🕐 When is it OK to ask for a rate increase?
It’s uncommon for new partners to ask for a rate change until they worked with the company for at least one year. We have never seen an increase in the first six months unless a customer agreed to it upon a start of the booking.
We rarely see increases in months six to twelve. You would need to have some persuasive arguments and probably some extraordinary circumstances to make it work during this time. For example, you’ve been moved to an entirely new role and have way more responsibilities.
Most of the successful rate increases happen closer to two years of working within the same company.
💰 What amount should I ask for?
Companies expect that the raise will increase contractor’s income about 3–5% a year and not more than 10%. The exact amount varies between people. You need to assess your situation and how valuable you are for the team.
Keeping this in mind, it's way easier to get approval when you’re closer to the numbers expected by companies. It’s not impossible to get a raise of around 10%, but it’s more challenging and requires more arguments than asking for a 5% raise.
😮 Great performance ≠ automatic increase
Your new rate and whether your request will be approved isn’t always tied to your performance or skills.
You manager and the business owner can 100% agree with your case, and still decline your request. This might be driven by budget, a cap on contractor rates, their planning cycle or any other reason. It’s often not a meritocracy.
🔥 What’s the risk of requesting a rate increase?
Keep in mind that asking for an increase is not always risk-free. You ask the company to assess how valuable you are for their team. They would like to check if they get a good value for the money they pay.
Clients often think about contractors differently than employees—they are less concerned about retention. There’s a chance that your rate increase will backfire and they’ll end your booking.
There’s often a ceiling that companies are willing to pay for contractors. The closer you get to that ceiling, the more likely you are to get fired. You can make more money working at lower rate for another 12 months than a higher rate for 3.
➡️️️ What’s next?
Once you decide to move forward with the request, you should first give heads up to your manager.