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Equivalent Contract rates

 
#1 Equivalent Contract rates
03/06/2010 00:41

anon

Hi there,

I am a consultant in Accenture with nearly 60 K package (likely to be promoted this Sept, so let us assume 70-75 K package). I have got a contract offer from FS company for 350 per day rates. Is this too low in comparision with equivalent Accenture salary. The company has agreed to sign the contract for next 12 months. I heard sometime back on this forum about rule of thumb being 2x permie salary. Should it be the the case really ?

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#2 RE: Equivalent Contract rates
03/06/2010 01:05

EX-ACN Manager Now Contractor to anon (#1)

not sure where did you get that rule of thumb, any how since you are not yet promoted which would mean you are C3 at the moment. £350 rate for a C3 is too good considering even if you will work 20 days for 11 months in your 12 months contract you will be earning 77000 which will be equivalent to M1 package (including bonus plus car allowance plus 30 days consulting holidays) and mind you there is no gurantee you will be made M1 this year therefore, this contract is too good to leave.

And finally if you form your company rathe rusing umbrella you will take home £350 a month more than should you decide to use umbrella company.

I left Accenture at M3 and on £500 a day ( despite of having a flashy MBA from a leading business school)

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#3 RE: Equivalent Contract rates
03/06/2010 08:35

taxrebate to EX-ACN Manager Now Contractor (#2)

when working out your projected annual comp off contract rates, you need to factor in whether the work you are going to do via your limited company falls under IR35 - which it does for most non-risk-bearing assignments. The rub is that the IR basically forces you to take your revenue as salary and also wallops your for emploters NI as well as employee's NI. Your consultancy employer has kindly been paying the former for you till now, and it's a lot of money....

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#4 RE: Equivalent Contract rates
03/06/2010 09:36

Mr Cool to anon (#1)

Rule of thumb is that your daily rate is what the market will bear. Comparing the day rate to salary is relevant to deciding whether you should accept the job or not, but is flawed as a method of deciding what the rate should be. Tell me what will you be doing and where (roughly) and I’ll tell you what rate you should be targeting.

£350 x 5 days x 46 billable weeks = 80,500 (ex VAT)

As long as you stay outside of IR35 you would take home £59K

Hardly worth getting out of bed!

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#5 RE: Equivalent Contract rates
05/06/2010 12:53

Another contractor to Mr Cool (#4)

Mr Cool - so taking home 59K (after tax) is not better than the OP's 60K package (before tax)....what planet are you on?

OP - all down to you really. I'd say 59K take home pay in your 1st year as a contractor would keep you happy (it is approx 20K pay rise after all!) and then you'll get a feel for the market and time to cultivate new opportunities which will hopefully lead to new roles on higher rates as you find your feet.

You've got to start somewhere and a guaranteed 12 months work is not to be sniffed at these days. Over to you...

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#6 RE: Equivalent Contract rates
05/06/2010 23:07

Not Anon to Another contractor (#5)

I tend to agree with Mr Cool - it is what the market will stand. I'd be interested to see your response to the previous poster though Mr Cool.

However no-one has mentioned travel and accommodation. Employed consultants are likely to get mileage or train fares plus hotel bills paid. Contractors have to deduct them from their daily rates.

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#7 RE: Equivalent Contract rates
06/06/2010 15:17

Another contractor to Not Anon (#6)

Not Anon - of course you should aim for what the market will bear. I didn't disagree with Mr Cool but as with all these helpful tips to a newcomer, no-one actually gives the OP an actual figure to guide him/her so still leaving them in the dark.

The point I was making is as a starting point a guaranteed 12 months work to start you off as a contractor is not a bad intro to this world and at an effective 20K pay rise too which I happen to think is quite a good position to be in before you establish yourself and demand higher rates.

OP - assuming you are not a world famous guru at something then you seem to have lined up a nice opening into the world of contracting. As a guide I started low as no-one knew me (not being world famous myself!) and have nearly doubled my rates in 2 years of doing this so it doesn't have to be a slow process to increase your rates - as long as you remain good value for money and keep delivering what is asked of you then you will keep getting work.

Mr Cool - you may be on higher rates hence the "hardly worth getting out of bed for" comment but your circumstances may be different, certainly I assume you have the benefit of experience at this, and the OP does appear to have a good opportunity presented to them - and who is to say the OP won't overtake all of our day rates in the future...

...provided they get on the contracting ladder at some point of course!

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