Negotiating Your Contract Pay

Being part of a meeting to discuss payments can be a little daunting and nerve-wracking but it’s also a great time to demonstrate your value to your client. Being a contractor, this is a common occurrence with each new job, so we have put together some great tips that will hopefully help settle your nerves and give you the edge when it comes to negotiations!


The first tip may seem extremely basic and that it isn’t worth mentioning but it’s a very important one that can sometimes be overlooked. Treat others as you would have them treat you. It’s very basic but positivity, friendliness and politeness can go a long way in bringing people to your side and way of thinking and will help settle tense meetings on important matters, especially when it involves money. Being arrogant, stubborn and overly confident could leave a bad impression and may hurt your future chances with other clients.

Build an Understanding

Negotiating allows you and your clients to really understand one another and build a healthy working relationship. You show your value and the skills you possess while they open up opportunities beneficial to you. Take the time presented to promote your skillset and what you can offer them. Let them to know why you feel you deserve what pay you are asking. It can be awkward but they need to know what their money is going towards and if it’s worth it.

Drawing Lines

Think hard about the lowest amount that you would accept for your work. This number is what’s known as the bottom line and it’s important that you stick to it. To help you find yours, this can be handy:

  • Decide what your desired salary is.
  • Add this to your overhead costs.
  • Multiply that by your desired profit margin percentage.
  • Divide that by the hours you intend to work.

This will give you the number that is the absolute lowest you should be negotiating for.

Now, think about a higher rate of pay that you find generous and ambitious that benefits you. Don’t go mad, remain realistic! This will more than likely go lower in negotiations but that’s what you should be expecting. Aiming higher at the start prevents you from undercutting or underselling yourself and being anywhere close to your bottom line.

When thinking about what payments you are looking for, it’s good to think about them in three, simple sections:

  • High – This is above what you were requesting, therefore it worked out better.
  • Acceptable – This is what you are aiming for so it worked out pretty well.
  • Unacceptable – This is under what you are aiming for and you may decide to walk away.

The Demand/Market

Take a look at the industry you wish to work in and find out what rates are being offered. Currently, the cost of living has increased, but businesses are feeling the stretch too and budgets will be set. Those in professions with fewer available skill sets will have their clients willing to pay more due to the demand. If you have skills that are in demand this gives great negotiating room. Should your contract work be more demanding (such as tough work conditions, farther to travel, temporarily moving, hastened deadline) you have leverage to increase your pay as it affects you more. If the work is easier or less demanding (such as virtual/remote work, less travel times, relaxed deadline), it will likely be set lower with not as much room to negotiate.


If the role is outside IR35, don’t forget to consider your tax calculations and make sure you set aside something each month towards your tax bill. You can use the HMRC calculator as a guide. This saves scrabbling for money to pay the bill when it is due!

If the role is inside IR35 and they will be looking to pay you PAYE directly or via an umbrella company such as us, it’s good to understand the calculations involved to have a clear picture of your actual take-home pay. Many agencies will offer two rates: one paid directly through themselves and one if via umbrella. Please remember that the uplift in rate offered by an umbrella company is taking into consideration the umbrella fee and employer’s costs that will be deducted from the funds paid to the umbrella. If you are unsure of this, you can always contact us and ask for an illustration, we’d be happy to explain it to you.


Before the negotiations start, have your potential clients write out what their acceptable hourly rates and payments will come to. This can really help you both reach an agreement faster with a good understanding of what you all want and need.

This also applies to asking them for information about what the role requires. The more information you have the better it will be to understand just how much time, effort and overhead costs will be needed to go into it for you to calculate your payment.

Stay Updated

Each time you have a meeting, even if it’s only once, be sure to keep notes on what you have talked about so as to not need to spend time going over previous information if negotiations are taking longer than expected. It’s also good to be able to have all the information at hand so you can plan your requirements better.

Keep a Professional Attitude

If negotiations aren’t going your way, be sure not to let it get to you. It’s not personal and purely business, so keep your emotions in check otherwise you may come off to your potential clients as unprofessional. Adding to that, it’s also best to not be overconfident in your own abilities. There’s no need to remind them that you have others who could want your skills, they know this and are working with you to reach an agreement. It’s never good to try and force your way into a deal, let it happen with mutual understanding.

Being flexible for both parties is what these negotiations are for.

Want Versus Need

Money shouldn’t be the be-all and end-all of your professional working life so reaching for too high a payment may be out of reach and lower your chances of your client requesting you further. Sure, money is great and allows doors to open but it’s also good to remain grounded, stay realistic, and focus on the bigger picture in life. Think about work satisfaction and job enjoyment alongside your living expenses and ambitions – They should work together, not against. Icarus is a fine example of this.

Honesty is the Best Policy

In trying to negotiate a higher contract pay it’s best not to go for tactics that are seen as underhanded like lying or exaggerating current or previous employment such as saying you’re earning more than you are in an attempt to raise your payment. Lies can be easily found out with a quick look at your paperwork and it’s really not worth taking the chance when it could cost you a job. Just be yourself.

Finishing Touches

Once your negotiation ends and an agreement has been reached, with both parties satisfied with the results, you should thank them for their time and effort and then email them a summary of the negotiation in detail. Let them know that you’re happy to start working for them soon as well. Performing well at your job and leaving a great impression from start to finish may inspire them to revisit your negotiations for higher pay at a later date.

We’re here to help so don’t hesitate to get in touch with us anytime!