Stop telling consultants to charge less and start valuing the work
Am I pricing myself out of jobs with a day rate of £350?
A recruiter said it should be £200-250 per day.
My opinion - that is ridiculous. Sorry recruiters.
Stop telling self-employed people what day rate they “should” charge, and let’s start looking at how we value skills, experience, qualifications, and, most importantly, PEOPLE.
Yes, there are ceilings, industry standards, budgets, and many other problems affecting companies.
You can’t just charge what you want and expect that you will win all the work because you think you should be paid £10,000 a day. But come on, companies, please look at this more closely before putting out these ridiculous rates.
£200 per day.
8 hours, I presume?
= £25 per hour.
THEN let’s consider what else needs to go into this calculation if you’re self-employed.
20% for tax (lower rate): £5
10% for NI: £2.50
A proportion of your operating costs - what basics would they want you to have?
Insurance, ICO registration, a laptop, broadband, a phone, and an email address are a bare minimum. ...let’s say £5 for argument's sake.
So you're now down to £12.50 per hour - The Living Wage is £13.45…
If you are self-employed (or a limited company), you get no sick pay, holiday pay, professional development, equipment, pension or perks, never mind guaranteed work or money at the end of the month.
A contract is for a set time, and you can be let go easily (even with a contract in place), and you may be juggling long-standing retainer clients because you know this isn’t for long.
Importantly, we’ve not even accounted for all the experience, knowledge, qualifications and skills you possess and continue to develop at your own expense.
I see more and more companies dressing up roles as freelancers/contractors when they want employees without the complications.
Rolling out “job descriptions” and things like “must be on-site Monday to Friday, between X & Y time”, ridiculous stipulations, ridiculous expectations… It’s not cool, kids, it’s really not cool.
And of course, we’ve not touched on if it’s an inside IR35 contract and Umbrella company costs. That’s a whole other conversation!
So back to the matter in hand…
What’s the per-hour rate in a salaried position?
60K job
40hrs pw = £28.85 ph with benefits (Salary+30%).
So if it’s a £60k per year salary for that job, then the contractor rate calculation should be:
Basic salary + 30% as an absolute bare minimum*
£37.50ph x 8hrs = £300 per day
But sadly, I know it probably won’t be calculated using that methodology!
*The calculator on Artema’s website is really helpful for understanding how employee costs are calculated.
Now, before someone says “your calculations are wrong,” - it's just a very rough, point-making calculation, but feel free to enlighten me if I’m totally incorrect.
So, tell me how £200 per day is about "right" for a highly skilled professional living and working in the UK in the current financial climate?
The question should be how can I charge more, not less, as a consultant?
I'm not going to say it's easy, and I certainly don’t have all the answers.
It takes time, effort and patience.
It's a numbers game.
It’s about structuring your business or company in a way that you have multiple streams of income, and one of them is working with corporate companies.
Here are my top tips for charging more as a consultant
Firstly, it’s about understanding and learning how to work with "corporate" companies and C-suite buyers, their buying journey and how you fit into the industry "standards" and pricing models. It's the polar opposite of working with solo/micro/small businesses.
Secondly, do your own direct lead generation and sales directly to companies and organisations rather than trying to get work through recruiters (they charge a fee, so it will eat into the company budget and your day rate!).
Choosing a market or sector to work with, honing in for a good chunk of time (3 months) and being relentless but following a solid strict sales process.
Ensure you have clear services and baseline offers/packages, but be open to learning what they need and coming up with a proposal (or two) after a sales call. Following up and keeping in touch.
Be aware that things take time to go from conversation to delivery to getting paid. Months.
In my work with corporates, I'm a Business Improvement Consultant/Business Systems & Technology Consultant, specialising in process and system improvement.
I offer services around:
Process improvement/ diagnostics
Process design
Audits
Risk assessments
Scoping new systems
I talk about saving time, saving money, making more profit, maximising resources, etc.
Very different language and services from when I work with freelancers or micro businesses.
I’ve learned a lot over the years and never stop learning or presuming that I know it all - I don’t.
That’s why, a couple of years ago, I invested in working with Jess Lorimer, who is an expert in selling to corporates. I was part of her course/membership (which will close this year). She is absolutely brilliant (and a fabulous human) and gives you amazing, no-B.S. advice on her podcast and newsletter.
So, the answer to how to charge more and get away from £200 per day is to change your approach and tactics, and for companies hiring contractors for a pittance to do better!
Looking for business consultancy or advice? I am here.
I can work with you to improve the foundations of your business and explore ways to introduce or enhance the services you offer and the profits you make.
Send me an email, book a no-pressure virtual coffee, or head to my services page to find out how I can help.
Not ready for that yet? No worries — here are other ways to keep in touch: