It’s a question that everyone working as a contractor will ask themselves. How can I make more money in contracting?
Depending on the industry you are working in, there are various ways to boost your income. For those who are already contracting, you may be ready to adapt your work in order to earn more.
Ask for more money
If your work is of a high standard and your end client values what you are doing, then you can negotiate a higher rate of pay.
Negotiation can be tricky, so it is important to do your research. Focus on comparing the market rates, outlining the benefits of your work to the company and the value you bring with your experience and expertise to place yourself in prime position when negotiating contractor rates.
Become a consultant
If you have been working as a contractor on a project, for instance, you could ask the client to retain your services on a consultancy basis once the project comes to an end. You will be able to charge more money on a daily basis because you can offer the client a high level of expertise.
While working as a contractor, make sure to go the extra mile to make a positive impression on the client. This will enhance your prospects of the client retaining you on a consultancy basis.
However, you must review your contract carefully to make sure there are no restrictive covenants that prevent you working for the client before you make any changes.
Source contracts directly
While using a recruitment agency makes finding work easier, there are benefits to contacting potential clients directly. You will avoid the agency fees, which can be 15% to 20% of the contract value.
It’s also possible to establish a relationship with a new high-paying client and offer to work on future projects (which is not always possible under an agency contract). There’s also the potential of supplying other contractors to the end client on a commission basis which could substantially boost your income.
Think about training
If the client wants to train their permanent staff with the skills you have, you could offer to run a training course. Providing staff training can be an expensive undertaking for any employer, but having someone in-house will reduce the cost substantially; this also means you will be able to negotiate enhanced rates for sharing your expertise. Ensure any training contract is carefully worded to retain your rights over any specific IP or training materials.
Additional considerations for independent contractors wanting to earn more money
A key benefit of working as a contractor is being able to charge a higher rate for your time than those in permanent employment. However, with increased contract value comes increased deductions, such as tax. As a contractor you will want to ensure that you work in a tax-efficient way, and you may wish to consider whether you will need to use an umbrella company or create a limited company.
An umbrella company tends to be most popular for those starting out in contracting, because someone else takes care of your administration including National Insurance and income tax deductions.
With an umbrella company, you submit your time sheets and they will chase-up the client for payment. By doing so you will be free to concentrate on your contracting assignment.
Setting up a limited company
The alternative to an umbrella company is to create a limited company. While this route may deliver a slightly higher income than using an umbrella company, you will have your own statutory and legal requirements to comply with, for instance filing tax returns and company documents on time.
The ContractingWISE team can help anyone who is considering contracting, new to contracting or already contracting. We can help you understand whether an umbrella company or a limited company is the best option for you by providing information to those starting out in a contracting career, as well as those who are already well-established.
So, when you want to make more money working as a contractor, you could look to attract high-paying clients. You could also consider negotiating terms and bringing more value to your client. Both suggestions could help make working as a contractor a lucrative and rewarding career.