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I'm interviewing for a full-time position that wasn't advertised. I was referred by a friend of a friend. That being said, I have no clue what they are willing to pay me.

I have a firm hourly rate already established when I do contract work. Is it advisable to respond with my rate just to establish a range we can negotiate around?

Jay
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2 Answers2

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I have a firm hourly rate already established when I do contract work. Is it advisable to respond with my rate just to establish a range we can negotiate around?

Yes, and expect to be countered with a substantially lower number, and do not rush to dismiss it as while employee salaries are lower, they include bonuses like paid time off, which may actually make the gap not so insurmountable. Make sure to do proper math before making any decisions.

The sooner you handle the matter of minimum payment you will accept, the less time will be possibly wasted.

Aida Paul
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    In most areas, "substantially" translates to a factor of 1.5 to 2. Expect between 50% and 66% of your contract rate as a full time hourly pay. YMMV. – Jeffrey May 20 '20 at 16:44
  • I would have expected more like a factor of 2 to 3 in my industry. – Simon B May 20 '20 at 22:22
  • Employees introduce a bunch of expenses that are not required of contractors, only a few of which are listed by Paul. Don't assume that lower raw pay translated to lower net income; as a contractor, many of these expenses are being covered by you. – Brian May 20 '20 at 22:28
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Not necessarily.

Stating your contract rate is equivalent to stating your previous salary. Converting between the two is relatively easy if you know the extra benefits that come with being an employee. You can check the many many other questions on this site about when to state your previous salary, but in general stating it puts you at a disadvantage. Knowing your previous salary (or equivalent in contract rate) means the company can pitch you a salary which they know is better than your current one, and that you are therefore unlikely to reject, but is lower than they might otherwise have offered. If they don't know your salary (or contract rate) then they might offer you something much higher.

If they pitch you something that works out being equivalent to less than your contract rate, then you can always tell them your contract rate at that point.

However if you are going to be happy with something that is the same as your contract rate (after allowing for employee benefits) then by all means tell it to them. The difference between your contract rate and your salary is that your salary is extremely hard to change once established, whereas your contract rate can be renegotiated for each contract.

DJClayworth
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  • While stating the previous salary is not advisable, in contacting the world your day rate is almost never a secret, it helps to filter out timewasters of all sorts. And if any company wants to pay a permanent employee equivalent (or better) than your contractor day rate, by golly molly, kiss their ring before they will come to senses. The secretive part would be how many days a year you can actually get clients to pay it. – Aida Paul May 20 '20 at 16:15
  • However this is not the contracting world. Salaries are much harder to change than contract rates. And everything I said about higher or lower salaries is after allowing for the benefits of being an employee, not in absolute currency unit equivalents. – DJClayworth May 20 '20 at 16:25