How much are you worth? Setting your day rate as an IT contractor

“Hard-working, talented IT contractor, day rate = £XXX. Seeking attractive prospects for potential ongoing relationships. Drinks and maybe more?”


Promoting yourself as an IT contractor isn’t too far from placing a personal ad on a dating site. The major difference is that “drinks and maybe more” isn’t the outcome you’re hoping for; it’s work.

(Actually, scratch that; if the client is buying, by all means get boozy with them. Just make sure the ‘maybe more’ translates to a work contract afterwards!)

But how do you get the clients to want to meet in the first place? You’ll obviously have the talent for the job, but is your day rate hitting the sweet spot? As freelance contractors, you’re always walking that delicate tightrope between charging too much and selling yourself short.

Love at first sight

It reminds us of the The Office’s David Brent, who when filling out an online dating form says: “You can’t put ‘very attractive’. It looks like arrogance, doesn’t it? Put attractive. She’ll see me.”

If you sell yourself short like this when it comes to your day rate though, not only are you letting your clients off for cheap, but you might come across as less skilled than you are and not even get the interview. Alternatively, you might get a meeting but then find you’re actually overqualified for the position.

Then again, if you do put ‘very attractive’ – or in this case, quote a day rate that’s too high – you could end up putting off the clients from the get go. The client needs to approve of your day rate at first sight, or they could move straight past it.

Ultimately you want to ensure you’re getting paid fairly for what you can bring to the table, and yet you also want to make sure you secure the work by charging an affordable rate. It’s a delicate balance, and one that many IT professionals struggle with. Just how much are you worth?

Plenty of fish to research

Permanent positions are often advertised with salaries – or at least salary guidelines – attached. This makes it much easier for you to know whether you’d be suited for the role. If the salary seems to be the next logical step for you to make in your career, and you have the required skills they’re looking for, you can apply with confidence.

Unfortunately this isn’t a luxury granted to many IT professionals when they’ve gone contract. Unless potential clients have quoted ‘market rate’ as the amount they’re willing to pay, it will be up to you to provide them with a quote. Besides, market rates for IT professionals will differ drastically depending on the skills required for the project.

Like you though, there are plenty of other proverbial fish out in the proverbial IT Professional sea, so start researching.

 Ask other contractors what they charge

Sounds simple, but you’d be amazed how many people don’t do this. Of course there are reasons why people working in the same profession as you would want to keep their day rates to themselves; they might feel they’re charging too little, or that their competitors could undercut them.

The problem with this is that if contractors don’t discuss their day rates, new contractors will come in and undoubtedly price themselves too low. This will eventually push all day rates down, as the market for contractors becomes too competitive. So chat with other contractors, and make sure you’re earning what you should be.

If you have any contacts working in HR, they could also be very valuable to you. As they often deal with invoices and contracts, they can let you know what the going rates are.

Use online salary tools

Researching through salary tools is one of the best places to start when deciding what to quote. LinkedIn’s salary tool amalgamates hundreds, maybe thousands of submitted salaries, to show the median yearly salary for a particular job title in a particular location. Alternatively, you can just search by country. Let’s take a look at some popular IT job titles and their salaries in the UK on LinkedIn.


Job title:                                 Median base salary (per year)                     Range:

IT Consultant                           £40,000                                                           £22K-£77K

IT Manager                             £42,000                                                           £30K-£62K

IT Analyst                                £25,500                                                           £18K-£40K

IT Project Manager                 £46,000                                                           £33K-£65K

IT Engineer                             £25,400                                                           £18K-£36K

IT Administrator                      £23,600                                                           £17K-£40K

For further salary research there are other versions of this tool available, such as Glassdoor’s. These average salaries are for full-time positions of course, so next up would be determining the additional costs you have that need to be compensated for.

The perfect match

There are two main reasons that IT contractors can charge a higher day rate than that of their counterparts on full-time salaries. The first is that a contractor doesn’t work every working day like someone in permanent employment does. The second is that there are plenty of additional costs the contractor has to factor in, such as:

  • Tax
  • National insurance
  • Healthcare
  • Funding your own sick pay
  • Funding your holiday time
  • Travel expenses
  • Business expenses

The trick is to find the perfect match between payment for your work and funds to cover these costs. For one thing, be realistic: there’s probably no way you’ll end up working all of the 252 working days in the year. The actual figure might be something closer to around 120-150 days a year (we’ll call it 135).

So let’s say your expected salary if you were in a full-time position was £45,000. If you divide that by 252, that comes to a day rate of £178.50. Divide by 135, and it comes to a day rate of £333.

This isn’t taking into consideration the things we mentioned however (besides tax and NI). So, instead, let’s say your day rate was £450. Multiplied by 135 working days, it comes to annual earnings of £60,750, which after tax and NI would be similar to the full-time salary, giving you enough to cover any additional costs.

Assess your own value

When you think you know all you need to know about day rates, there’s one more thing you need to ask yourself honestly: how much value do you provide to the client?

If you feel good about what you’re charging, and you can produce the work to back it up, then you should feel confident and stick to your guns.

When you first go contract, there are likely to be times when you undercharge for work, and times when you quote too much and lose work. Use this experience to determine the right day rate for you.

Now, who’s up for drinks and maybe more?




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