With the rise of the free agent nation and gig economy, there’s rampant confusion around the terms contractor, consultant, and independent contractor. If you are a self-employed consultant, you don’t want to be a contractor but do want to be an independent contractor. This article explains why.
Contractor or Consultant
How you perceive yourself matters because it influences how others perceive you. This affects how much money you can charge for your services and expertise.
Let me give you an example. Recently I met a sharp, professional woman with about 15 years of experience as a project manager and change management specialist. For the last few years, she’s been designing and implementing change management efforts for multinational companies. She’s been working through various agencies as a contractor and making anywhere from $90 to $110 an hour. Last week I recommended her to a client as a consultant with a pay rate of $135 an hour. This means that for a three-month, full-time project she’ll make about $12,000 more as a consultant. Annually, she’ll probably make $30,000 to $40,000 more as a self-employed consultant than as a contractor. (It’s hard to estimate because of unpaid time between projects.)Read More