Not many people enjoy the prospect of negotiating a contract, whether it’s negotiating your first contract, or your 50th. Holding your nerve while you’re locked in contract negotiations with a wily agent isn’t easy.
But it’s not as hard as you might think, and ContractingWISE has helped plenty of contractors seal some great deals. Here, we’ve assembled some great tips on how to negotiate a bumper contract.
Do your homework
The first step in your negotiation strategy has to be figuring out what your contractor rate should be. You may have some idea from your full-time job, and you should definitely try to talk to any contractors you know already to find out what they charge. One way of starting off is to calculate out your hourly rate by taking your annual salary and dividing by 2,080 – the typical number of working hours in a year.
Dealing with recruitment agencies
Clients usually pay agency fees of around 12 to 20 percent of a contractor’s salary, sometimes a lot more for a very highly skilled consultant. Big clients often have fixed margins because of the high volume of placements they require.
What this means is that during negotiations you may effectively be asking the client to increase their fee, or asking the agent to cut their margin – figuring out which is happening can help you take a more effective negotiation stance.
But don’t write off recruitment agencies as interfering middlemen. They can do you a great service by helping you avoid any gaps between contracts. For someone earning £300 a day, a gap of a week means they would need to achieve £307 a day to earn the same amount by the end of the year. After a month of no work, the rate would need to be 10 percent higher.
Remember also that your personal circumstances are of little interest to clients and agencies so don’t expect them to take that into account.
Getting through the interview process
Your guiding principle should be that you never reveal your price until you have to. So your initial pitch should be all about your skills, experience and how they fit the job.
Be vague and non-committal, and if pressed give a broad range of prices. Try to get the agent to reveal the client’s expectations.
Consider every stage as an opportunity for you to gather information that will reveal what your top rate might be. You’ll need to find out how much demand there is for your specific skills and experience, and how many competitors you have who are available.
Also consider your own position – if you don’t really need the job because you have financial security or other offers, you’re in a strong place to negotiate.
The time to discuss money comes after the interview and when the agent tells or hints that the client wants to make an offer. At this stage you need to come to a conclusion about how much competition you face.
Walking away is a good way to assess how much you’re wanted. Saying “I’m not sure I can do it for that – I’ll have to think about it” will put the agent under pressure and may get them to slice some of their margin for you. But make sure you’re in a position to do this.
Don’t forget that the agent has done this many more times than you, so don’t think of negotiations as a battle you have to win. You want to end up with a client who is happy to have you, and an agent who will be happy to find you another contract in a few months. And ContractingWISE will be able to help you through each stage of your contracting career, speak to a member of our team on 0203 642 8679.