After you have been in a contract for a while, and assuming all has gone well, you may be offered a contract extension. These are typically negotiated some weeks before the initial term comes to an end.
If you have been performing well and have established yourself as a valuable member of the project team, you may be eligible for a rate increase.
However, there are several factors to consider before negotiating an increase with your agent (or end client).
This has increased competition for roles and put downward pressure on rates.
If you’re considering asking for a rate increase, make sure you understand what’s going on in the market, and whether you’re in a strong enough position to justify it. Here’s what you need to consider.
1. IT contracting in 2025 – Market snapshot
The UK IT contracting market remains challenging in 2025. While demand for certain specialist skills is recovering, many contractors report difficulty securing new roles, with longer-than-usual gaps between projects.
According to the Recruitment and Employment Confederation (REC), temporary hiring has declined for eight straight months, though the rate of decline is slowing. This suggests a degree of stability, but the market is still far from buoyant.
Anecdotal evidence from LinkedIn and contractor forums confirms that many contractors, even those with 10-20 years of experience, are spending weeks or months on the bench.
Several have shared examples of applying for dozens of roles with a lacklustre response, or accepting significantly lower rates to stay in the game.
2. Stagnant rates – real-term earnings falling
Median day rates for IT contractors remain stuck in a range that hasn’t changed meaningfully for 10-15 years. In 2025, common rates for developers, BAs, and PMs still sit between £400 and £550 per day, roughly the same as in the early 2010s.
This rate stagnation, combined with rising umbrella costs, increased Employer’s National Insurance (NI), and inflation, means that real take-home pay has dropped significantly for many contractors. One contractor recently posted:
“£375/day with 18 years’ experience. The same role paid £500 just a few years ago. I’ve had no responses in weeks.”
According to ITJobsWatch, roles such as business consultants and data specialists still sit around the £490-£520/day median range. But there is increasing competition and downward pressure, especially in generalist roles.
According to the latest YunoJuno Freelancer Rates Report (2025), the average UK freelancer day rate now stands at £390 – up 3% year-on-year – with the top 10% of earners commanding around £708/day.
While overall project lengths have shortened slightly (averaging just 23 working days), demand remains strong for specialists, especially in areas like strategy, data and AI.
3. Sector-specific trends
Some areas remain more resilient, according to anecdotal evidence in the contract market:
Cybersecurity and cloud infrastructure roles are in steady demand.
AI and ML contractors are experiencing a rise in opportunities as companies invest in automation.
DevOps and platform engineers still command premium rates, especially in enterprise-scale environments.
Conversely, full-stack and front-end roles, once plentiful, have seen increased supply and reduced margins, especially outside London.
4. How market conditions affect your renewal
Many clients are trying to cut costs in 2025, so they’re less likely to approve a rate rise unless it’s clearly justified. If you work in a common role like business analysis, testing, or general development, there are probably plenty of other contractors available, so your negotiating power is limited.
But if you have specialist skills that are hard to find (like AI, cybersecurity, or niche cloud platforms), or you’re essential to keeping a project running, you may still be in a strong position to ask for more.
Right now, lots of contractors are out of work, so clients know they can often fill roles quickly.
That means if you want a rate increase, you need to show why you’re worth it – using recent results, market rates, or feedback from the client. And if the answer is no, be ready to compromise, or you might find yourself on the bench too.
5. Negotiation strategy for 2025
Start early: Open the conversation 3-4 weeks before your current contract ends.
Lead with results: Demonstrate how your work has helped reduce risk, saved time, or delivered measurable value.
Support your case with data: Reference live market rates from reputable sources, such as ITJobsWatch or recruiter salary guides (e.g., Robert Half, Robert Walters).
Be transparent: If rising NI or umbrella costs are affecting your take-home, it’s fair to say so.
Stay professional: Don’t bluff about other roles unless you’re ready to leave. Honesty builds trust.
6. Consider your leverage
If you’ve delivered strong results, filled a hard-to-source role, or integrated deeply into the team, your client is less likely to want to lose you.
You don’t need to demand an unrealistic rate, but even a modest increase (or a phased increase) can often be agreed upon if presented well.
It is always a good idea to find out what your agent is charging your client as a fee.
The percentage cut can vary massively, although 20% wouldn’t be uncommon.
The end client will be paying your contract rate + the agency fee, so if you feel that your client is unlikely to accept a higher overall rate, you may need to negotiate for your agent to take a cut in their commission rate.
The agent would rather take a cut than lose the contract entirely if you don’t renew.
In practice, this may be easier said than done though!
7. Practical steps to take
You shouldn’t tell your agent that you’ve been looking at other contract roles unless you are willing to walk away from the job if you don’t get a rise. They might call your bluff, especially in an uncertain market.
At all stages, you need to keep your client and agent on board.
Play the renewal game with the health of the market very much at the front of your mind.
Find out from other contractors what the current market rates are for your skills, and be prepared to compromise!
Approach renewal discussions early, armed with market insight, performance evidence, and a willingness to compromise – and you’ll put yourself in the strongest position possible.
