking for some insights into how HR and attorneys feel about hiring contract recruiters, click here.

Step 5: Scaling

There are only so many hours in the day. Some weeks I work 90+ hours, and other times it’s much less than that. I don’t want to be a slave to my work, but I am a professional business hustler for a living. The hours we work directly impact the number of hours that we bill which is why scaling is to critical. If the project or contract is a fit for me and my skill set, I don’t want to say no because this might be a great opportunity. Consider training, building relationships, or outsourcing some of the project or find a way to make yourself available for that time. It could be hiring a personal assistant, housecleaner, or looking at bringing on a junior member of the staff on board to work with. Train them to be you when you’re booked.

If you choose to do this, be upfront and let the company you are working with that you and your team will be working together to give them the best experience it will be. Be aware of privacy and HIPPA laws especially, but under no certain terms should you ever hide that you are having someone else manage the project for you. You want to grow and scale your business for the long term.

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Jessica Miller-Merrell

Jessica Miller-Merrell (@jmillermerrell) is a workplace change agent, author and consultant focused on human resources and talent acquisition living in Austin, TX. Recognized by Forbes as a top 50 social media influencer and is a global speaker. She’s the founder of Workology, a workplace HR resource and host of the Workology Podcast.


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