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Old 13.12.2017, 02:30
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Contractor - Negotiating Salary raise after contract extension?

Hi there friendly EF'ers! You're helped me before and I'd love to hear your input on my current situation.

I've been working for the last 6 months as an IT contractor. My Project I'm working on is way behind schedule (was supposed to be completed in 6 months) but now looks to be going well into 2018. After having the possibility of going permanent waived above my head, I've now been offered a 1 year extension to my contract.

My Question is: Am I within reason for asking for a raise in my daily rate?

I've actually already raised this issue with my agency, but they're giving me the run-around saying that "they only raise rates after a year". My current responsibilities are getting more and more, and Ive been told I will be taking on an additional project after the new year.

My issue is that, the extension sent to me is for a full year, stating my current daily rate. Once I sign this extension, it basically says I'm ok with the daily rate for the next year, at least that's how I see it in my mind. Am I missing something here?

I appreciate any and all Input you guys may have, and any experiences similar to mine. Cheers and Thanks again!
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Old 13.12.2017, 06:57
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Re: Contractor - Negotiating Salary raise after contract extension?

Only you can answer that question, but I agree that if you sign a one-year extension, you’re committing to that rate and are unlikely to get more in six months. In fact, asking for more at that point will be seen in a very negative light.
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Old 13.12.2017, 09:28
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Re: Contractor - Negotiating Salary raise after contract extension?

If you want a raise, ask.

If you dont, don't.

But if you do, I suggest that you be prepared to negotiate hard as the agency will not want to give up some of their margin after only 6 months.
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Old 13.12.2017, 10:06
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Re: Contractor - Negotiating Salary raise after contract extension?

Most companies see a contract extension as an opportunity to reduce the rate; do you really want to start this horse running?
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Old 13.12.2017, 10:27
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Re: Contractor - Negotiating Salary raise after contract extension?

I share some thoughts on this but in the end it is up to you. After all you only get paid once a month and the motivation for the other days is depending on the job and environment.

What margin does your agency take do you think? They could be taking up to 25 % and over of your daily rate.

If you feel you are are underpaid and want to risk a change, then ask your agency for an increase with some reasoning (ie 12 months is long to commit, Switzerland is just so much more expensive than you imagined etc) - agency can either pass on the rise to the company or absorb it.

But how much of a rise are you proposing? Because it's not going to be life changing, a few percent at most which won't mean that much actual money increase.

And remember, it goes both ways : if they decide to cut all contractors pay by 10% and say take it or leave, or even just get rid of all contractors that can all happen in your 12 months.

And also, once you have signed, don't expect any rises until contract renewal, unless a rise is stated in the contract...
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Old 13.12.2017, 11:06
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Re: Contractor - Negotiating Salary raise after contract extension?

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My Project I'm working on is way behind schedule
I am not sure if this is a great time and position to negotiate a raise...
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Old 13.12.2017, 12:38
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Re: Contractor - Negotiating Salary raise after contract extension?

Hi Everyone,

Thanks for your reply.

The Project being behind schedule has nothing to do with myself or my performance, rather that the 3rd Party we are working with is behind schedule in their delivery.

I've already asked for the raise, but have been told that they don't raise rates before a year. Seeing as how this is a year extension, I don't see how they can claim this as the rate is written already into the contract.

My reasoning for asking for a rate raise is that I will be assuming the duties of an additional role which was not filled, as they couldn't find anyone qualified enough for this. I saw this role advertised by another agency for 1K a day, and my current rate is 30% lower than that. My goal was to see at least 15% of that amount, as my duties and responsibility will increase.

Can any other contractors out there speak to this in relation to their own experience? I don't have a large overview of the contracting market at the moment, other than what I've seen on job ads, but hearing from other contractors where I'm working I'd think I was well within reason for asking for a raise at the moment.

Thanks again for your input!
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Old 13.12.2017, 12:43
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Re: Contractor - Negotiating Salary raise after contract extension?

Its good you have already approached the agency. That is definately the first step. As they are giving you the run around they havent closed the door completely on the idea.

You are also having a perm position dangled by the company. Is this worth chasing up and going perm quicker than the 1 year contract extension?

Only you know what you can get away with and how the land lays, but I would suggest being firm with the agency and saying you expect an increase in salary for the 1 year extension and plan to discuss with your line manager/HR, that you havent signed the extension as you were hoping for better conditions from the agency.

If the company really need you and do regular business with this agency they will be comfortable to approach the agency and push the margins. And if the agency know this too, they wont want to rock the boat and can eat into their margins a bit.

The next question of course is will their increased offer be enough...
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Old 13.12.2017, 13:52
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Re: Contractor - Negotiating Salary raise after contract extension?

I work in this area and can tell you that rates for individual contractors almost never go up.


If you think about it, it does not make any sense that a contractor can turn around after six months and say "Hey, look at me. I have now gained more experience while working for you and want a raise".


However, most agencies reduce their margin by 2% at each annual contract renewal.


