Many contract workers are asking themselves the same question right now; is it time to review contractor pay rates?
Contractor insurance specialist Kingsbridge has written some advice on how contractor pay rates should be approached.
The Kingsbridge blog looks at how to increase contractor pay rates without alienating clients.
It says: ‘With a potential lack of work during 2020, and a keenness to secure clients in 2021, you may not have increased your rates since before the first lockdown. In addition to this, you may now be working inside IR35 and therefore be making less money due to being taxed at source as an employee.
‘But how do you decide what to raise your rates by, and how do you pitch it to clients without losing them? At Kingsbridge, we have extensive experience working with contractors and we have a few ideas.’
Do Your Research
The Kingsbridge blog recommends checking the industry average for your work and considering where your experience level places you on that scale.
Location and demand are also factors.
The Kingsbridge blog goes on to advise testing the waters, seeing how clients react to your new rates, and give clients plenty of notice.
It adds: ‘Additionally, it can always be a good idea to remind them of when you last reviewed your rates (if, indeed you have). Employees get annual pay increases so if you haven’t raised your rates since April 2019, say so as it will highlight exactly why it’s necessary to you.
‘Perhaps write something along the lines of, “I last reviewed my rates two-and-a-half years ago and increases in expenditure during that time, as well as my own increased experience, has prompted me to look at them afresh and raise them in line with the cost of living and my expertise.” Something like that gives them a reason behind the raise, as well as justification.’
Don’t Forget IR35
The article also considers the impact of your IR35 position, and suggests your rates should take into account the needs, resources and size of individual clients.
To read the full article, visit Kingsbridge Insurance.
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