Contracting for a living

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  • RyanDS 25 Jul 2016 15:01:47 12,547 posts
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    So given the fact I am divorced, mortgage free and I have been picking up loads of experience lately with work, I am probably at the best time of my life to try out this contracting malarkey for a living.

    Don't seem to be that many jobs around in my field, but enough that I am willing to take the gamble.

    In terms of the mechanics I am sorted (will go Ltd etc.) The real question I have is what is a minimum daily rate that I would be willing to quit my cosy job for and dive into the "oh shit I hope I still have a job tomorrow!" world of being my own boss. My work will be running implementations, so I expect 3 month minimum, usually 6-9 months going by what I see on Reed.

    Those of you who have made the jump, what would you recomend?

    So at 40k you need minimum 250 per day, at 50k 350 is barely worth it etc?
  • Deleted user 25 July 2016 15:05:53
    Get out of that mentality of the salary thing because you'll need to fit market rates and make allowances for lean times.

    Personally speaking, and I was only a contractor for about five years in total (over a few stints), I never found myself out of work and it was just as stable as any permanent job I've had, but I was relatively flexible in terms of location.

    It's not a life for everyone, but it's nowhere near as cut throat as you're probably imagining. Your circumstances though would make it pretty much risk free, so what's the harm in trying?
  • Deleted user 25 July 2016 15:06:45
    Also, get a decent (named!) accountant
  • rice_sandwich 25 Jul 2016 15:07:34 5,040 posts
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    No idea about rates but worked next to contractor's for a long time. Turns out they earned 3x more than me despite doing nearly the same job.

    It depends how much you like living in hotels and being away from home a lot/most of the time. I gather it can be very tedious and for some all they do at night is drink due to loneliness etc. Worst case scenario obviously!

    Edited by rice_sandwich at 15:07:54 25-07-2016
  • Not-a-reviewer 25 Jul 2016 15:10:38 5,503 posts
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    About 2.5 times salary, before tax, was the point I went for it.

    Make sure it's an industry with a lot of jobs as its likely to get a bit tougher in the next couple of years.

    If you're willing to travel or relocate then it's a lot easier to go for it too.
  • RyanDS 25 Jul 2016 15:13:18 12,547 posts
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    PES_Fanboy wrote:
    Get out of that mentality of the salary thing because you'll need to fit market rates and make allowances for lean times.

    Personally speaking, and I was only a contractor for about five years in total (over a few stints), I never found myself out of work and it was just as stable as any permanent job I've had, but I was relatively flexible in terms of location.

    It's not a life for everyone, but it's nowhere near as cut throat as you're probably imagining. Your circumstances though would make it pretty much risk free, so what's the harm in trying?
    Well the issue for me is that my salary is above market rates. And the contracting side is lower than I expected.

    50k perm salary. Contracting rates seem mostly to be between 200-300 (with a few 400-500) whereas I was kind of thinking I wanted 350 which would mean I would be pricing myself at the higher end.

    I was hoping someone would have been on a similar salary and made the jump. Unfortunately all my friends are on 1,000 a day type roles, so their experiences are not really applicable.
  • Deleted user 25 July 2016 15:17:35
    If you're after the most money, then it would seem silly to take the plunge.

    If you want to have the freedom of being your own boss, then the daily rate is almost irrelevant
  • Load_2.0 25 Jul 2016 15:17:52 28,597 posts
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    Yeah trying to compare to annual salary is probably the wrong way to approach it, we do use formula's which can give you cash equivalents of benefits but it's hard to put a price on things like job security and career progression etc.

    Also there are lots of factors which drive rates up, the biggest being specialisms, niche skill sets and fellow contractor numbers. You could potentially have perm staff on 50k and a contractor doing the same job at 500 or 750 per day (which if you work to a rough formula is around 130 - 190k.

    If you are looking to pick up new contracts it will likely be through agencies as temp and contractor recruitment is usually farmed out to RPO's or offsite agencies whereas perm is handled in-house. They will have a specific rate card which they work to.

    So first point of call would be the big agencies who will give you a fairly accurate idea of what you can expect.
  • Not-a-reviewer 25 Jul 2016 15:18:37 5,503 posts
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    If financially it doesn't make sense then i don't know why you would do it.
  • RyanDS 25 Jul 2016 15:19:50 12,547 posts
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    Yeah, everything about contracting appeals, the only sticker is I don't want a salary drop to do it.

