Why 'market rate' is a dud term IT contractors should no longer accept

“Market rate” – that old chestnut and go-to for IT contractors everywhere in the UK, and further afield, when it comes to pricing tech skills on a temporary basis.

Once, “market rate” was a solid term you could rely on, a bit like a favourite pair of comfy shoes, writes Natalie Bowers, founder of boutique recruitment agency Bowers Partnership.

Unrecognisable, or certainly it ain’t what it used to be

But now? Well, with so many different strains and pressures on the market, with its numerous variables, and irrevocable change since covid, and IR35 reform, it might be time to chuck ‘market rate’ in the bin.

As someone who’s spent over three decades placing IT contractors in the historically rate-rich investment management and wealth management, I’ve seen this term lose its shine. So, has “market rate” lost its mojo?

Calling for the death of ‘Market Rate’

Nadine Drelaud, an AI product CEO, isn’t messing about!

I don’t know Nadine but a look at LinkedIn will show you that Nadine is calling for the death of “market rate” in job adverts.

Nadine has a point.

In today’s topsy-turvy IT contractor jobs market, an advert specifying “market rate” is like saying “price negotiable.” It doesn’t exactly fill candidates with confidence.

With some adverts offering “up to £150” a day and others throwing out £600 for similar gigs (notably SPM roles), “market rate” really has become as clear as mud.

More and more, I’m sensing that contractors see this two-word term and think:

Is the client seeing how cheap they can get someone in for?

From my agency’s perspective, our clients -- some of the sharpest minds in finance, know that clarity attracts the best talent.

Without me having to advise them, I’m pleased to say they know vague terms like “market rate” just don’t cut it anymore.

“Transparency” isn’t just a buzzword; it’s what skilled, professional IT contractors want.

Who wants to feel like they’re playing a game of ‘Guess the Rate’?

A job that REC and APSCo are taking seriously...

Pleasingly, The Recruitment & Employment Confederation (REC) is all over this. They make sure their members don’t mess about -- job ads put out by the confederation’s agency members should be crystal clear about what’s on offer. None of this “market rate” nonsense​.

As an example, our business periodically takes compliance tests on the REC Code of Conduct, which emphasises transparency and ethical practices. Failing to comply isn’t taken lightly. And we must pass regularly to keep our membership intact.

Moreover, if contractors spot breaches of the code -- like a dodgy “market rate” appearing in a job ad, I encourage them to report the agency to their industry body.

The REC takes these reports seriously and will investigate any breaches.

At APSCo (the Association of Professional Staffing Companies), it’s the same story.

The association expects their members to keep things above board and spell out the details around the all-important aspect of pay.

Personally, I’ve always believed that a well-informed IT contractor is a happy contractor, and that starts with clear job ads. My team knows my feelings on this subject, and so they too expect nothing less than a number after the pay bracket, not words.

Should 'Market Rate' be sent to the Big Job Board in the Sky?

In a word – ‘Yes.’

My recommendation if you really like the role and it says the m-word then the r-word, is get in touch with the recruiter.

In short, if you can pin down a rate, do so!

Us agents should appreciate that the contract IT jobs market is confusing enough without adding more fog.

Contractors appreciate a bit of clarity, especially now when everything’s a bit wobbly in terms of engager confidence, time-to-hire and the IR35 offset’s impact. As I told one agent online the other day, inserting just “market rate” next to the £-sign is like putting “trust me” on a second-hand car; it’s just not reassuring anymore.

Why is “Market Rate” worth less than the paper it’s printed on?

One of the big reasons “market rate” is losing steam is the sheer diversity of skills, systems, and languages in today’s IT roles. Gone are the days when most tech jobs fit neatly into just a few categories.

Nowadays, almost every tech role seems to require a different mix of expertise, making it nearly impossible to pin down a one-size-fits-all rate.

 It’s why I always tell my clients, “You can pay whatever you want, but…

Remember; you won’t want the cheap talent, so you’ll have to pay the most that you can afford to get the people you want and need.”

Like many things in the new normal, quality doesn’t come cheap -- and in this industry, you get what you pay for.

But for first-timer contractors, what are they meant to do? Is researching their “market rate” in the hope of setting a price akin to going on a Wild Goose Chase?

Well, if you’re just dipping your toes into the IT contracting pool, “market rate” might seem like a good starting point. But it is potentially more of a Wild Goose Chase if you see the term in an advert, than a reliable guide of what you’ll get paid (pre-deductions of course).

Right now, rates are all over the shop, so instead of hanging your hat on the “market rate” if you’re an IT contracting newcomer, focus on what’s ‘hot’ in your niche and look at how your skills match up. Do some research; fine, but don’t treat “market rate” as gospel. It should be taken as more of a vague, implied pointer not an accurate indicator of billable self-worth.

This latter point is something we emphasise to every new tech contractor we place. Know your worth, but also know the market. And if the market’s volatile, rely on solid, specific and ideally verifiable numbers, not phrases about what those numbers might mean.

“Competitive” is another. “Delete” is recommended in response!

Saying goodbye to 'Market Rate'

So, is "market rate" done and dusted? Pretty much. In today’s IT contracting world, transparency is NOT just a nice-to-have -- it’s an absolute necessity.

Recruitment agencies and ultimately end-user organisations should know that being clear about pay doesn’t just attract contractors. It also builds trust and makes the whole hiring process smoother.

As hopefully more big recruitment industry players like REC and APSCo push for honesty and clarity in job ads in relation to rates, it looks like “market rate” might be going the way of the dodo. And maybe you could be accused of being one for going along with it!

Where to find reliable rates online

This goes for lowballing too. In fact, next time you're offered a rate that feels a bit low, rather than accept it, reach for published rates, consult industry-specific reports, check Glassdoor or if it’s a permie role, try Linked Salary Insights. Speak to your network, your trusted number-using agents, and fellow candidates too, plus anyone else who has a finger on the pulse of the IT contractor market and specifies pay in figures not phrases.

A bit of empowering knowledge can be tremendously useful in standing your ground during negotiations. And this back and forth may follow when you tell the next agent which offers it that “market rate” is a dud term that you no longer accept. Straight talk. Clear terms. Unambiguous pay. With "market rate" now left in the past.