The Daily Rate Myth – Why Freelancers are Much Worse Off

Daily Rate Myth
Daily Rate Myth for IT Contractors

Daily Rate Myth

A reader posted this article, about the daily rate myth, as comments after one of our articles.

Banking Contract

I was six years in a bank, being made up of four different contracts with different divisions of the same bank (different agency every contract of course, but that’s through their own incompetence).

I never once earned less than five-hundred quid a day.

good rates from a contract
Good Rates – How to get them from a contract

My most recent rate was 12% less than the highest one I ever had, which unsurprisingly was the starting rate way back in 2005.

Annual Contract Earnings

But daily rates don’t mean dick, except that the contractor is getting shafted.

I look at my annual earnings to see what I am getting.

Last year I earned two-thirds of what I earned in 2005, but in 2005 I only worked eight months.

So this bank now pays around half what it used to pay.

Good Rate

I can technically still say I’m on a ‘good’ rate, but it isn’t true.

After daily rates come enforced rate-cuts, mandatory holidays, long-hours, unpaid weekend work (you can get a day off in the week in compensation, taken out of your ‘holiday’).

I quit banking last year, it sucks.

IT Contractor Daily Rate
IT Contractor Daily Rate and what it entails

But I still know quite a lot of contractors there who are overawed by what seems like a ‘good daily rate‘ and don’t realize that they are actually only getting around 10% more than the permies, which is all eaten up in paying the extra contributions.

Year Wasted

I did the math.

If I’d gone perm five years ago when I was offered it, my total salary would have been around 95% of what I got contracting – assuming I never got promoted in that time – plus I would have had 25 weeks – almost six months – of paid holidays, and a further six months redundancy pay when I left.

So about a year’s money down the chute, and it all started when I accepted the daily rate.

That’s the daily rate myth as I see it.

Ad – Contractor Services

If you do need an umbrella company you could try one of the following:-

Simply Umbrella

Public Sector Umbrella Company

Or would you prefer to get expert advice about which umbrella company is right for your specific needs? If so fill in the form below and they will be in touch.

For Mortgages specially designed for contractors try Specialist Contractor Mortgages.

If you know anyone else who would find this article useful, please share it with them using the social media buttons at the top and bottom of the page.

    Your Name (required)

    Your Email (required)

    Your Telephone (required)

    Your Daily Rate (required)

    Please Fill in Answer to Simple Quiz Question




    Please enter your comment!
    Please enter your name here

    This site uses Akismet to reduce spam. Learn how your comment data is processed.