Cautionary tales of negotiating your day rate

When I first started in Change Management, I didn’t even know day rate contracting was an option. I had been on a fixed term contract before but it wasn’t until a couple of weeks into my first Change role, a recruiter called me about a Change Analyst role he had going, and when he said the day rate of $750 per day I almost fell off my chair! Multiplied by the number of days in a year, that was $273,750 of annual income! I was 27 at the time so that was like $10k for every year I’d been alive.

I already knew project work paid more (a Digital Marketing Project Manager colleague in my previous workplace had told me that), and it was one of the main reasons I had moved to Change Management. But I thought that meant salaries - I didn’t know there was a whole untapped employment type of “day rate contracting” that was exceptionally lucrative and in high demand!

So I asked a fellow Change Analyst about it and she confirmed that day rate contracting was normal and the rate was reasonable and on par with industry standards. This was for a junior Change role - more senior roles commanded day rates of up to $1200 per day!

It seemed too good to be true. So further conversations and research helped me understand that day rate contracting is indeed exceptionally lucrative, but you do need to go in with your eyes wide open and the right information to make sure you’re not worse off overall when you negotiate your day rate.

Here are my top tips to negotiate your day rate with confidence:

And heads up: the information and any figures provided are for general purposes only do not constitute personal advice or take your specific needs or circumstances into consideration. You should look at your own financial position, objectives and requirements, and seek financial and tax advice if required.

Compare apples with apples

Day rates are a flat fee paid to a contractor and don’t include a lot of permanent entitlements. So you might need to take out things like superannuation (or your country’s equivalent retirement requirements), leave, bonuses, and company-specific benefits like product allowances or discounts. A $750 day rate might give you a salary equivalent more like $145,000 rather than $273,000. It’s still a great rate, but you need to then decide if you’re better off or worse off overall compared to your current permanent or fixed term salary. I explain step-by-step how you can calculate salary equivalents for yourself so you can earn your best worth in my Intro to Change Management Webinar, which includes a done-for-you table of estimates for the most common day rates. It’s one of the reasons I recommend the webinar to experienced Changies and newbies alike - information is power, and no one ever really shares all the pros and cons of perm/fixed term/day rate and how to be sure you earn your worth. But it’s foundation knowledge for any Change career and can build your confidence fast to pitch yourself at a higher day rate.

Ask the question at every contract renewal

When you’re contracting, your employer doesn’t give you pay rises as part of an annual salary review. Your worth is in your hands and if you don’t graduate yourself from day rate to higher day rate, then your pay can stagnate because no one else is going to do it for you. The cost of living keeps increasing, your skills and experience and value keep increasing, so your day rate can too. If your contract is getting renewed or you’re going for a brand new contract, use this as an opportunity to pitch yourself at a higher rate.

Let your recruiter negotiate for you

I was always happy to ask my employer if there was the potential for an increase on my rate. But I also leveraged the support of my recruiter, whose job is literally to secure you a new contract or renewal on a current contract. Increasing your rate has a flow-on benefit to them in commissions, so make the most of their services, provide your day rate expectation to them, and let them have the conversation with your employer (i.e. their client). I preferred to flag the potential for an increase with the client first, but let my recruiter do the actual negotiation, as it helps to keep a good relationship between you and the employer.

It’s actually a mindset shift

I think the biggest thing that holds Changies back from going to day rate contracting is the perception of risk involved. And it’s always good to be prudent and understand all the pros and cons. But in reality it’s a mindset shift you need to make: it’s you understanding who you are, what value you bring, what you want from your career, leadership and life, and what you’re worth. Trying to negotiate without this clarity and confidence can be hard, so if you need help with this, get it. 

I’m not here to tell you to be a contractor or be a permanent or be a fixed term or what day rate you should go for. Talk to your accountant, talk to your tax person, to your financial advisor - whoever you talk to understand how to make your money work for you.

I’m all about bringing things to awareness and I believe it’s really hard to make decisions for yourself, for your life, if you don’t have the information to hand to make an informed choice. 

I’ve never seen anyone else provide this level of detail to make an informed choice and it’s the sort of questions I love answering so come along to my free Underpaid and Overlooked Workshop kicking off on Monday 13 February and you’ll be able to ask any further questions on day rate contracting or negotiating pay rises in our Live Q&A. 

CLICK HERE to register for my free Underpaid and Overlooked Workshop

Look forward to seeing you there!

Lata xx