Having done contract work, newcomers to the field often ask me the age-old question… “How much should I ask for?” The employer wants to pay the least, the employee/contractor aims for the most.
All too often one party or the other brings up the rate question far too early in the conversation. If there is a mutual interest in the position being discussed, and both parties are being fair and equitable, the question can wait. The main focus should be on the job and expectations. Once there is an understanding, then the rate discussion can begin.
How do I get the best rate while staying on good terms?... Have some trust in your potential employer and be honest with them – and yourself. They know the range that is appropriate for the position. They know either from experience or help from a labor acquisition firm. Ask for their range, then be honest with yourself and them – does your experience warrant the top of the range, or closer to the bottom (at the same time, don’t sell yourself short)? Be prepared to negotiate, and at the same time prepare to justify standing your ground.
What if they push me for MY ‘expected range’?... When I’m pushed, I calmly explain that my rate ranges from ‘free’ to ‘you can’t pay me enough’. It all depends on what is being asked for and by whom. If you want me to do something easy, on my schedule, and I support the cause or organization, I may do it pro bono. Likewise, if you want me to take over as the scapegoat for a severely failing project with angry team members, excessive hours, and heavy travel… well, I will want a bit more for that. As long as the range is appropriate, I have the utmost confidence that we can find an agreeable rate.
But how do I know what a ‘fair rate’ is? How do I compare offers?... That is tricky and comes down to running the numbers. The first thing to do is determine if you will be a W2 employee (with benefits like insurance and paid time off) or 1099 (picking up everything yourself), then look at the stability and expected length of employment. A long term, steady W2 job is very different from a three-month 1099 contract. That is why someone might make $20/hr balancing the books while a temp helping to prepare for an audit pulls down $80/hr. And why your mechanic gets $9/hr while you get charged $75/hr for their work. The amount per hour is just a piece of the equation and the size of that piece depends on the type of position.
Once W2 vs 1099 is determined, you can add the other things to consider so that you compare apples to apples, and not to oranges.
• Are benefits covered or do you have to supply your own?
• How much paid time off is included? If it is for a set term, how many weeks of padding afterward do you need to line up a new project?
• Are travel and business expenses covered?
• Is overtime available? (Never count on it.) Similarly… Are 40 hours a week guaranteed?
• Does the job offer anything that adds value to you? (e.g. included training, new experiences)
• Will you wind up paying a higher/lower income tax rate?
• Can you work from home? Similarly… Do you have to provide your PC, etc?
• What is the percent of travel? Do you need to be away each week?
It is a lot to take into consideration, so here is a quick spreadsheet to help you get started. I make NO guarantees as it is only intended to help get a quick comparison. You still have to run your own numbers.
While all of this will help you compare potential offers and give you a better ability to see if the rate is right for you, the bottom line will always come down to one thing… Is this the job for you?
