If you have chosen to work as a contractor then hiring firms and recruitment agencies will always ask you one question i.e, What is your expected contract rate? It will mostly rely on the type of industry you are working in and how much work you can do.
Your rates can be cited as either hourly or daily. It is confusing to opt between both the rates. It doesn’t matter whether you are new to contracting or doing it for a while, considering the merits and demerits of both the rates is quite necessary.
What is the daily rate?
Under this section, you will receive your payment on a day-to-day basis. Clients love paying the contractors on daily rates because they can ask to extend more hours to finish the task before the deadline. Also, they favor it because they can handle their budget easily.
But you must be aware of companies who ask to add more hours daily but pay less. That is why having a contract that states everything, from work hours to pay scale and T&C, etc., will be an excellent choice.
What is an hourly rate?
Here you will receive your payment on an hourly basis. Hourly rate is more popular. It is usually for rates less than £40 an hour.
Here clients have to be aware of ambiguous contractors as they can demand less rate and then present 60 hour weeks of face time to earn extra earnings.
Having a cap on the hours allotted is more advised. And when considering overtime, the manager will have to approve it. It will also help you as you will get less work at the last minutes.
How to maximise your earning?
Contract rate differs - Contract employ rates will change as per the industry and, obviously, the quality of abilities you have. Most of the time, your rate will decide if you should cite daily or hourly, as ordinarily those with a higher rate will cite daily rate.
Research is required - if you want to earn more through contracting, then you must do your research and evaluate all the alternatives. Check whether another hiring agency is offering a good deal or not. Make a list of competitors and check how they treat freelancers like you.
Too low or too high - Your rates should depend on the level of skills and the rates at which everybody is working. If your rate is high then nobody will hire and if your rate is too low, then the contractor might see you as a low-skilled and less experienced person.
Client’s expectations - On a daily rate, you will get paid for a set amount of time and this is mostly favored by clients as they can easily ask you to work more hours that’s why an hourly rate can stop clients from abusing your rights.
Check permanent employee rates - If you are considering contracting, then you must know how much permanent employees of a company earn for the same work. Mostly, a permanent employee earns less than a freelancer. It is also essential when contemplating IR35.
Nowadays, the hourly rate is more preferred than daily rates, as freelancers know their capabilities. For the contractors who have larger earnings, then daily rates should be preferred.
Just remember you have to work only for the amount of time you and the manager have decided. The expectations of your client should be met properly so that they will consider you the next time also.