salary negotiation for contracts I love it step green what's happening buddy when considering
contract assignments versus full-time roles how do you approach salary negotiation for contract
and contract to hire roles okay here's I'm going to give you the ideal scenario if you're going to
negotiate for a contract you just negotiate for the contract you're going to pay me $100 an hour
I'm going to do this maybe we agree that we're going to visit this in revisit this in 90 days
180 days 270 days or 365 days whatever it is right and that that's fine and you negotiate
and how much money you want to make per hour can be dependent on a number of things and it's more
art than science but remember rule of thumb there's about 2,000 working hours in a year
rough cut just for Fast Math if you make $100 an hour you make 200 Grand a year except you're
not getting benefits you might not be getting vacation you might not be getting other perks
long-term you know incentive plans or disability or all these other things okay so so you have to
keep that in mind when you quote a rate then if it's a contract to hire let's say we negotiate a
100 bucks an hour and we decide in in six months you want to turn me into an employee at 100 bucks
an hour I'm roughly making 200 Grand except you're also not getting all the other things and you're
not counting and you're in the US and you're not counting all the additional expenses the
employer has to pay in terms of of uh employer tax right there's another 16% I like there's a
lot of other taxes they're going to have to pay roll tax and other things that they're going to
do they're also going to start putting in vacation every one week of vacation is 2% of salary so if
I give you a week of vacation that's four grand effectively or if you're earning a 100,000 it's
two grand so you got to understand those kinds of things not to mention General paid holidays
and other things like that that go along with whatever uh the employer is going to give you
as a perk not to mention there could be 401K matches there could be just the fact that you
have a 401k and are able to siphon off uh dollars that you don't have to pay taxes on at least at
the moment and those kinds of things so you might go from 200,000 to the equivalent to 15 50 except
the 150 at 75 an hour as opposed to the 100 an hour is an even better deal for you so so those
are the kind of things now what I tend to do and recommend and I I actually coach a lot of people
on this who are going through these scenarios where they're in a contract and they're trying
to convert and they're they're going to convert and they're like and I need help negotiating
this so a lot of times what'll happen is we will lay down for them um Stephen you're in the boot
camp so you have the grid and you know what I'm talking about right so you got to identify well
here's what you want me to do goals and objectives this and that now if it's a contract to perm and
you're staying in the same position you have a running interview of 6 months or 3 months or 9
months or whatever it is that a track record of proving yourself that you're a dang safe
bet right kind of thing otherwise they wouldn't be hiring you and so you're going to lean on that as
a throwin of hey and I'm a good bet and you could see obviously how I perform but I would still be
focused in the future just like I was trying to negotiate a pay raise but you're also not it's
it's not an apples to app comparison but you would go about it the same way and I would prefer the
last thing I want to say about this is you do not lock in your salary at the time you start start a
contract meaning you don't say I'm starting as a contractor today and then in 6 months I'm earning
$100 an hour now and in 6 months you're going to pay me 150 in salary don't do that don't do
anything until you get right up right up to the to the negotiation table for when they say we want
you to we want you to um to to become a full-time employee because why because I want you looking
for other opportunities along the way and I want you to be able to hold those other opportunities
right as leverage when you're negotiating your salary going forward with the company who you're
going to be converting with the other thing is you might want to convert sooner than the 6 months in
3 months of the 6 months you might get a great job offer that while really good you would take
it but you'd prefer to work for the company who you're Contracting with right what how do you
know what's going to happen then you turn to the company you're going to be contracting or you're
contract when you say look I love you I want to stay here these guys gave me a great offer
can we convert me now right kind of thing I don't want 150 I want 175 right kind of thing well you
won't use those words but you know what I'm saying for purposes of of illustration so you want to be
careful uh Udo udono uh do you have any tips for salary negotiations for somebody transferring from
a contingent worker to an employee there you go Ian what's a good way to negotiate a shift there
you go can can an hourly wage be negotiated now you got to remember when you're a contractor most
much of the time what happens is if I'm the hiring company and I need certain people contractors even
if it's just one but let's say it's multiple I'm working with a number of staffing firms
at the same time and I'm saying can you get me an accountant can you get me 10 accountants and
what happens is I'm going to take the lowest cost ones right because I consider those commoditized
it's I should be able to find them I go to firms that have relationships so they can get them to
me quickly and this stuff is over in a matter of hours not days okay it's kind of like the wreck
goes out at 8:00 and then it doesn't you know like by noon who like I'm going to have 25 resumés kind
of thing so when you start negotiating hourly wages that are outside the boundaries of a
contract uh basically a contract rate that I would prefer to pay you need to be pretty exceptional
and it's a rare it's it's much much harder to make an argument about the Rarity when you're
on a contract like this now now the Other Extreme is I'm so awes that I don't want to be a full-time
employee for everybody because I have such a rare skill that I I contract myself out to the highest
biders and I can make a lot of money and people have to pay that because I'm so uniquely skilled
or I have such an area of specialty so you can use the same kind of negotiation tactics right
you got to show your value and why it's so rare and all that other good stuff but so you want
to be really careful so when you're working with a recruiter and I I would not even call
recruiters who work for staffing firms recruiters they're more agents than anything but when you're
working with that person and that person says what is your what is your uh rate I'm inclined
if I just need the work to say what's the standard rate that they would normally pay to get this the
contractor to do that and then I would decide if I was okay with that and then I would say
yes I'm comfortable with that or no I'm not you know normally I receive whatever but I wouldn't
be so high because they're just going to move on to the next person and if you're trying to
negotiate this as an individual but not through a staffing firm then you just need to be careful and
it also is going to depend on your relationship strength your relationship with the person you're
negotiating with and whether you have a track record with them so that's what I would say there