Advice: Associate negotiating day rate increase with consultancy
For the past 6 months I’ve been working as an associate for a consultancy. The consultancy has a mixed engagement team of 15+ permanent employees and contractors delivering full time. We are providing project management, change and PMO support on an AI transformation programme for a FTSE 100 company.
My current situation:
- I am a Project Manager and my day rate is £575
- The consulting firms margin is 47% (based on my individual circumstances)
The client has given very strong feedback on my work and the consulting firm is in the process of negotiating a 6 month extension for the entire team. They have asked me to stay on if the extension goes through. During the engagement I’ve taken on more responsibility and embedded well into the programme.
I’m considering asking for an increase to £650 p/d for the extension (+£75/day). That would still leave the consultancy on a 40% margin assuming the client is charged the same rate for my services.
My rationale:
- As I’m an associate contractor and the consulting firm can stop paying me when the contract ends - a 40% margin seems reasonable
- Replacing me would be an inconvenience and create delivery risk for them
- AI transformation work seems to be commanding strong rates currently
What I’d like advice on:
- Is a £75 p/d increase reasonable or should I just be happy with what I’m making currently?
- How would you position the negotiation with the consultancy?
- Should I explicitly reference that I’ve seen the rate card and understand the margins or avoid mentioning this during negotiations?
For more context, this is my first project as a contractor following 7 years working for various management consultancies in London. I’m really enjoying the project, its low stress and very reasonable working hours. So I don’t want to upset the consultancy or jeopardise being kept on.
Any words of advice or nuggets of wisdom would be much appreciated, thanks!