Average contract rates have remained static over the past decade, thanks to increased competition and outsourcing, so here we explain why it is more important than ever to maximise your potential earnings as a contractor.
Some skills are commanding higher fees than ever, while others have barely moved, and once you factor in inflation, many contractors are taking home less in real terms than they were a few years ago.
If you want to get the best return from your time on contract, you need to understand two things. First, the wider market conditions that push rates up or down. Second, what you can do personally to influence what you are paid.
Our contract rate checker uses ITJobsWatch data from live job ads, serving as a good starting point for determining the current value of your skills.
What drives contract rates
Economic climate
When the economy is funding new projects, demand for contractors rises, and rates follow.
When there is uncertainty, projects get shelved, budgets shrink and rates suffer. Public sector budgets, interest rates and even changes in government can all have an impact.
For example, the government’s much-criticised hike in employers’ NI has led to an increased demand for contractors in 2025, according to data from Adzuna.
Legislation and compliance
Few rules have had a greater impact on contractors than the IR35 changes. Since April 2021, private sector clients have been responsible for determining the employment status of contractors, and many have taken a risk-averse approach by placing roles outside IR35.
This has reduced the number of genuinely outside IR35 contracts, especially in larger organisations, and prompted some contractors to request higher gross rates to compensate for the reduced take-home pay.
Demand for skills
While overall growth in tech jobs has slowed compared with the boom years before 2020, specific skills are still in short supply:
- Cybersecurity
- Cloud infrastructure and DevOps
- AI and machine learning
- Data science and data engineering
- Regulatory and compliance projects in financial services
Depth of experience
It is not just about having the right buzzwords on your CV. Clients pay more for individuals who have consistently delivered at a high level, especially within their industry.
Location
Remote and hybrid work have narrowed the differences between some regions, but London and the South East continue to offer the highest median rates. A high proportion of contract roles are still based in the South.
Sector
Industry makes a big difference. Financial services often pay more than the public sector. Oil and gas can be lucrative when the market is buoyant, but rates can fall fast if conditions change.
Typical UK IT contract rates in 2025
Source: ITJobsWatch data – July 2025 snapshot.
| Role / Skill | Median rate | 90th percentile | Notes |
|---|---|---|---|
| Java developer | £575/day | £700+/day | AI or data integration can add a premium |
| Cybersecurity consultant | £675/day | £900+/day | High demand in finance and government |
| DevOps engineer | £600/day | £750+/day | Kubernetes and Terraform remain valuable |
| Business analyst | £500/day | £600+/day | The finance sector pays more |
| IT project manager | £550/day | £675+/day | Agile and regulatory projects pay higher rates |
Who decides what you are worth
Advertised rates are usually agreed between the client and the recruiter, but that does not mean they are fixed.
Some ads overstate the figure to get more applicants.
Others start low and try to move the client up if the right candidate comes along. Treat job board rates as a guide, not the final number.
Hiring manager insights: Simon Bichara
We asked experienced hiring manager Simon Bichara for practical views from the client side. Here are some key extracts.
“Firstly contracting is a market, so supply and demand applies.”
“Treat all the data you see in adverts with a large pinch of salt – only data on actually achieved rates is really worthwhile.”
“What really matters is the job you’re capable of doing not how it’s labelled.”
“Remember that in any large company you’ll need not only to persuade the immediate hiring manager, but also to give them the evidence to persuade their boss and their HR department to make an exception for you.”
“You’re much less likely to see [margin cuts] with a large company in financial services, because they will have an effective procurement department who will have squeezed the agent’s margin down to the bone already. A small company in healthcare, by contrast, might still be paying a 20 or 25% margin.”
“You should know what margin your agent is taking. It’s fair that they take some – but make sure it’s not too much.”
Simon also stresses that non-technical skills often determine success when bidding for a new contract role. Negotiation, in particular, is an essential part of a contractor’s toolkit.
“Contractors today operate in a complex market. They sell their skills directly to end clients; via recruitment agents; through third-party consultancies; on a full- or part-time basis; by the day or by the outcome. More than ever, contractors are independent small businesses.”
He advises separating the “what” from the “how” – the product (your core skills and track record) from the business skills needed to win and retain work. Unless you already work in sales or procurement, selling yourself and negotiating effectively will require learning new skills. Preparation is critical – successful negotiations are won before you enter the meeting room.
Simon’s approach boils down to three steps:
- Do your research – understand what motivates the other side, and your true position in the market.
- Figure out your BATNA – your “best alternative to a negotiated agreement”, so you know your options if talks stall.
- Talk nicely – keep discussions constructive so both parties are happy to work together in future.
How to push your rate up, and keep it there
If you are starting a contract or approaching renewal, these tips from the ITContracting team will help you approach the conversation with more confidence.
- Contract rates fluctuate in response to supply and demand. Track market data regularly.
- Your skills, knowledge and experience all influence your rate.
- London and the South East still tend to pay more.
- Some sectors pay better than others. Finance often leads.
- Strong demand for your skill set increases your bargaining power.
- Negotiation is business. Treat it professionally.
- Weigh the opportunity cost before accepting a low-rate role.
- Ask your agent about their commission. There may be scope to adjust it.
- Avoid stating your current rate too early. It can limit flexibility.
- Aim high, expect to compromise.
- Renewal talks are different. You already know the client and the value delivered.
- Speak to the decision-maker as well as the agent.
- Do not bluff about leaving unless you are ready to follow through.
- Confidence counts. Hesitation can weaken your position.
- Keep it professional and avoid making it personal.
- Be willing to compromise when competition is tough.
- Sometimes it is not the right moment to ask, for example, when budgets are being cut.
- Agents work to maximise commission and keep clients happy.
- Every negotiation balances your rate, agency margin and client budget.
- Do not get discouraged if it does not go your way. You will improve with practice.