In the last few years I’ve had half a dozen different contract jobs ranging from corporate tax work (ugh) to budgeting (twice!) to winding down companies (love it) to bankruptcy work (fascinating but sad) to financial statement work (high pressure).
Most people don’t want to do contract work because it involves a fair amount of uncertainty and no security. You don’t know from one year or month to the next if you’ll be working or not. You generally don’t know how long a contract will be for (most go longer than planned). There’s no time off for paid vacations so it’s hard to justify taking time off during a contract when you could be out of work for quite some time in the future and when you’re sick, you don’t get paid. And there’s no benefits.
For the most part, your rate has to encompass all of the above downsides. In the last few years, I’ve charged out from anywhere between $85-$150 / hour. That’s pretty standard for my profession. And I’m “experienced” (aka old).
It’s been quite easy for me to get work these last few years, much of that having to do with an economy that’s still doing fairly well where I live.
Here’s a few tips for people who are interested in moving to this kind of work:
- Make friends wherever you work – a lot of friends. You don’t have to be some kind of social butterfly, going out for drinks or lattes with coworkers every day. Just be easy to work with and outstandingly helpful to others. Make sure you have really good relationships with the people that are actually doing the hiring and you’ll never have to send out a resume again.
- Let people know that you’re looking before you actually need a job. And don’t be shy about asking. This last contract took 7 months from when I first heard about it to when they actually got the go-ahead to hire me.
- Be a generalist if you can. Over the last 25+ years, I’ve done anything and everything it’s possible to do in my field. This widens the possibility of what I can do in the future. People want to hire someone who’s actually done the job before that they’re hiring for. This is especially true with contract work since they don’t expect to have to train you. You’re expected to hit the ground running and be a major self-starter – usually because you get no direction and often have no real “boss”. You may make more money in some fields as a specialist but the downside is that you may not be able to pick up work as easily.
- Go to contracting agencies if you have to but be aware that your charge out rate will be lower than what you can probably get on your own. Most agencies will charge anywhere from 20-50% over your billing rate. I’ve only gone through one agency and that was my lowest paying contract by quite a bit.
- Really try not to let a good contract go – even if you have to work two jobs at one time to do it. I did that for over a year and don’t regret it even though it took a lot out of me. I didn’t let either of them down but both were flexible enough to allow me to hop in between them to some extent.
- Build up a really big emergency fund. I’d say it should be double what your average employee’s e-fund should be or at least 2 years of living (frugal but reasonable) expenses.
- If you’re just starting out in your field, get a lot of experience in many different areas and with a variety of companies, even if you have to job hop to do it.
I’m sure there’s a lot of tips I haven’t covered above. The trick to contract work really isn’t much different than what you have to do to get a regular job. A lot of people get into it because they’re unable to find a regular job, not as a regular lifestyle like I have. If you’re the type that gets bored (like I do) six months or a year into a new job after you’ve learned everything, then contracting is probably right for you.
You just have to be able to handle the uncertainty – both financially and mentally.