Six tips for securing a rate increase
Many contractors happily work with the same client for year after year. However, you’ll eventually find that you’ve outgrown the rates of the original contract. A lot of contractors feel awkward or uncertain about asking for a rate increase – but armed with the right reasons, evidence and tactics, a pay raise is absolutely achievable.
With this in mind, we’ve set out six top tips for securing a higher rate:
#1 Have a good reason
It’s absolutely essential that you have a good, solid reason why you deserve a rate increase. Without this, your request is likely to fall flat, no matter what negotiation techniques you try. Good news though – we have a whole article devoted to reasons why you deserve a rate increase.
#2 Time it well
It’s best to time your request to coincide with contract renewal, since the client will be most open to negotiation at this point. As a rule of thumb don’t ask before 12 months into your contract, as you’re unlikely to have enough bargaining chips (these being the client’s trust, strong internal relationships and in-depth knowledge of the business).
If you’re using an agency, discuss your requirements with them around two months prior to renewal. This gives your recruiter plenty of time to lay the groundwork, negotiate with the client and obtain sign off. It also ensures the client can factor your rates into their financial plan.
#3 Arm yourself with evidence
It’s not what you know; it’s what you can prove. Have you taken on more responsibilities? List and compare them to those specified in your contract. Has the client asked you to travel more? Calculate how much that time is worth according to your hourly rate. Increased demand is tricky to prove, so ask your recruiter for their market insights.
Persuading the client to reassess your value can be the hardest task of all. It’s helpful to quantify your achievements, such as calculating the time you saved by finishing a project early. However, qualitative information can be useful too – for example, you could print out an email containing positive feedback on your work.
#4 Use an intermediary
Rates can be a touchy subject; if it’s not handled with sensitivity by both parties, there is a risk of damaging your relationship. However, you can minimise that risk by using your agency. By acting as a buffer, a recruiter can protect the relationship. Furthermore, their people skills and market knowledge will improve your chances of success.
#5 Know what you’re asking for
Rate increases are normally around 3-5%. Whatever you’re aiming for you, be clear and consistent. You should also be able to explain the number – if it seems arbitrary (or based on your needs rather than your worth) you’ll lose bargaining power. Finally, remember that advertised vacancies rates aren’t always a realistic benchmark; the actual rate is highly dependent on skill level and contract terms.
#6 Use leverage sensitively
Threatening to quit can create negativity and even leave you without a contract. But that’s not to say you can’t use another job offer as leverage – you just need to handle it correctly. Avoid getting personal, and simply show the client that you have to make a sensible business decision. Once again, a recruiter can help you use this leverage to the best advantage.
Need further advice? Contact our recruitment specialists.