How to Successfully Navigate IT Contract Negotiations During COVID-19
Negotiating your rate as an IT contractor might seem intimidating, but it isn’t as difficult as you might think. The pandemic has indeed had a significant impact on contract negotiations, with many IT firms demanding more work for lower rates. Even so, you can still secure a good rate for your skills while building your reputation along the way.
Working with an IT recruiter can help you better navigate IT contract negotiations, ensuring you and your employer are both satisfied.
Before you start contract negotiations, decide whether you want to be a W2 employee or a 1099 independent contractor. Your employment choice will impact how you set your IT contract rate, as you’ll be personally responsible for withholding your own taxes and paying other expenses typically covered by an employer in full-time scenarios.
If your last full-time position paid $40 and you worked a 40-hour week, you were earning approximately $83,000 per year, or $6,900 per month. As a contract worker, you’ll need to set aside about 20% of that to cover taxes alone. To realize the “take-home” pay you’re accustomed to, you might want to negotiate a higher rate, say $45 per hour.
To get that higher rate, you’ll need to be able to justify it to an employer. That makes it important to benchmark a rate in your head before contract negotiations start. A good rule of thumb is to aim high but always expect to compromise. As every role and every IT firm is different, you’ll need to look at things like skills required, company culture, the market, and going rates.
Working with an IT recruiter can help you better navigate IT contract negotiations, ensuring you and your employer are both satisfied.
Common Types of Contract Rates
There are a lot of benefits to accepting contract work, particularly in light of the fact many IT companies aren’t hiring full-time employees at the moment. There are several ways contract employment rates are commonly calculated.- Project or short-term contracts sometimes command the highest rates, as it can be challenging to find qualified candidates for the positions.
- Hourly rates are often calculated for long-term projects. The per-hour rate is typically computed by dividing a full-time salary by 2,080, or the average number of working hours per year. For instance, a full-time IT position that pays $75,000 per year would equal a $36 per hour rate.
- Day rates are generally arrived at by adding a third to the salary you were previously receiving, with the additional money covering costs you now handle instead of your employer, such as travel, taxes and other work-related expenses.
How to Set Your IT Contract Rate
Negotiating a fair contract rate is all about showing value.Before you start contract negotiations, decide whether you want to be a W2 employee or a 1099 independent contractor. Your employment choice will impact how you set your IT contract rate, as you’ll be personally responsible for withholding your own taxes and paying other expenses typically covered by an employer in full-time scenarios.
If your last full-time position paid $40 and you worked a 40-hour week, you were earning approximately $83,000 per year, or $6,900 per month. As a contract worker, you’ll need to set aside about 20% of that to cover taxes alone. To realize the “take-home” pay you’re accustomed to, you might want to negotiate a higher rate, say $45 per hour.
To get that higher rate, you’ll need to be able to justify it to an employer. That makes it important to benchmark a rate in your head before contract negotiations start. A good rule of thumb is to aim high but always expect to compromise. As every role and every IT firm is different, you’ll need to look at things like skills required, company culture, the market, and going rates.
Let an IT Recruiter Guide You Through Contract Negotiations
Working with a Las Vegas IT recruiter can help you arrive at a contract rate that is fair to you and the business you’re negotiating with. To learn more about contract negotiations and the role a recruiter can play in a successful outcome, contact Taurean Consulting Group at 702-529-0378, today.