How to punch above your rate
You will not maximise contract rates by smiling meekly and taking whatever the agent offers, but by exerting your often considerable – if only you knew it – power, learning a few simple techniques and negotiating for the best deal available.
Robert Dorney, SQL development contractor and team lead, has 20 years' experience in negotiating with agents. He has reached a startling conclusion:"I keep my mouth shut to learn more," he says.
Dorney's technique is to remain silent and wait for the agent to make the first offer. His silence is intended to instigate an agent thrust to which he can quickly parry with, "Oh... how disappointing," displaying ridicule and forcing the agent to re-start negotiations.
This well-tried and practiced sales technique of letting the other side go first will not be unknown to the agent. It's no accident that agents always ask for your rate before putting you forward, they want a price in principle before you see the client. However, there is a definite advantage to the contractor if you can avoid price discussions before other details have been agreed.
If the agent is forced to go first, they just might offer a surprisingly good rate and you can adjust your goals, but Dorney admits, "It can lead to some strangely silent conversations with agents who use the same technique."
For stock jobs, where competition is high and no niche skills are required, Dorney's approach might be the only one available, but sales manuals will tell you that creating an impression before rate-negotiation begins is likely to generate the best results.
According to sales consultant Alan Chapman, "Establishing a position (or impression) of uniqueness is the single most effective technique when you are selling, whereas denying uniqueness is the most powerful tactic of the buyer."
Unfortunately, agents hold nearly all the cards in this deck. It is they that have the up-to-date market intelligence - they that create the expectations with the client and they who know the value and uniqueness of skill sets.
But for some contractors, rates are not the only fruit, and can be traded for other concessions.
"If you want to gain new skills on the job, then you need to aim low on your rate," says Dorney. Though he thinks this approach gives the agent a golden opportunity to fleece the contractor – agents will always attempt to sell you in at the same rate – he says you may have no choice when upgrading expertise or moving sector.
And Ben Straw, enterprise architect and 15-year veteran of software development, has traded rate hikes for partial home working. A tactic he thinks is well worth the money especially for super-commuting contractors.
Training, travel expenses, per diem, even crates of wine have been offered to contractors in exchange for their services, but securing the optimum deal is often down to something else entirely: belligerence.
"I simply stuck to my guns and the agency budged quite easily, and cut their margin to make the rate. Since there are several agencies here, my agent is 'quids in' if he gets me in at all, so they were willing to be flexible," Straw explains.
Contractors often fixate on agency percentages, but real advantage comes from offering a unique skill. Without a USP (Unique Selling Point) agents and clients can go elsewhere to fulfil the contract.
It is up to the contractor to understand the market and create a USP from skills at their disposal. This may be knowledge of an obscure coding language or a promotional technique. Dorney says his USP is to engage the client during the interview and make them feel like the project has already started with him at the helm.
In sales lingo, this is known as the assumptive close and can give the buyer confidence the relationship will start well and continue in the same way. It can also backfire and send the impression you are an arrogant twit, which is why so many technical people are afraid of putting themselves forward.
It's a generalisation, but contractors are often more sales-savvy than the average IT guy. After all, they have set up on their own and gone into business. Therefore you shouldn't be scared to blow your own rather than taking it from the agent. A better rate, a better contract and longer weekends might just be the result.