One of the most important things to consider as a contractor is what rate you will charge your clients. Contractor rates not only depend on your skills or experience as a contractor, but various other factors such as climate change (e.g., demand for contractors), company budgets and location. You will also need to consider the best way to charge your client, whether that’s on a daily rate, hourly rate or fixed rate.
All of the latest updates on average rates for popular IT contracting skills and contractor demands reports can be found below along with any emerging IT contractor skills and how to calculate your own contractor rate.
For more on current contractor rates and demand please visit our contractor forum where these topics are often discussed. You can also search the latest IT contract jobs here.
What Factors Can Impact Your Market Rate?
There are a variety of factors which affect daily rates. These are:
• Experience – both in experience regarding previous businesses and experience involved with the technical skill to be used.
• Location – can impact the daily rates of the contract (i.e. London offers higher rates because the cost of living is higher).
• Industry – depending on the industry, contracting pay rates may differ (e.g. financial services will likely pay more than others).
• Objective – depending on the importance of the role and what objectives must be accomplished through the role.
• Company Budget – certain companies may have higher budgets than others, meaning some may offer higher contract rates compared to others.
What are the Three Charge Rates as a Contractor? Daily, Hourly or Fixed Rate
Daily Rate
The contractor charges a set amount daily -
| Advantages | Disadvantages |
|---|---|
|
• More precise figure of income. |
• Some clients may take advantage of contractors regarding workload. Contractors may be told to make adjustments or changes, resulting into overtime hours which will not be accounted for as charge rate is not hourly-based. |
Hourly Rate
The contractor charges for each hour worked -
| Advantages | Disadvantages |
|---|---|
| • If extra work is required from the client, the contractor can earn extra for each hour of overtime (£40+ per hour) as long as it is approved by the manager. | • Can be a hassle for clients trying to figure out costs for services accurately. • To prevent excess costs, clients often limit the hours that the contractor works. Any extra work will need client approval first. |
Fixed Rate
Contractors can dictate a fixed price for carrying out a project –
| Advantages | Disadvantages |
|---|---|
|
• Can be hard to predict the duration of a project and could result in contractor being over/under paid for work. • Similarly to daily rate, any extra work required by client on the day-to-day basis will not be accounted for. • Negotiating a fixed rate may take longer than an hourly rate. |
How do I Calculate My Contractor Rate?
Your contractor rate will depend completely on the circumstances you are in. Looking at your experience and skillset and looking at rates that other contractors charge (who have a similar level of ability and experience), will give you a rough estimate of what types of rates you should charge.
As well as comparing your rates to other contractors, you may base your contractor rate on the demand for particular skills or jobs in the market. Find out more about current IT contract jobs here.
Looking at the size of the project and what will be required from you will also determine the contract rate. Understanding exactly what the client wants from you will help you valuate the contract, and you should consider the difficulty, estimated time to complete and importance of the project to the client when trying to calculate your contractor rate.
Contractor Market Demand
You can check out the latest ContractorUK market reports below:
IT contractor jobs market 'fiercely competitive' in September
Despite strong demand potentially levelling off, starting pay is at a 24-year high, even before ‘one-off financial incentives’.
IT contractor demand 'remained very high' in August
Billings, shortages, and rates are still all but off the charts in the temp tech sector.
Clients told to stump up premiums, as IT contractor demand continues to soar
Agency bosses: It’s not all about rates, but the pay picture for contractors has definitely now changed.
Contractor Guide to Rates
For any further guidance on contractor rates, have a look at some of our other guides which provide further details below:
Bounce back in IT contractor demand from COVID-19 'starting to ease'
October saw a ‘slowdown’ in freelance tech skills, as a ‘new recovery phase’ begins.
Getting the right rate for the contract - negotiation for IT contractors
The basics of negotiation and establishing what rate becomes a 'deal breaker' for you.
Contract rate negotiation: How to negotiate a rate rise
An IT contractor's guide to asking for premiums.
Top Ten IT Contracting Skills by demand
| Rank | Skill | Average Daily Rate |
|---|---|---|
| 1 | Azure | £530 |
| 2 | DevOps | £550 |
| 3 | SQL | £510 |
| 4 | AWS | £550 |
| 5 | Microsoft | £460 |
| 6 | Java | £545 |
| 7 | Python | £560 |
| 8 | Windows | £430 |
| 9 | JavaScript | £510 |
| 10 | Linux | £540 |
Top Ten IT Contracting skills by daily rate
| Rank | Skill | Average Daily Rate |
|---|---|---|
| 1 | Databuild Engineer | £920 |
| 2 | Openlink Developer | £900 |
| 3 | Core Java Developer | £900 |
| 4 | Endur Developer | £900 |
| 5 | Digital Transformation Director | £880 |
| 6 | SAP Enterprise Architect | £870 |
| 7 | C# Quant Developer | £860 |
| 8 | C++ Quantitative Developer | £850 |
| 9 | Programme Director | £840 |
| 10 | Graph Visualisation | £815 |
Emerging IT Contracting skills in 2022
| Skill | Average Daily Rate |
|---|---|
| Data Protection | £500 |
| IT Project Manager | £480 |
| Data Governance | £550 |
| Data Visualisation | £500 |
| Site Reliability Engineering | £600 |
| TypeScript | £525 |
| SaaS | £550 |
| Data Analytics | £540 |
| Azure Data Factory | £550 |
| Enterprise Architecture | £625 |
*Source: Technojobs data (Updated December 2021)
For more information on IT contractor skills please see the below:
Agile Software Development
C#
C++
Cisco
IT support
ITIL
Scrum
Sharepoint
System Testing