Contract renewal

Question

I work in IT, as a contractor, and my renewal is coming up in a couple of months and I am wondering how the process is for asking a raise? I have researched around and I am being paid below market value. I have been with the company for 4 months now and they like me. I am not directly hired by the company instead I am hired by a vendor.

What are the chances of the vendor saying no? How does the vendor determine my rate, is it through the company? I am not sure how this vendor process really works.

see also How can I determine a reasonable salary to ask for? — gnat, Dec 25 '15 at 10:19
You'll get a better response on freelancing.stackexchange, it's for contractors specifically — The Wandering Dev Manager, Dec 26 '15 at 11:06
I'm voting to close this question as off-topic because this would be better served on freelancing.stackexchange.com — The Wandering Dev Manager, Dec 26 '15 at 11:07

score 5 · Accepted Answer · answered Dec 25 '15 at 12:55

If you want a raise with your next contract, you need to talk to your employer now. In this case, your employer is the "vendor". You just speak with your boss at the vendor and say "This contract is coming up for renewal in a few months. I really like working there, but for my next contract, I would like $X."

Usually, a company has a budget in mind when it seeks out a contractor through a vendor. That rate isn't always firm, so it might be possible that they would be willing to pay more. At the same time, there are many contractors out there - probably available through the same vendor.

You are in a position where the company knows your work. If they want to extend your contract, that indicates that they like your work, and probably don't want to bring in a replacement contractor. That works in your favor.

When I have hired contractors in the past, I had to get the contract approved by folks higher up in the corporate ladder. It was fairly simple to get the contract extended - as long as the rate didn't change. But if I wanted to increase the rate, I would have to go through another requisition process, and approval process, which was the equivalent of starting over. That meant I always tried to renew at the same rate. That works against you.

Asking your vendor for a higher rate could work. Either the company could pay a higher rate, or the vendor could accept a smaller percent of your rate and thus pay you more. Or, your need for a higher rate could mean that this particular position is no longer viable for you, and the vendor must find you a different position. You might find yourself on the bench for a while, waiting for the higher rate position to come along.

To sum up, if you want a higher contract rate - start with the vendor you work through.

Thank you! When you say, "the vendor could accept a smaller percent of your rate and thus pay you more" what does that mean exactly? Does it mean that the vendor gets a share of my salary? If so, do you know how much is it on average? — code, Dec 25 '15 at 19:53

score 2 · Answer 2 · edited Dec 25 '15 at 12:56

2

If you do not ask, you do not get. Just ask - they can either say yes or no.

If they say no, you have the option of taking the lower rate or finding another job.

As to the chances of the vendor saying no - that depends on the quality of your work, their need and the people in the market, only they can decide on that.

As to the rate, the vendor decides. It is like the tax office (to quote Yes Prime Minister - BBC sitcom) - They pitch for what they think they can get away with

edited Dec 25 '15 at 12:56

mhoran_psprep

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answered Dec 25 '15 at 04:18

Ed Heal

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You didn't even answer my question. lol I will like to know the process. And I am definitely going to ask. – code Dec 25 '15 at 04:19
@code - updated answer – Ed Heal Dec 25 '15 at 04:23

score -1 · Answer 3 · answered Dec 25 '15 at 07:19

There can be 2 type of contracts 1) fixed 2) variable.

In fixed contracts, there is a maximum that can be paid by the company to the vendor for specific positions. The vendor can then pay a maximum amount based on this and the other expenses 1) insurance 2) social security 3) income tax part for the vendor 4) leave part for the contractor 5) any other expenses. SO eg if co pays vendor say 100 he can most likely pay about 75-80 $ if he keeps a very low margin. But say he is paying you only 45 there is a room to ask for more. So the process is just to ask for more. He can try to negotiate or flat out refuse. It then depends on you whether to accept or negotiate or go somewhere else.

In variable contracts , the vendor might ask company for more money which can flow to you.

But in both cases , you just need to talk to the vendor and be firm on a rate. He will give you many excuses but you need to stand ground.

The only thing to keep in mind is what you ask for , which is dependent on what vendor is getting from the company and also the industry wide average rates for your skill set and experience. But this will mostly be confidential and nobody at the co or vendor will tell you this information.

Contract renewal

3 Answers3