Contractor rates of pay
As mentioned previously, many people decide to become self-employed due to the fact that a contractor can often command much higher rates compared to their permanent counterparts.
And, when you consider that a contractor is not entitled to certain benefits such as holiday and sick pay, this only seems fair.
There’s also the fact that a contractor has usually dedicated themselves to a particular skill, which means that it is likely that they are both highly skilled and experienced in their field.
To read more about the benefits of contracting, read our Permanent vs Contracting page.
Daily, hourly or fixed rate?
When it comes to rates of pay, you need to think about whether you want to charge a daily, hourly or fixed rate.
This might change with each project, or you might have a client that has a preference, but ultimately you need to ensure that you’re getting paid a fair wage for your work.
There are advantages and disadvantages to each method:
A daily rate can be the easier option for both the contractor and the client in the sense that the contractor will have a better idea of how much they’ll be earning for a project and the client will also know how much they’ll be spending, which will help them from a budgeting point of view.
A contractor can also often charge more when it comes to a daily rate compared to an hourly one.
However, it’s worth being aware that if the client asks for additional work to be done within those days, which could essentially be seen as ‘over-time’, the contractor could miss out financially.
An hourly rate can benefit a contractor if a project takes longer than expected, but it can become an issue should a client limit the number of hours that a contractor works on a project in order to cut their costs.
A fixed rate means that you know exactly how much you’ll be earning for a project, however, when setting this rate, you have to really think about how long a project will take, as you could find it takes longer than expected meaning you’re potentially being underpaid.
So how much should I charge?
There are many factors to consider when setting your rates of pay, for example, the amount of experience you have, not only in your field but with the number of businesses you’ve worked with.
There’s location to look at, for example, London rates are much higher due to the cost of living being greater in this area.
How in demand are your skills? How much are other IT contractors in your field charging?
These are all questions to ask yourself when considering your rates of pay.
A recent report (2023), compiled by Technojobs, looking at current top IT contractor jobs and the average daily rates might help to give you some idea of what others in your field are charging:
- Applications support engineer – average daily rate is £550
- Cybersecurity consultant – £550
- Data analyst – £400
- Embedded software engineer – £500
- DevOps engineer – £580
- IT support – £170
- Risk manager – £650
- Design engineer – £500
- Business analyst – £490
- Cloud engineer – £500
Read our Accountancy Services for IT Contractors for information on what we can offer you as a contractor working in the technology sector.
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