Learning how to negotiate the best rates for your skills is another skill that contractors need to learn in order to get the most out of their contracting career.
There are a great many advantages to contracting, from the freedom of being your own boss and the flexibility to work (and holiday) when you want, to the opportunity to choose your jobs and the direction your career takes and to develop your skills and training in a particular way. And then of course there is the money – the chance to earn considerably more than you would as a salaried staff member, doing exactly the same work but for yourself. But with all the extra opportunities also comes extra responsibilities. As your own boss, the buck stops with you, which means you are responsible for networking and advertising, for finding contacts and finding contracts and once you’ve found them, negotiating those contracts to get the best rates for you and your business.
And as with all the other skills you have to learn as a contractor, there is an art to negotiating the best rates for yourself. That art lies in realising the best possible rates by being aware of the value (and therefore price) of your particular set of skills and the corresponding position that gives you in the market place at that particular moment in time. With that in mind, here are a couple of tips to help you negotiate the best rates for your skills when you next sit down with a prospective client:
(a) Find out what you are worth
Obviously the starting point in working out how much you can negotiate your services for with other people is learning exactly how much your services are worth. And with just a small amount of research this is quite easy to do. Start with forums populated by people in your industry – introduce yourself and ask how much they charged when first starting out. Then take a look at agency and recruitment sites and see what people are willing to pay for people with a similar amount of experience as yourself. Finally, take a look at all the online job sites and see what is being offered on these. Bear in mind too your level of experience – if you are starting out you are unlikely to be able to demand the same level of pay for a job as someone who has been contracting for years. Once you have a price in your head that seems fair after looking at all of the above, you will then be able to sit down with clients and negotiate. If you think you are slightly pricey but have years of experience then you know you can say this (and sell it) when talking to the clients. Likewise if you have no experience (as a contractor) but can do the job then you can sell yourself on price – and tell them you will work extra hard because it is your first job. Finally, as a general rule it is best to have a benchmark in your head below which you will not go under any circumstances. The client should not be able to barter you down to a level of pay that is unacceptable to you!
(b) Tailor Your Negotiations to The Role Being Applied For
With all of the above in mind, it is also worth remembering that every job you apply for is going to be different and some may offer extras that make you willing to work for slightly less. For example you might apply for a job that will offer on-the-job training in a new skill, or one that would look very good on your cv in the future. Similarly you might also see a great job that is at the other end of the country or a job that is almost as good but local – which would be better? You need to be flexible with the rates you ask for a job and you will quickly develop a way of working out the best rate for you according to the type of job. So don’t stick religiously to a flat rate as no two jobs will have the same amount of work / research / preparation or travel etc
(c ) Choose Those Roles Carefully
This may not be so easy when you first start out but as your career develops you will need to be judicious in the roles you choose to take on. Remember that you went into contracting to take control of your own career, so do that – be in control of your career. New contractors will want to take on a broad range of jobs and to get as much money and experience in as possible but thereafter you need to plan jobs according to the specialist role you want to take in your sector. (However, you may want to balance those specialist roles with (if you can find it) one on-going larger client who uses you regularly for a broad range of jobs, if only to keep a regular source of income coming in.) Once you have built up a reputation as a specialist you will find yourself in a much better negotiating position when you sit down with clients in need of your skills.
(d) Stay Relevant
Tied in with becoming a specialist in your sector is keeping all of your skills up to date. Staff and permanent employees of companies don’t have to think about this so much, but contractors need to take responsibility for keeping themselves up to date. This means staying knowledgeable about all of the very latest advances in technology in your sector and making sure you are competent in every bit of machinery and software that is used by people working in your industry. This will sometimes mean doing extra training in your own time (but remember that as a contractor you can claim these training costs as expenses) but ideally you should try and make the most of any opportunities you get for training when working on-site for clients. Also, when doing training, always opt for courses that offer certification at the end of the course – everything helps when sitting down to negotiate with a client and certification in areas they require can only increase your value.
(e) Reputation Is Everything
More important than all of the other things mentioned here is your reputation – get a good one and word of mouth will increase your value. Get a bad one and you will struggle to find work. So be scrupulously fair in your dealings with clients and charge a fair rate – but never overcharge. And remember that it’s always better to under-promise and over-deliver than the other way around!