    But you are right, I need to take my focus away from just fixating on the money.
  • RyanDS 25 Jul 2016 15:22:31 12,547 posts
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    reviewer wrote:
    If financially it doesn't make sense then i don't know why you would do it.
    I implement systems (which I love) then spend 2 years running them (which is fucking boring) before moving to a new job and starting over. Switching to contracting means I only have to do the part I find interesting and avoid the boring management role that it alwatys turns into.

    From a lifestyle choice a (small) pay cut could be well worth the trade.

    Edited by RyanDS at 15:25:17 25-07-2016
  • Deleted user 25 July 2016 15:23:41
    Read what Load wrote, as well. I was in a position where I didn't really care enough to progress my career any further and just wanted to make bank to achieve a life goal unrelated to career.

    The absolution from company politics was a definite bonus, but that comes at the price of security (although oddly enough in lean times companies are far more likely to employ contractors as they cost less than permies) and training / progression etc
  • nickthegun 25 Jul 2016 15:42:10 76,534 posts
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    What do you do? 200 quid seems barely worth getting out of bed for, in contracting terms.
  • Deleted user 25 July 2016 15:50:08
    You can stay in bed and earn more than 200, PM me for details
  • nickthegun 25 Jul 2016 15:51:52 76,534 posts
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    My camgirl days are long behind me
  • You-can-call-me-kal 25 Jul 2016 15:55:00 13,769 posts
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    If you take a salary drop to go freelance, you're definitely doing it wrong.
  • Deleted user 25 July 2016 16:10:33
    I was on 50k in my last permanent job. When I was unemployed, a contract role came up at 360 a day. I think that worked out at 70k after tax for a year. However, you do not have any benefits obviously, so you are missing out on pension, training, sickness, paid holidays, bonus scheme etc.

    I know permanent positions are not all that secure these days, but they are obviously more secure than contracting. End of the day, it depends what you want out of life. Do you need / use the benefits you would get as a permie? Are you okay about the risk (you should try and save 3 to 6 month's salary when contracting just in case is what I was told)?

    Overall, (pension aside, which I am addressing), I've done better financially out of contracting, but had I been sick or taken more time off, then it would probably have been similar (or even worse had I been very sick... something like IPSE is worth joining for long term sick / jury service cover). You need insurance and an accountant.
  • RyanDS 25 Jul 2016 16:14:29 12,547 posts
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    nickthegun wrote:
    What do you do? 200 quid seems barely worth getting out of bed for, in contracting terms.
    Well most of the time payroll manager (which is boring and low paid), but I specialise in implementing software and systems integration which I really enjoy (and means I can actually get a decent salary.)

    Not the traditional contractors area.
  • THFourteen 25 Jul 2016 17:43:30 50,968 posts
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    RyanDS wrote:
    nickthegun wrote:
    What do you do? 200 quid seems barely worth getting out of bed for, in contracting terms.
    Well most of the time payroll manager (which is boring and low paid), but I specialise in implementing software and systems integration which I really enjoy (and means I can actually get a decent salary.)

    Not the traditional contractors area.
    I used to work as an implementation consultant for a firm called SS&C who sold software to various banks and things, so you got the "excitement" of new clients and travelling, but also the "security" of a salaried job, having said that i was on about 36k per year and they charged me out at 170 PER HOUR so do the maths there!!

    I didnt like that travelling lifestyle, and gave it up after 2.5 years, also the feeling of never really being one of the "team" when i was out working because "they" were clients and "i" was a provider.

    Much prefer where i am now, part of a massive organisation with (most) people pulling together for common goals, and people are nice and helpful.
  • KnuttinAtoll 25 Jul 2016 18:01:29 6,703 posts
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    I switched from permie to tractor 2 years ago. It was a bit nerve wrecking in the beginning (contract renewals in the final week of existing contract, very unfavourable payment terms which meant not getting paid for 3 months at the very beginning) but things settle, you get used to it and it's a very satisfying feeling of being your own boss. Also the whole corporate bs can do one (one of the reasons I switched).

    The risk of being without work is on my mind although I have a solid gig going currently. But then you could get made redundant as a permie. Contracting keeps you on your toes and you tend to gain experience quicker due to different assignments, rather than being stuck in the same 9-5 job for years.

    But I would not do it were I financially worse off. The higher rate is a reflection of the risk you're taking on vs being employed (and ultimately costing the company less if you take into account pension, long term employment, redun etc).
  • elstoof 25 Jul 2016 19:04:10 22,446 posts
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    I've been contracting for a living for a long time now, here's me at work yesterday

  • challenge_hanukkah 25 Jul 2016 19:10:14 9,627 posts
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    Who says there's no bonus package with contracting.
  • RyanDS 28 Jan 2019 09:22:41 12,547 posts
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    Could do with some advice. Or at least bounce the situation off someone.

