Three ways to increase your contract income
Friday, 11 February 2005
There are three main ways to increase your income if you are a contractor. Each of them is outlined below.
Increase your rate
Getting an increase in the rate you receive for your time can increase your income greatly. Even an increase of $1 an hour gives you an extra $40 a week or $1840 a year. That's the equivalent of a new PC every year.
The best time to negotiate your rate upwards is when you've been offered a job and not yet accepted. If you are a candidate the client really wants, you should be able to talk a few more dollars an hour out of them. Tell your agent you've been offered another job paying a higher rate, but you'd prefer to take the one they're offering. It is rare for a client to withdraw the offer completely if you ask for a rate increase. The worst-case is likely to be that they will refuse to offer you any more money.
If you are already in a long term contract, check what other people with your skills are earning in the current market. Are you paid below market rate? If so, you should let your manager know and request a rate increase.
Unless you feel your job is in a precarious position, you should always ask for an increase at renewal time. The worst your manager can say is "no". It is often possible to ratchet up your rate a little at a time to achieve quite substantial increases in a long term contract. A $2.50 increase every 6 months will leave you with $10 an hour more in a two year contract.
Increase your cut
As discussed in the article Inside the murky world of agency margins, you should always ask your agent what their margin is. If that margin is more than about 15%, there is probably some room for negotiation. As with your rate, the best time to negotiate your cut is before accepting job offer. The agency is likely competing with other agencies to fill the position and won't want to lose a certain sale to a rival.
Contract renewal is also a good time to increase your cut. Work out exactly how much your agent has made from you and tell them that they've made a substantial profit and it's time to reduce their take.
Most agents are practised at margin negotiations, and you can expect to have a tough time getting more money out of them. Nevertheless, it is worth trying. Tell your manager that you are negotiating the agency rate and will accept the renewal, despite what the agent may be telling them. Then, refuse to agree to a renewal with your agency until they reduce their rate.
Decrease your time spent between contracts
If you earn $50 an hour while working, every week you spend unemployed is costing you $2000 before tax. A month out of work will cost you around $9000. You should try to make sure that the amount of time you spend out of work is kept to a minimum. Generally, this means keeping an eye on the market even when you are in work. The best time to set up your next job is during the last few weeks of your current one. Read about The hidden jobs market and begin to nurture your list of contacts.
Many contractors brush off calls from agents when they are working. This is a mistake, as agents prefer to help those that they get on with. If an agent thinks you're a good contractor, they will call you when they have a job you will fit. These calls are a minor inconvenience when you are working and a major convenience when you're not. Keep your agents sweet, and you will likely spend less time out of work.
Paul Knapp (editor@brainbox.com.au)
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Quote "Keep your agents sweet"Today I received an email from a recruiter seeking my help in finding a DataStage expert. It was addressed to me but the body of the email only contained the recruiter name, company and contact details. The request was written in the Subject heading of the email. Why should I assists any recruiter if this is how they seek my assistance but sending me a terse email. It simply bad manners and a lack common courtesy by the recruiter. Gun4Hire, 02/10/2005 07:52:46 AM
Response to Gun4HireGun4Hire, After contracting for over eight years I'd have to agree with your sentiment regarding the recruiter seeking a DataStage expert. Every industry has particpants who are less than professinal in their conduct. However (you knew it was coming), if you did have such as contact, that shouldn't prevent you from offering this person's details (with their permission) in exchange for a finders fee. After all, this is was recruiters are in business for. I'd also have to agree with Paul. I started a new contract role just before Christmas (how's that for timing). Prior to any interview the agent refused to negotiate on rate, in act they wanted to pin me down on a rate. Instead I waited until the end of the interview process and I happened to be the successful candidate. It was only at this point where I had leverage (after the client specifically stated they wanted me). I then professional and politely (never burn bridges) advised the agent the minimum rate I would accept to take on the role. The agent could noew either cut their margin or disappoint the client. Good luck OfficeHacker OfficeHacker, 02/11/2005 04:56:52 AM
Recruiters are parasitesOfficeHacker, I have been contracting for 14 years. For the last 8 years I have NEVER given away any leads to a recruiter. Their finder fee is pittance. I despise recruiters who are rude, arrogant and use tricks to obtain leads to gain new business. Read my post at http://www.namesfacesplaces.com/snitz/topic.asp?TOPIC_ID=1072 of my experiences with recruiters. Gun4Hire, 02/11/2005 07:59:29 AM
good timing.I am currently thinking about asking for a $5 an hour payrise in my current 9mth contract. I negotiated a better rate when I started and they gave me a reasonable rate, but now I want what I should be getting paid. I think I will try the advise posted and tell my employer I am negotiating rate but hastle the agency for a better cut, sounds like a good enough idea. Dave, 02/11/2005 08:25:16 PM
marginregarding asking the agency for their cut, do they legally have to tell you the truth? what's stoppin them from lying? permie_at_moment, 10/10/2006 01:20:05 AM
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