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4 Hourly Rate Negotiation Strategies for IT Consultants

By Eliassen Group
Jul 12, 2016 11:30:00 AM

If you’re a talented IT consultant looking for a contract or a permanent position, you know that your skills are in high demand in the current business environment. As many companies have a greater need for IT consultants who can jump in on specific short-term or long-term projects and have expanded their budgets to quickly ramp up when these needs arise, there are a plethora of opportunities available to you.

As an IT recruiting firm, we frequently have discussions with technology professionals about hourly rates and, when times are good, consultants tend to have higher expectations when it comes to compensation. Now, we certainly understand this expectation. But as career advisors, we typically provide a few pieces of advice when it comes to money:

Don’t leave one position or go to another solely because you want more money. In our experience, taking a new role strictly because of the pay typically does not translate to a successful employment situation.
While the job or project may look great on paper, there are so many more factors that you must consider. It’s imperative to ask yourself questions like:

  • What is the environment like? Will the company culture be a good fit for me?
  • What is the team like? Will I be able to learn from and collaborate with my colleagues?
  • Will I be learning any new tools or technology?
  • Is this role really what I want to be doing every day?

If you can’t answer at least a few of these positively, then chances are you will be looking for a different job before long. So don’t make a move just for the money; go for the great project, the fantastic people and/or a company that is up-and-coming.

Be honest and up front with everyone involved. This goes for your recruiter partners, as well as the clients who are considering you for a contract role. The most important thing you can do is to be transparent with your recruiter about your personal and professional needs so that he/she can match you with a client and an opportunity that meets those requirements.

That said, you must take the time to figure out what these needs and requirements are up front prior to engaging with potential employers. Once you’re down the road in the interview process with a specific client, changing up your expectations mid-stream simply because you talked to someone else with a similar skillset who is making more elsewhere can lead to frustration on all sides.

Determine an hourly rate up front and feel confident about it.
Many clients will try to compare rates with what you were making in a previous role or contract position. So be prepared to discuss your hourly rate or salary expectations. This discussion will be your starting point. Remember that if you are looking for $30 more per hour, for example, because you have acquired a particular skillset, you must be able justify the increase. Did you pick up some great new skills in that recent position or are there personal reasons that require you to seek additional compensation?
For contract opportunities, candidates typically get a good idea of the job opportunity up front, find out the length of the contract, and the skills that are required. This provides a strong baseline so that consultants can make some clear decisions.

As tech recruiters, we also urge IT and tech consultants to target an hourly rate by doing some research. What are these roles paying? Websites like Salary.com can be helpful for this. You must also understand what your benefits options are and what they will cost you up front. It often falls upon the consultant to purchase his/her own health, dental and life insurance so you want to arm yourself with these costs before quoting a rate. Additionally, you will want to consider vacation days, sick days and holidays when the client is closed and you will not be billing.

Once the target hourly rate is established and communicated, the client will expect to close at that rate. No one wants to go through the interview process to then find out that you’re looking for $20 more per hour. That said, if the rate deviates by $5 at the end because you may have heard that you will need to be on call longer, for example, then the increased rate might certainly make sense. But, in general, you want to be confident in your target hourly rate up front.

Lastly, be sure to find out what you can expect in terms of average billable hours per week. Does the client cap their hours at 40 per week? Or is it 35? Knowing this information up front will save everyone a lot of heartburn that comes from trying to negotiate for more money after the fact.

Seniority and Generational Differences
Most often if someone has a great deal of experience in their field, he/she knows what related positions are paying. And this is particularly true of contractors who have held many roles at various organizations. Keep in mind that while many clients value this level of experience, some just pay less; good IT recruiters have strong relationships with their clients and will know which ones are willing to pay a premium for these extensive skillsets and which ones are not.

Naturally, we also see differences between what younger tech professionals are looking for vs. those who are more established in their careers. And compensation can vary depending upon the various benefits and perks that may come with the company and the role.

Given that some IT positions can be performed remotely, many tech consultants work from home. For consultants who value the ability to work remotely, they are often willing adjust their rates. Where an IT consultant might expect $125 per hour plus expenses, for instance, they might be willing to take $80 per hour in return for the ability to work from home since they are able to eliminate commuting costs and have greater work/life flexibility.

For younger tech professionals who are really keeping up on technology and acquiring new skills regularly, we often see higher rates for companies that value these skills, especially on the DevOps side.

And let’s not forget some of the perks that might come along with the position such as free parking, an onsite gym or gym membership, quarterly incentives, and food options.

When all is said and done, understanding your personal and professional needs, feeling confident with your compensation requirements and being completely transparent with your recruiter and potential employers will lead you down the path to a successful contract role. Be sure to look at the big picture, not just the money, and your next job will be a win for both you and your employer.

Do you have questions about hourly rates and how to figure out a realistic goal? Are you seeking a new IT position? Check out our current job listings and send us a note - we’d love to hear from you: solutions@eliassen.com.  

Eliassen Group

Written by Eliassen Group LinkedIn

Eliassen Group is an award-winning consulting and talent solutions firm with specialties in IT staffing, Agile consulting, creative services, managed services, and life sciences.

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