One of the main reasons people give for moving to contracting – other than having more control over their lives – is that they want to make more money. But once you are working as a contractor, what can you do to use your skills to make even more money?
It may take some time to establish yourself, and there are several actions you can take to make your contracting business more lucrative. Here are our top tips on how you can increase your earnings as a contractor.
Which industries can a contractor earn the most money?
Contractor pay, in particular, are exceeding average wages across the UK, according to CV Library’s most recent survey (2019). Here are some of the top line results below:
|Sector||% increase in salary working as a contractor||Salary information|
|Engineering||Engineers can earn up to 75% more.|
Engineers earn £244.23 every day, which works out to £63,252.80 per year.
Compared to the industry’s average annual pay of £36,050, it’s easy to see why this is a good choice for engineers.
|Social care||Social care professionals make an average of £25,444.50 per year.|
Being a contractor in this area might earn you 72% more – a staggering £43,815.20 per year!
In addition, the industry’s average daily rate is £168.52. On the other hand, social workers can expect to make £217.54 every day.
|Manufacturing||The average annual remuneration is £31,255.|
Manufacturing contractors can earn up to £52,156 per year, a staggering 66% more than the national average!
Manufacturing Project Managers, for example, earn an average of £269.01 per day, whereas Manufacturing Engineers earn £222.94 per day.
|Construction||Contractors in the industry can earn nearly twice (46%) this, with an average annual salary of £43,815.20.|
Contractor day rates in the construction business is currently £168.52 a day. Specific roles, on the other hand, pay significantly more.
|Human Resources||If you work as a contractor, you could earn 21% more.|
Workers in the industry earn an average of £32,431 per year, with contractors earning £39,243.20.
Become a consultant
Become an independent consultant in an area of technical knowledge or business expertise that you have, e.g., in processes or methods and up your daily rate to the £750 – £2,000 a day bracket.
Whilst working as a consultant, make sure you go that ‘extra mile’ to make a positive impression on the client – make yourself indispensable as this will enhance your prospects of the client retaining you on a consultancy basis.
Ask for a pay rise
If your work is consistently good and your client appreciates it, you have put yourself in a stronger negotiating position to ask for more money. Negotiation may be challenging, so doing your homework is crucial. For example, to put yourself in a good position when negotiating contractor rates, comparing market prices, outlining your work’s benefits to the organisation, and the value of your contribution with your experience and skills.
Support your contracting jobs as a consultant
If you have been working as a contractor on a project, it is the perfect opportunity to ask the client whether they would retain your services on a consultancy basis once the job ends. You will increase your daily rate because you can offer the client a high level of expertise.
Go directly to clients rather than through an agency
Whilst getting work through an agency can make things easier, there are numerous benefits to contacting potential clients directly. You probably will not earn as much money from a job by going directly to a client. Still, you will get the opportunity to continue taking on contracting work from a company, which an agency might not allow you to do.
Also, using a recruitment agency may make your life easier finding work. But it would be best if you weighed up whether paying their agency fees of around 15- 20% (of the contract value) is more beneficial income-wise?
There is also the potential of supplying other contractors to the end client on a commission basis, which could substantially boost your income.
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.
Run training courses
As a contractor, you have specific valuable skills that could benefit others. For example, if the client wants to train their permanent staff with your skills, you could manage a training course.
Staff training can be an expensive undertaking but having someone in-house will substantially reduce the cost and put you in a much stronger negotiating position to agree on enhanced rates for sharing your expertise.
Offer training in any IT systems you install
If you are an IT contractor, you will probably have jobs installing new IT systems for your clients. However, it is one thing for a company to have an IT system. Still, they need their employees to understand it, which is an opportunity for you as an IT contractor to earn more money by offering to train a company’s employees in the IT system you install for them.
Have the right team in place
To make more money as a contractor, you must surround yourself with the appropriate people. For example, a reliable team of trustworthy suppliers, subcontractors, and business consultants can help it succeed. Contractors may feel confident that the investment has been worthwhile when things function smoothly with a well-oiled workforce.
Persuade clients to upgrade their out-of-date IT systems
If you are an IT contractor, you should be up to date with all the latest developments in IT systems, which means you are in the perfect position to assess whether a client needs an upgrade. Work out how much it would cost to redesign and go to your client with a proposal. You will earn more money as an IT contractor by creating work that was not originally there.
Talk to a specialist Contractor Accountant
Before you start, make sure you have plenty of references to hand to back up the expertise or skills you are offering. We suggest you have the necessary accreditation that relates to your industry to communicate security and trustworthiness. Also, building a solid online presence (website or social media), will help build credibility and a loyal customer base.
We provide accounting services to hundreds of UK Contactors – the perfect mix of software, advice, tax planning, and accounting support contractors need. So whether it is talking through your IR35 status, setting up a Limited company or taking salary or dividends, we will get the most out of your contractor accounts, starting at just £69 + VAT per month. We are also ICAEW & ATT accredited and partnered with the top accounting software UK providers.
Call us on 020 8577 0200 to schedule a meeting with one of our experts can help you navigate life as a Contractor.