The daily rates we pay for software engineers is anywhere from CHF 800.00 to CHF 1'200.00 - the top rates go to solution architects and requirements engineers. This is to the agencies who will take between 10% and 25% margin off the top.
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Old 13.12.2017, 14:07
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Re: Contractor - Negotiating Salary raise after contract extension?

It also depends on the company you are working for. Some of the big banks have fixed rates for roles and the agencies have fixed margins, if you are in one of these companies there is little chance of a raise.

From my experience in Switzerland, the rate you start with is your rate, if you want a higher rate you change jobs.

I know a few people who have tried what you are thinking about and it didn't end well.

Also be very careful about taking on extra tasks, they will burn you out, and move on to the next contractor. If anyone asked me to take on more work I would ask what are you going to take away first.

By being willing to do more work, you are saying, you are over paying me because I am not busy enough. As a contractor you need to be able to see things from everyone's view point not just your own.
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Old 13.12.2017, 15:13
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Re: Contractor - Negotiating Salary raise after contract extension?

My experience is you cannot negotiate the customer to pay more, you can negotiate the angency to take less.
If this other role was offered at chf1000, and you are getting 700, does that mean the agency is actually getting chf1200 to chf1400 a day for you?
It would not surprise me if that was the case.

Find the day rate then go from there.

On my long term contract I changed agencies and the final commission was 7% for the angency, but I did approach them with an 18 month contract in the bag, they just needed to do the paperwork and payroll.
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Old 13.12.2017, 17:13
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Re: Contractor - Negotiating Salary raise after contract extension?

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Hi there friendly EF'ers! You're helped me before and I'd love to hear your input on my current situation.

I've been working for the last 6 months as an IT contractor. My Project I'm working on is way behind schedule (was supposed to be completed in 6 months) but now looks to be going well into 2018. After having the possibility of going permanent waived above my head, I've now been offered a 1 year extension to my contract.

My Question is: Am I within reason for asking for a raise in my daily rate?
If you think you are underpaid you should definitely ask for a rise, e.g. if you are an experienced DB Admin/Programmer and your daily rate is less than 700 CHF (all in) you are likely underpaid. It also depends on the client, big companies usually pay better than small and startup's. You can also check the ads on jobserve.com to get an idea, but be aware that there are certain agencies that constantly offer dumping rates - they should not be taken as a benchmark.
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Old 14.12.2017, 11:57
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Re: Contractor - Negotiating Salary raise after contract extension?

Hi Guys,

Thanks again for your helpful responses. I'll let you know once I have an update
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Old 15.12.2017, 13:09
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Re: Contractor - Negotiating Salary raise after contract extension?

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I work in this area and can tell you that rates for individual contractors almost never go up.


If you think about it, it does not make any sense that a contractor can turn around after six months and say "Hey, look at me. I have now gained more experience while working for you and want a raise".


However, most agencies reduce their margin by 2% at each annual contract renewal.


The daily rates we pay for software engineers is anywhere from CHF 800.00 to CHF 1'200.00 - the top rates go to solution architects and requirements engineers. This is to the agencies who will take between 10% and 25% margin off the top.

I'm not a native speaker, does this mean that the contractor takes 75% from 800-1200CHF what the agency gets paid?
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Old 15.12.2017, 13:15
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Re: Contractor - Negotiating Salary raise after contract extension?

also, if you ask the agency about their margin, will they tell you?
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Old 15.12.2017, 16:30
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Re: Contractor - Negotiating Salary raise after contract extension?

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also, if you ask the agency about their margin, will they tell you?

In a game of Texas hold 'em, If another player asked you to show them your cards, would you...?
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Old 15.12.2017, 16:31
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Re: Contractor - Negotiating Salary raise after contract extension?

Find another contract that pays better and then walk when the current one expires. I lost a contractor from my team as he found a better rate elsewhere and agency / my upper management were not willing to up the rate.

I don’t begrudge the contractor for a minute - but it is annoying when somebody effective leaves after becoming familiar with one’s project. The agency however will not be in my good books.

Cheers,
Nick
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Old 15.12.2017, 17:41
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Re: Contractor - Negotiating Salary raise after contract extension?

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In a game of Texas hold 'em, If another player asked you to show them your cards, would you...?
You don't ask that - you ask "do you have the queen of hearts" and see what their reaction is.

Same with the agency - ask if the rate could increase by X and from their reaction you may be able to judge if you're taking the mickey, on the mark, or selling yourself cheap.
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Old 15.12.2017, 20:23
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Re: Contractor - Negotiating Salary raise after contract extension?

If you feel that they want you and can't do without you then you can play it as if you're otherwise not going to accept the extension. The agency might get very nervous but they might also say ok we withdraw our offer. If the role that you will be doing is not significantly different to what you were first hired for then the client probably won't want to pay more. BTW, agencies are well known to take 40% or more.
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Old 15.12.2017, 20:42
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Re: Contractor - Negotiating Salary raise after contract extension?

40%??!?!?

holly shit, that's some ruthless shit right there.....
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