How to Negotiate Your Contract Consultant Rate?
Determining your contract rate
Consultants who decide to strike out on their own for the first time can sometimes be unsure about the contract rate that they should be charging their clients. Before meeting with an agent or a potential client and taking on their first project, it is important that you define your salary expectations. Contract consultant rates vary depending on the project and set of skills required to carry it out, but there are several ways to determine the contract rate for a management consultant in any given field of expertise, on any market.
Which contract rate to quote?
As a contract consultant, you must first of all be informed about the state of the market and the demand for your particular skills. IT consultant contract rates, for instance, will greatly differ from government contract rates. The first step is to find out what the market rate is for your skills before meeting with the recruiter or potential employer. This is the rate you will quote to agents, recruiters and clients. Quoting below the market rate can make even an experienced consulting contractor seem uninformed or less skilled than he or she really is. A number of consultants make the mistake of selling their skills short in an attempt to get more job interviews or offers for contract jobs. This does not necessarily result in more job offers. In freelance consulting, it is just as important to project confidence in one's skills as it is to get a foot in the door with as many recruiters as possible.
On the other hand, going above the standard contract rate is just as risky with agents and recruiters. It could land you fewer job interviews than you are hoping for and disappoint the recruiter sitting at the other end of the table once he or she realizes that, in your case, a higher contract rate does not necessarily translate into special skills. When hiring a contractor, company managers and organisation leaders like to know that they are getting their money's worth. An agent or recruiter will always keep this in mind while assessing a contractor's resume.
Standard market rate for contractors: Where to find it?
The contract rate for consulting jobs is not usually mentioned when a position is advertised on job boards. The recruiter will usually only mention ''market rate'' in the section that concerns contract pay and benefits. A specific contract rate is generally mentioned only when it is significantly lower or higher than the standard market rate. Agents and recruiters, however, are not required by law to quote the market rate for any contract job. This is why, in most cases, it will be up to you to do the research and make sure that you are being paid adequately and that your agent is not offering you a lower rate in order to increase his or her margins.
Contract rates for any specific market and industry sector can usually be found on the Internet. Industry insiders' forums, specialist sites for contractors and consultants, and your own circle of colleagues and business contacts on social networking sites are the places to go. By subscribing to our service, you will gain access to our contractors' forum as well as to the latest contract jobs being advertised on the UK market and internationally.
Contract rates for niche markets
When negotiating your contract pay for a consulting project, market contract rates are the numbers you need to quote to the recruiter. Determining the contract rate for any project management assignment can be a challenge if you have a unique set of skills and are unable to find the standard consultant rate you should be charging. On the bright side, however, having a unique set of skills allows any contract consultant more freedom in negotiation to set his or her own consulting rate.
Contractor rates and market demand
When determining your contract rate as an independent consultant, you should also consider the market demand for your specific area of expertise in consulting. For instance, as the industry at large increasingly starts to invest in IT projects, the demand for skills and experience in every area of information technology will likely be on the rise as well. The more specific and highly sought your skills are, the more money you are in the position to ask for as a freelance consultant. Architect jobs, for instance, will usually pay better than general consultant and project manager roles.
Finding out the market rate for your specific skills
The easiest way to find out what contract rate you should be charging is to ask other contract consultants how much they are being paid for similar projects. If you can't determine the market rate for your skills even after searching the web and talking to your business contacts, you can always contact several different agents and use their feedback to get an estimate. When an agent asks about your salary expectations, simply say you tend to charge market rates, ask how much the client is willing to pay, and wait until the agent throws a number at you. Never be the first to come out with a number, especially if you are not sure how much you could be earning and how much you can negotiate with the agency. When the agent gives you a rate, say you expected a little bit more – provide an exact number – and see how he or she responds. If the response is a positive one, call another agent and add a little more to the sum. If that salary is acceptable too, simply keep calling agents until you get a sense of what you could be charging for your consulting services.
The process of determining and negotiating the contract rate in independent consulting may sound a little complicated at first, but it gets easier once you have several projects under your belt and are better acquainted with the market for contract jobs and all its underpinnings.
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