How to Negotiate Your Contract Rate

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How to Negotiate Your Contract Rate

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How to Negotiate Your Contract Rate

We can afford to live the contract life, my husband and I. We switch between projects, setting our own working hours and guidelines. Yes, getting started was frightening, but if you perform outstanding work as a contractor, you will never truly be out of a project. Greg, my husband, has over 15 years of experience in the healthcare IT field. Four years ago, he took the risk of becoming a consultant, and he hasn’t looked back since.

Not everyone enjoys the independence that comes with contract work, including in the IT industry. Although it is frightening, I also find it freeing since I, we, truly have power over our jobs. Starting out can be difficult, as you constantly scheme, plan, network, and make plans for your next contract job or chance.

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 is first based on how long the contract is. I feel more at ease with lengthier contracts. Depending on how long the contract can be, I am willing to accept less money per hour because I don’t have to work as hard and can relax a little.

If you feel comfortable, start with a short contract and aim for a higher hourly pay because small contracts sometimes extend. When they’re talking about extending your contract for a future date, it’s easier to bargain down than up.

Step 2 – Number of Hours Billed Weekly

The amount of hours billed each week affects your hourly rate as well. I start out at a higher hourly rate if I’m working a part-time job that requires 20 hours a week. If the contract specifies more than 40 hours, say 50 to 60, I usually agree to a lower payment. When starting the negotiation, inquire about the amount of hours worked. Check the contract to check if the weekly hours are mentioned there. If you need to exceed the weekly hours cap, you can find out more about the approval procedure later.

Step 3 – Range of Pay

Being a recruiter myself, I always like to inquire about the pay range right away. Everyone is prevented from squandering time by it. When I place applicants, I put a lot of effort into getting them the position they deserve, but I also have the employer I’m recruiting for in mind. It’s an equilibrium. As a recruiter, I’m always upfront when I ask for the rate. I dislike holding out on potential clients.

Request the pay range and be ready to provide details if necessary. Contracts that involve travel or are performed on-site are typically billed at a higher cost than virtual contracts. Less travel time, money, and overhead are involved. Who doesn’t enjoy working in their cozy pajamas?

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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