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How do I calculate a contractor's rate? This is a question that has been frequently asked and usually not answered appropriately without the availability of a tool to defend or negotiate a rate to pay a contractor that actually makes sense.
Enter the ConnectsUs Contractor Rate Calculation Spreadsheet. It's a spreadsheet used to calculate an hourly rate for an independent contractor, based on fair market value for an equivalent, regular, full-time position. It will be an eye opener!
Negotiating a fair and defendable hourly rate for an independent contractor has always been an undertaking shrouded with mystery and cryptic ambiguity. As HR professionals or hiring managers, we often settle on a rate simply because there's no tangible science or formula we can refer to. The variance in rate for the same work can span 200% from one independent contractor or consultant to another. Contractors often communicate their rates based on their requirements rather than a fair market calculation for that work.
One way to determine a contractor rate is to understand what that individual would be paid in a similar full-time regular position and reverse-engineer the hourly rate.
Once this ConnectsUs document has been modified for your company, it will be used by:
HR and/or Finance, who will collaborate with the Hiring Manager to complete the details for each contractor position.
It ensures that your company:
You may end up paying contractors an inflated rate.
You may offer a rate that is below market value and risk losing strong contractor candidates.
|Contractor Rate Calculation Form|||||Accompanying Instructions for Managers|
The Contractor Rate Calculation Form can be used on its own as a stand-alone tool, or as part of the Compensation Kit.
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