Ask LH: If My Hourly Charge-Out Rate Goes Up, Should I Get A Pay Rise?

Hi Lifehacker, I've recently had my hourly charge-out rate hiked up to $300 per hour - an increase of around 7 per cent compared to my previous charge out rate. Unfortunately, my salary hasn't been increased at all.

Can you provide some advice on what sort of rise might be reasonable to ask for? It seems a little unfair that my boss will get more money from my day-to-day toil but I'll not even see an increase in line with CPI! Thanks, Salary Serf

Consultant picture from Shutterstock

Dear SS,

Your employer has hiked up your charge-out rates for two reasons: because overall business costs have gone up, and because it can get away with charging that much for services that are in demand. You need to adopt the same attitude in thinking about this issue. If you're being charged out at $300 an hour, you have a valuable skill, and you should be rewarded appropriately. At the same time, asking for a 7 per cent raise could make you look greedy.

The most recent CPI figures show a year-on-year increase of 2.7 per cent — so a rise at that level would seem fair even if your charge-out rate hadn't increased. Under the circumstances, I'd suggest that asking for a 5 per cent raise would be reasonable. Even if your boss then tries to negotiate it back to 4 per cent, you're still a little ahead.

We'd love to hear from readers who have been in similar positions in the comments. Good luck!

Cheers Lifehacker

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Comments

    Pretty much exactly the same as above.

    We don't exactly get the forum to ask for a payrise, only an appraisal which is based on your development/performance goals and feedback over the last year (I hate this system). Haven't had a payrise in 2 years (Engineer in a consultancy).

    Strike out on your own and earn a pay rise up to $300 an hour??

      Good luck in this climate!

      Clients can pick and choose on the cheap.

        charge $299.95 an hour and undercut the market??

          You'd be surprised how much big business are willing to undercut in order to keep that revenue going!

    Be reasonable and open with your manager from the get-go for a mutually beneficial relationship.

    If you are a contractor and paid N x 40hrs per week without a need to justify 'billable hours' then you might want to go easy on them and just try for CPI.

    If you have to justify every last billable minute and clearly your skill-set is in demand, then go for higher and settle on anything better than a CPI increase.

    If all of the support staff back in the office are asking for the 2.7% CPI then someone needs to make this up for your agency. As a billable resource this lands on your shoulders. 2.7% for admin/staff and 2.7% for you - not too far off the 7% the boss is asking for?

    In a previous life I was a long term consultant making $180 cream per hour for my agency. During the whole engagement all they had to do was run payroll once a month and have a meeting every 3 months to roll onto the next contract. I had a skill they needed and was hard to find, the client needed the skill so I was in a pretty good position to negotiate a rate raise every 3 months.

    If you want some negotiating tips hit me up :)

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