How much do contractors earn and how has the pandemic affected rates?
In our annual survey, contractors made it clear that earning potential wasn’t the main reason they went self-employed. That’s not to say financial opportunities aren’t a motivating factor though - along with ‘escaping office politics’ and ‘flexibility', the ability to earn more was rated as one of the best things about contracting.
So cutting to the chase, how much do contractors tend to charge for their services? How has this income been impacted by the Coronavirus pandemic? And how long do contractors spend working on one project?
In this article, we explore the key findings from our study...
Contractors command healthy fees
The biggest group of contractors (40.1%) charge clients between £250 and £499 a day. Close behind, 34.5% of more than 2,300 surveyed command fees that range from £500 to £749. With nearly three quarters (74.6%) of contractors earning £250+ for every day worked, our research suggests contractors enjoy a healthy annual income. But while this is perhaps a fair assumption to make, it should also be remembered that out of these earnings, contractors pay tax, aren’t paid for time off and don’t receive employment rights.
Rates stay resilient throughout the pandemic
Most contractors (59%) said the amount they charge hasn’t changed during the pandemic - 16% were even able to command higher rates despite the economic downturn. Granted, a quarter (25%) noted a drop in rates accepted by clients, but it doesn’t take away from the overall picture, which is that contractor fees have remained resilient during Coronavirus.
Work is won in a number of ways
Our research shows that contractors are fairly entrepreneurial when it comes to securing work, approaching business development in various ways. 69.9% source projects via recruitment agencies, 60% utilise the network they have built over the years, 46.1% use job boards and 29.8% rate LinkedIn as an important platform upon which to win work.
Despite this, it remains to be seen as to whether contractors have the appetite for marketing their services - or even feel the need to. The majority don’t carry out any marketing activity at all.
We’re now clear on the amount contractors charge, how these fees have stood up during a recession and the methods used to win business, but what about the work itself? Do contractors prefer working in the private or public sector? And how long is the average contract?
Private sector preferred over public sector projects
Most contractors (68.8%) opted to take on contracts in the private sector, not the public sector. This could be easily explained though - at the time of the survey (Summer 2020), IR35 reform hadn’t reached the private sector, meaning contractors were responsible for determining their IR35 status. However, since its introduction in April 2021, the only time a contractor assesses their IR35 position is when they’re engaged by a small company.
Contractors satisfied with project length
The time contractors spend working on one contract varies. For example, the biggest group (31.2%) and nearly a third of contractors surveyed usually work between 4 and 6 months on a single project, with 27.8% engaged between 7 months up to a year. But regardless of the time period, the most important thing is that 63.4% of contractors see it as significant enough to deliver a project successfully.
To conclude, our study suggests that in 2020 at least, contractors were able to maintain consistent rates despite the challenges brought on by the pandemic, are resourceful when it comes to winning work and are largely happy about the length of time spent working on projects. When focusing on economic recovery, this can only be a good thing.
Want to find out more? Head over to our contractor survey to see a full rundown of the thoughts of contractors in the UK.