What are the best ways to encourage your clients, new and existing, to pay you more for your expertise? Talking about pricing is something which scares many contractors. It’s hard to balance the feeling that you’re worth more against the fear of losing a contract.
Know what your competitors are charging
While the temptation may be to lower your price to win the work, be careful that this is not the way you begin a new relationship with your client. They might be engaging you simply because you’re cheap. If you were taken onboard purely for cost reasons then it’s going to be easier to drop your prices than raising them.
You can find out the rates other contractors in your area and with your specialities charge by looking at certain websites on current and historical job information.
Research your industry
There are many types of contractors, as you will have seen on the Contractor UK site we’ve just linked to. According to their research, a Java contractor can charge in excess of 10% more than an SQL contractor. Likewise, a contractor with the skills to head a data analytics department can command £250 more a day than a contractor with quantitative analysis development skills.
When marketing yourself to new clients and persuading existing clients to give you work outside the normal scope of responsibilities they know you for, push your niche skills as having additional value that gives your client a competitive and operational edge.
As well as giving you the chance of securing more financially lucrative work, your CV may be overlooked by a client looking for the skillset you offer because you have not drawn their attention to it.
Your recruiter can be your friend
Although many contractors have a deep-rooted suspicion about the level of cut a recruiter is taking from them, recruiters can also be your friend. They are born dealmakers and, if you’re not comfortable with the idea of asking for an increase in your rate, they can do it for you.
IT Contracting sums it up well – they are experts at keeping their clients happy while gently raising the value of bills over time which “maximise(s) their commission.”
Tell clients you want to financially maximise your time
If you’re new to contracting and going through the struggle that we all went through in finding paying clients in our first 12-18 months, what we’re about to say may sound like the height of hubris.
However, as you become a more experienced contractor with successful client jobs under your belt and a wider range of skills, you will often find that most of your work comes from existing clients rather than projects you have won through prospecting for new business. Over time, you will start to become gradually dissatisfied with the rates you charged in the past (because they were too low) and some of the types of job you worked on (not mentally taxing enough or too mentally taxing for the reward).
This dissatisfaction will lead you to be more selective about the clients you work for and the jobs you take on. As Matthew Anderson at TheSelfEmployed website says, “(r)aising prices is a good way to cut out the bargain hunters and leave yourself with a solid core of valued clients. This way you can focus your attention on clients you really enjoy – a win-win for both of you.”
And he’s right about this. You’re in charge of your contracting career – you’ve always been in charge of it. Be selfish about the type of work you want to do and the amount of money you want to make from it.
Be prepared to walk away but don’t spring it on your client either
The art of deal making is compromise. If your client doesn’t like your initial offer, be prepared to be haggled down. Because you know you’re going to be haggled down, make sure your initial offer is high enough that you can meet in the middle, get paid a rate you want, and feel confident that your client is happy moving forward with you and your services.
You may wish to stage a series of rate rises over the course of the next few months so that you receive incremental benefits straight away and that your client has time to adapt their business model.
Try not to spring a rate rise on a client a few days before a contract comes to an end, recommends Rethink Recruitment. Instead, they recommend that you should start negotiations between four to six weeks in advance of a renewal or contract rollover. “There’s the potential to damage a good relationship” and, if the client is not agreeable and you need to walk away, you will have ample time to line up your next contract in the remaining time.
Demonstrate added value
The Recruitment and Employment Federation suggests that the best ways to secure future rate rises are to:
- be on time and, on business- or project-critical tasks, be prepared and happy to stay back
- be generous in transferring your knowledge to your client’s staff
- subtly describe the ways in which you have added value to the team you’re working with and the company as a whole, and
- don’t round your bill up to the next hour.
Discuss your future pricing strategies with contracting experts Umbrella Broker
To speak with one of our team about your pricing strategy, phone 0161 464 8708, email customerservice@umbrellabroker.com
