When negotiating a contract candidate’s pay rate, it may feel like you are between a rock and a hard place. After all, both the client and the candidate are your customers. You have to make your client happy if you hope to get future job orders, and a satisfied candidate will likely turn to you for future contract opportunities and may even refer friends looking for contract work.

So where do you start? A common rule of thumb is to divide the annual salary for a comparable direct position by 2,080 (the number of hours typically worked in a year). That will give you a starting point that you can then adjust based on the circumstances of the particular contract placements.

Here are some factors that may affect the pay rate:

• Short-term contracts generally require higher pay rates to attract quality contract candidates.
• The longer the contract is supposed to be the closer the pay rate can be to a comparable direct position’s salary.
• The pay rate can also be closer to a direct salary if the position is likely to convert to direct.
• If benefits are going to be included, that may justify a lower pay rate.
• Factors that would affect a direct-hire’s salary also come into play in a contract placement negotiation. Examples include how long the worker was unemployed, how valuable his/her skills are, and the proximity to the candidate’s house.

The biggest tip when negotiating with candidates is to make sure you don’t promise a high pay rate right out of the gate if you don’t know what the client is willing to pay. It’s better to under promise and over deliver. Getting range of bill rates from the client can help make the entire negotiation smoother and less painful!

Debbie Fledderjohann is the President of Top Echelon Contracting, Inc.