Faced with the challenge of negotiating an hourly pay rate, neophyte contractors, often convert the salary of full time employees to calculate their wage request. While that’s certainly one benchmark, it often has no bearing on contractor rates, which are largely influenced by supply and demand and the value a contractor offers to an employer. If many people are vying for one gig, the competition may drive down the rate, while those with previous company experience or comparable industry or project knowledge may garner a higher hourly wage.
To avoid the trap of negotiating based on your old full-time salary, use these sources to determine the going rates for contractors with your skills and experience.
- Dice: Search contract jobs in your area using a similar tax status, such as W-2 or 1099, and review the rates being offered. Compare your skills against the job descriptions to determine the exact range for your experience. If many open positions are returned during your search, consider asking for a rate near the top of the range, since demand may exceed supply.
- Salary Web sites: Some sites provide contractor rates. The best compile data directly from users, although the pay rates may not reflect the different tax statuses.
- Recruiters: Contract recruiters will know the market rate for your area of expertise and which employers are willing to pay a premium for specific experience or certifications. It’s best to ask when you don’t have an offer on the table, so you’re sure to receive unbiased information.
- Other contractors: Once you have ascertained an hourly range for your skills, verify your information with other contractors. Be sure to ask several sources, as some contractors will undoubtedly be paid below market and some above. Also, don’t ask the contractors who work at your company – it’s just not a good idea to ask co-workers about their pay. Try discussion boards, professional networking sites and salary Web sites to secure anonymous information.
— Leslie Stevens-Huffman