I recently took a contract-to-hire position through a contracting agency. I was an established PHP developer, but the company I'm doing work for now is a Ruby on Rails shop which was seeking intermediate developers to train under their senior-level people, for a 6 month contract. In my local market, Ruby on Rails developers are hard to come by; because of this, CTH is ideal for their situation as it allows them to try converting people from other disciplines like mine without making an immediate commitment in case things don't work out.

Before even being presented to this company, the contracting firm negotiated an hourly rate of $34/hr, with a conversion after 6 months to full-time employee at a salary of $65k. This opportunity seemed promising, I was looking for a significant change from my previous job, and I loved the environment at the new company. I'm nearing the end of my contract period, and things are going great. I fit in well with the company culture, I've learned the ins and outs of the new language without issue, and I'm definitely contributing much more than the other 2 people who were hired at the same time as me under similar terms.

However, I feel like the agreed upon conversion rate ($65k) is lower than I'm worth. I understand that with a FTE position, I get added benefits such as health insurance and paid time off, but market rate for similar positions in this area are in the $75-85k range. I'm also fairly confident that the full-time employees here are earning within that range.

When my contract nears a close, am I in any position to try to negotiate for a higher salary? On one hand, the conversion rate was agreed upon beforehand. I also had to interview multiple times before being given an official offer, as I didn't do well in my first interview and there were definite concerns about whether I could handle the new field. Along with this, I'm averaging nearly 50 hours a week as a contractor; to take the agreed upon salary wouldn't just be slightly less than my current take home amount, it would be another 20-25% less as an effective hourly rate because of the additional hours I'm putting in (and assume would be expected to continue to log as a salaried FTE). Because of these reasons, I feel that I can justify asking for $5000-15000 more to be in line with market rates based on my performance, but I don't know if that will be frowned upon for trying to renegotiate something that was pre-determined.

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    Whenever you negotiate, the worst case is that the other party says no, or refuses to make an offer. So yes, you can negotiate, and if you're reading the situation right (you are worth 75-85k, that is what other employees are paid, and it is tough for them to find good developers), then they will be more than happy to pay you that rather than sift through other 6 month work-to-hires. – jmac Jul 12 '13 at 7:55
  • Early you mentioned that the openings were for intermediate positions under direction of a senior. Are you sure about rates per tier offered, and not confusing with senior rate? – JustinC Jul 12 '13 at 8:32
  • You will likely be renegotiating (to some extent) your pay with every usually annual review. Setting a figure ahead of time is always a gamble. If you can justify the higher pay with the value you add to the company (that is, not simply "I feel I should receive more"), I don't really see any reason why you shouldn't. Just be prepared for the possibility that the answer is "this is what was agreed upon and we'll start there"; discussing how that pay can be increased over time might then be a possible alternative option. – user Jul 12 '13 at 10:00

The reduced pay is most likely due to the contracting agency. They could be taking the 20% of your salary that you are missing when you turn full time. If you like the company, then why not ask if your reduced pay has to do with the agency or if you will receive a large increase after your first year; the first year is the time period that agency fees are based on. Worst case is that you work for a year in this and then leave for another company with more skills than before.

  • You might be on to something. Many contracting agencies have huge profit margins. They take more from the client than a regular employee would cost, and pay the actual employee less. Paying a regular wage might even be a cost reduction for the company. – Philipp Jul 12 '13 at 12:01

I just landed a contract to hire too and I have to roll with it. Sure they might just really want me for a limited project and the full time position might just be a dangling carrot but at least I am getting paid the standard rate $70/h (silicon valley). That boils down a bit closer to the full time salary I am asking but I am still taking a huge hit without the fte benefits, no 401k, health insurance etc.

It's only about the benefits. In the US it is employment at will, your full time job can evaporate anytime after you are hired even if you worked there for 40 years. Full time employment is not about job security but about more money on top in the form of stock options and of course the benefits. If you think about it in Germany for example sure they have to go through a bit more red tape to fire you but even in the best case they only have to give you 3 months of salary. And unless you are successful in contracting you make a pittance full time over there compared to the US.

To sum it up the deal I am looking at is worth my time but it could be a lot sweeter and even if it is contract to hire all I see it as is normal contract work and I will keep looking for other opportunities contract/c2h/fulltime/whatever. Maybe they extend the contract after the 3 months are up maybe they actually start paying the benefits maybe they will thank me and show me the door.. it all matters not that much in the long run.


Need a job vs. want a job situation. If you are desperate be careful what you say.

If you want a job... remember this recruiters lie constantly. Been lied to repeatedly by them. ALWAYS verify salary numbers for a temp to perm. Verify that it IS a contract to perm (got lied to and burned on this once. Passed on a longer term contract because the recruiter lied to me). Verify the length of the contract.

Note that the employer who is hiring off the temp to perm will lie about temp to perms. I worked for a fortune 500 company last year and there was a guy there for a temp to perm. His manager kept extending his 'hire date'. I told him to get a new job, they are playing you. They were. They had layoffs at the end of the year. He took my advice and got another job. If the terms change, look for another job. Temp to perms are risky situations. Is is best to never quit a job for a temp to perm. These are jobs you take if you 'need a job' not when you are looking for a better job. They are very risky.

I don't take temp to perms. The rates tend to be low because the recruiter wants to max his profits and you don't earn time with the company. You are also supposedly in 'tryout mode', so you are generally expected to work lots of hours and not be paid (this is unsaid, but your workload requires more than 40 hours/week), and there is no guarantee at the end. The idea that its a trial is not true. In the US, they have at will employment and they can fire you anytime they want. It is done, so the company does not have to pay a lump sum finders fee to the contracting company and can pay as they go. The rates tend to be low too since the company will pay less money total since the contract company will take profit from the rate. In 'service'/contracting/government related work this is VERY common. Since the companies make money by billing you hourly to the client. They then pay the contract company as they get paid. so they don't have to advance money.

  • edited my comment. Sorry for the typo. Given my mark downs due to my criticism of recruiters/contract companies I see alot of contractors are on these forums. Note in the IT industry they are commonly referred to as 'pimps'. I am speaking from experience about being lied to by recruiters and knowing others who were strung along on temp to perms. – Bob Aug 22 '13 at 15:09
  • as far as 'renegotiate'. Talk to the employer during the interview to verify what they want to pay. It is very rare that they will go higher than this number. Generally 'renogiations' just tell people not to hire you. The best way to renegotiate is to look for another job. – Bob Aug 22 '13 at 15:10
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    I don't understand your answer (aside from the fact that you aren't answering the question). You say In the US, they have at will employment and they can fire you anytime they want but then talk about temp-to-perm being risky. The fact is that everyone is 'temp', all the time! – Kirk Broadhurst Aug 22 '13 at 15:28
  • Note also that good agents don't lie. I've had a lot of great jobs through agents. I negotiate with the agent, the agent negotiates with the company. It's very simple, and if I don't get what I want then I go to another opportunity. – Kirk Broadhurst Aug 22 '13 at 15:29