I’m a contractor. Like many or most of my colleagues in the contract sector I believe I have an independent streak - it’s important to me to be in charge of my own fate/career/destiny. If I mess up it’s on me.

One aspect of this is financial responsibility. I need to know exactly how my finances and income are constituted. That’s not to say I need my company to have a stable, dependable income. Any contractor in that position is really in the wrong line of work. Rather I will know exactly how much my company needs to bill in a given timeframe, how much of that eventually gets paid to me. I have detailed projections of my company’s and my financial health over various timeframes and scenarios.

The alternative, as a permanent employee, is to have your employer take care of all that for you. I have issue with those who just depend on their employer to do all their thinking for them - letting them know how much they pay in tax at the end of the year, taking the default pension and health contributions that the employer deems they should have, and progressing up pay scales (or not) as HR decide.

This dependence on others to do your thinking for you and trusting they will have your best interests at heart is dangerous. First of all, they can make mistakes - it’s easily done. Second, an employer rarely has your best interests at heart - they are there to make money. They are rarely going to voluntarily part with more of that money than they have to. If you want a bigger share of that income, you have to fight for it.

The same is true of contracting. A client isn’t going to pay more than they absolutely have to. An agent is going to want as large a cut as they can get away with (or as large an aggregate income as they can manage from a single client). As a contractor you have to be aware of that and negotiate accordingly. Be aware of the value you bring to the client. Know how much that is worth. Be prepared to sell that value at the rate you want, or be prepared to walk away from the negotiations if the client isn’t willing to pay the value of your services.

Market forces are always at work. Know what the going rate for your skills are in your location and sector. On a long running contract, be aware of the value of your accumulated domain knowledge. While the industry as a whole tries to make developers (for example) entirely interchangeable and replaceable (see the CMMI), there is always domain knowledge that can be leveraged. If you’re experienced in a particular system, company or environment, know that that has value.

Be aware of the political and financial landscape around you. As I’m writing this, the spectre of the looming IR35 private sector changes are making the large financial clients panic, and large consultancies are playing them excellently on it. It makes working as a smaller independent contractor in that sector challenging right now. How you handle it is up to you - personally I’m not stressed about it as I think it will settle down soon enough.

Enough of the digression. The main point was in this capitalist economy it’s not enough to just plod along, putting in the hours and being happy with what you are given, contractor or permanent. Your employer or client rarely has your best interests at heart. At best they care just enough to ensure they don’t lose a needed resource. Sticking to that strategy will guarantee you approach retirement with at best average salary, even assuming that employer doesn’t go bust or you get made redundant (if you’re a permanent employee). If you want better than that (in my opinion) you have to go out and get it, fight for it if necessary.

Shared at https://www.linkedin.com/pulse/gaining-income-donal-stewart