    I jumped ship from perm last April time, started contracting with a few small clients, really loving it. Then was offered full time at a great rate at a company I use to deal with so took it, but now for budget purposes they are looking at trying to get me to go perm.


    The new FD has given me two choices. Stay as Ltd, same day rate, but I can only bill 200 days per year. (Still works out better take home than when I was perm, so am happy with that.)

    or

    Go perm, they convert the salary to PAYE and I get 6 weeks holiday a year. Means I am on 3 months notice, get pension, holiday pay etc. But will take home a little less. Still a substantial (like 20%) payrise from when I was perm previous though.

    Anyone who contracts, what made you turn back to the dark side of perm? Brexit is the main thing tempting me to go perm, with the volatile economy and likely recession 3 months notice sounds great, especially as the only contractor in the company I would be first against the wall. But I am nervous about falling back into the depression wage trap scenario, I honestly have never been happier in my life with work than this year of contracting.
  • fontgeeksogood 28 Jan 2019 09:44:45 4,699 posts
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    What makes you happier being a contractor? Because flexibility of work (most of which is perception rather than reality) is the only thing which it has over the permie role.

    You'd be mad to turn the permie offer on those terms down IMO
  • KnuttinAtoll 28 Jan 2019 09:46:50 6,703 posts
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    You might be answering your own question there, in your last sentence.

    I'm still doing the same as I did when I last posted the above, for the same client. So I haven't really 'tested the market' yet and I do feel a bit nervous about that - i.e. will I get work, keep my current rate, etc.

    I sometimes imagine what it would be like going perm and am being put off almost immediately. The office politics, having to play the game to get promoted, awkward social gatherings (xmas and team building events), annual reviews. Yeah no thanks.

    Difficult to give you advice though, as everyone's situation is different. From your previous posts though I'd say stick to what you have and the 200 days limit could also be an opportunity - either by spending the remaining days doing something you enjoy or maybe take separate short assignments (not sure if that's an option).
  • IronGiant 28 Jan 2019 09:56:56 5,840 posts
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    RyanDS wrote:
    Could do with some advice. Or at least bounce the situation off someone.

    I jumped ship from perm last April time, started contracting with a few small clients, really loving it. Then was offered full time at a great rate at a company I use to deal with so took it, but now for budget purposes they are looking at trying to get me to go perm.


    The new FD has given me two choices. Stay as Ltd, same day rate, but I can only bill 200 days per year. (Still works out better take home than when I was perm, so am happy with that.)

    or

    Go perm, they convert the salary to PAYE and I get 6 weeks holiday a year. Means I am on 3 months notice, get pension, holiday pay etc. But will take home a little less. Still a substantial (like 20%) payrise from when I was perm previous though.

    Anyone who contracts, what made you turn back to the dark side of perm? Brexit is the main thing tempting me to go perm, with the volatile economy and likely recession 3 months notice sounds great, especially as the only contractor in the company I would be first against the wall. But I am nervous about falling back into the depression wage trap scenario, I honestly have never been happier in my life with work than this year of contracting.
    I'd take the job, if the economy does take a dip then contractors are the first out the door. Working in the public sectors as a contractor has already been hammered by HMRC and the private sector is next.
  • THFourteen 28 Jan 2019 10:00:57 50,968 posts
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    Missed the best part of being perm - don't have to fill out a sodding tax return.

    Although you still do if you have other investments. Grrr.
  • RyanDS 28 Jan 2019 10:11:57 12,547 posts
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    fontgeeksogood wrote:
    What makes you happier being a contractor?
    Fear of commitment and not having to deal with the office politics.

    To be fair the offer of perm includes a clause that I never need to manage people if I don't want to. (Panic attacks from managing staff were what killed me at my perm job. Firing people etc is stuff of nightmares for me.)
  • fontgeeksogood 28 Jan 2019 12:16:13 4,699 posts
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    The commitment is a notice period, which in return for pension contributions, training (I assume), chance to get promotion and learn new things and holiday pay seems like a sweet deal.

    What's the office politics like there? You must see it as a contractor
  • KnuttinAtoll 28 Jan 2019 12:31:23 6,703 posts
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    THFourteen wrote:
    Missed the best part of being perm - don't have to fill out a sodding tax return.

    Although you still do if you have other investments. Grrr.
    Or if you are above certain limits;) Anyways that's what accountants are for.
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