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I have been with my current employer for a bit over six years, and am looking to get out. I've had no career development, am grossly underpaid with minimal raises, and my department has taken Lean operations to such an extreme that it's created a toxic environment full of people on the edge of burnout. So I have been looking for something new.

I have an "offer" that is for a one year renewable temp contract with a large pharma company in my area. It will be a huge step up in pay, a great name to have on my resume, and would give me a lot more opportunities for career growth. But I would have zero benefits or security.

I know what the market average is for this job in my area (about 75% more than my current salary), and the recruiter says they pay contractors above the perm employee salary to account for the lack of benefits. But he says they want to extend an offer to me, that the pay range is so wide it's pretty meaningless, etc., clearly wanting the first number to come from me. Basically, putting all the risk on my end above what there already is going perm to temp.

The opportunity is good, and while there is a risk with the position being a renewable contract, the ability to pay down debts and save in case something goes bad are huge.

I am awful at negotiations, so I hope someone can help. I will only take this if they will exceed the market average for the role by at least 10% given the risk I'm taking on and additional expenses due to lack of benefits. But I can't help but feel they stance of "we want to make an offer, so give us a number" is a backdoor way to ask "how desperate are you really?"

How do I approach this? Should I ask for 20% above market average and hope they are willing to negotiate down to 10% or even 15%? Should I just say that because of the risk on my end, it really is not possible for me to negotiate without a fully-outlined offer on the table? Or can I split it and say 20% above average, but I'm open to revising that once I have a formal offer in front of me?

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  • Will you be employed as a W2 or 1099 ?
    – aaron
    Sep 2, 2016 at 16:45
  • Rule of thumb is find your real worth to your current employer in the area you are working at as a permanent employee(not the lean ops BS) mark up by 10%-20% for the lack of benefits, depending on your experience level. If you have less than 10 years experience, I'd stick to the lower end of that range, i.e., close to 10%
    – MelBurslan
    Sep 2, 2016 at 18:53
  • I once estimated how much more one needs to get to compensate for good corporate benefits. It came to around $30K/year.
    – PM 77-1
    Sep 2, 2016 at 19:21

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You need to balance your market worth against the costs of being independent.

X2 Rule of Thumb Assume you will be fired at any time because you're a contractor. Ask for at least (x2) what it costs to survive. This sets your target at 50% employment to live the way you are living today.

Know your costs Being independent is not trivial. You need to pay your other half of Social Security (+7% of gross wages) as Self-Employment tax. You need to provide your own healthcare ($1,000 - $3,000/mos.). You only get to deduct honest business expenses (e.g. mileage, conferences, books, software, computer and NOT clothes, personal items, ...). Don't ignore the cost of retirement. You'll need to set aside money for a 401k or similar. If you think you're too young to save, think again. If you work until 65 yrs old, you'll need at least 15 yrs of cash to survive (esp. when you need more healthcare). That's 30% of your working life! You'll need to save roughly 30% per year to survive in a zero inflation economy.

Cash Flow Be prepare for at least 30 days wait to get paid. First to get **** and last to get paid. You'll be last in line after employees to get paid for your work. Have enough savings to ensure that waiting 30 - 90 days won't get you evicted from your home / apartment.

Always be hustling the next gig You never know when you'll be out of work. Always be looking for a new job. You can't easily do that if you're working 40 hrs / week for somebody else. Be prepared to set aside some time to get more work and perhaps not get paid while you search for work!

Sign reasonable agreements Be careful about onerous NDA's and Contractor's Agreements. Ensure clauses that allow you to exit, raise your rate, and work for competitors (but not at the same time).

Know what temps are being paid Know your competition. Know what salaries are being paid. Know what hourly rate is being paid for somebody doing the same job you plan to do.

Be prepared to walk away If you can't say 'no' and walk away, you're not negotiating... you're just complaining.

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