Negotiating a rate rise: five fundamentals
It’s usually recruiters who speak up about how to get more cash out of your client, but it’s the likes of us who are first to notice when a contractor company starts bringing in more money thanks to a rate rise, writes Jude Eze of Shield Accountancy.
Research or preparation is still your most valued ally in any attempt to increase your headline rate, and that includes getting your timing, demands and even your demeanour down to a T. But there are five other things that we’re noticing again and again that those securing premiums are doing. You should:
1. Approach with confidence
Being the right degree of confident is one of the master keys to success when negotiating your rates. It’s a matter of realising what you’re worth and sticking to it; convincing the decision-maker of your worth. In essence, you need to back yourself before you can ask your agent or potentially your client to back you -- financially, for more. So don’t be shy.
2. Keep your cards close to your chest
Where you’re working through an agency, keep rates they might not know to yourself to begin with. It’s better to treat it like a game of poker -- don’t lay all your cards out on the table too early. Remember, if you give an overly high rate you may price yourself out of contention. If you offer a rate that’s too low, then the agent may try to secure a margin and thus you will lose out.
3. Home in on the sweet spot
Once you’ve carefully gauged the financial brackets a rate rise is going to lay between, perhaps in percentage terms, you must then be specific. Cite the figure and explain how you’ve arrived at it. It shouldn’t be the explanation that you give, but the ‘sweet spot’ you arrive at is often a balance between what you believe you’re worth and what you believe they’ll offer.
4. Know what’s market-driven and you-driven
If back and forth negotiation breaks out, remember two important variables; what’s controlled by the market and what’s controlled by you. As an IT contractor, you’ve got a specific amount of experience and skills -- what’s in your control. But mentally put that into a backdrop you don’t control -- comprising the market (includes your skill’s scarcity and rate), the client’s budget and rival candidates interviewing before and after you.
5. Practice your negotiating skills
It’s important to flex your negotiation skills each time your encounter a client or agency, or even your accountant! Practice makes perfect. Have a mock negotiation with a fellow contractor to test your readiness. By continuing to assess your shortfalls or awkward moments in the past, you can develop a negotiating strategy that will help with your confidence because you’ll know it only contains phrases, methods or techniques you’ve personally tried and tested.
Selling yourself is a key skill for contractors because you need to win new business on a regular basis. But only you really know the numbers you need to hit when that business comes to paying out. Become comfortable with this idea. Realising it and acting accordingly when negotiating a rate increase is the foundation to securing a continuous, viable income as a contractor.