What’s The “Salary” of An Independent Consultant?

Are you an IT or tech pro who is keen to take the plunge into self-employment?

If you are, you are not alone. Every year, the world of independent IT consultants attracts more and more professionals.

Jobs in IT and tech are very profitable and provide successful careers. The expertise and skill set of IT consultants (from infrastructure management, application management, and the integration of IT systems etc.) are essential to companies undergoing digital transformations.

IT Consultants, either employed by a consulting firm or working independently, manage to earn a comfortable income from the start of their career. Despite this, an income gap remains between salaried consultants and freelance IT consultants (who seem, at first glance, to be financially better off).

 So, what’s going on? In this article we will delve into the differences between salaried consultants and self-employed IT consultants and look at the pros and cons on both sides. 

Let’s dig in.

What Is The Difference Between A Salaried Consultant And Independent Consultant?

Salaried consultants

Salaried consultants perform the same duties as self-employed ones; however, they are employed by a consulting firm. As experts in their respective fields, they are sent by their employer to various clients for consulting assignments (alone or within a team). 

Consulting roles cover a wide range of expertise, including: auditing, marketing, communication, IT, change management, etc.

Pros and cons of being a salaried consultant

Due to having a permanent contract, a salaried consultant enjoys greater job security than a self-employed IT consultant . Additionally, they have l employee benefits  included  in their contract (e.g. , health insurance, paid holiday , regular income, etc.).

That said, salaried consultants don’t always have a choice over their clients. Additionally, the salary of a consultant in an IT firm or Software Engineering Company is generally lower than that of an self-employed IT consultant.

Independent IT consultants

Whatever the preferred form of independence (e.g. sole trader , employed by a management company, etc.). A self-employed IT consultant has complete autonomy over their business.  They find their own clients and only accept assignments from companies on their  terms. As experts in their field they can set their own rates (aka an Average Daily Rate).

Pros and cons of being an independent consultant

An independent IT consultant sets their own rates and often earns more than an IT consultant on a permanent contract. Moreover, by being their own boss, they have complete freedom to choose their assignments and are not subject to a company’s chain of command (i.e. they’re not a subordinate).

An independent IT consultant, however, does not enjoy the same  benefits as an employee on a permanent contract. They must account for the absence of paid holidays, and retirement (in most cases). Additionally, it’s also necessary for them to plan for periods when work activity is quieter.

However, to benefit from all the perks  of a permanent contract without suffering from its downsides, independent IT consultants are increasingly opting for management companies. 

In particular, they are attracted to the  independent employee status management companies provide, which allows them to  thrive in their career as an IT freelancer.

Salaried Consultant vs. Independent Consultant: What Are The Differences in Income?

A salaried consultant generally has a set income, with or without a variable. Although IT consultants employed by a management company are known to have high salaries, they are still lower than the average earnings of independent IT consultants. 

However,  self-employed IT consultants that do not use a management company have many direct costs (e.g. accounting, travel, taxation, etc.) and ancillary costs (e.g. mutual insurance, retirement, liability insurance, etc.) that cut into their earnings.

What is the income of an independent IT consultant?

An independent IT consultant establishes what is known as an ADR, or Average Daily Rate. Their service is, therefore, billed by the hour or day. Different calculation methods make it possible to set the fairest price for both parties. 

How do you calculate the salary of an i self-employed IT consultant?

• The first step is to consider the market prices.
• The ADR is also calculated according to the status of the entrepreneur (e.g. sole proprietorship, wage-portage, employed by a management company, etc.)
• Taxes and business expenses (e.g. transport, equipment, etc.) must also be put into consideration.
• The payment of a pension, mutual insurance, healthcare contributions, etc.

Despite business costs and the deduction of charges, an independent IT consultant generally earns more income than a salaried consultant, regardless of their specialty. 

Find out how to properly calculate and set your daily rate here. Remember, though, that you have to enter your costs within the calculation to produce a more accurate result. 

To avoid creating your own company, the easiest path is to use a management company like Hightekers, which provides step by step support. 

Difference in salaries between a salaried and independent consultant

On average, there is a 20% and 40% difference between the annual salary of a salaried consultant and an independent IT consultant. 

As indicated, this difference should be contextualised in regards to the charges, fees, and taxes of the self-employed IT consultant. Taxes are not the same for sole traders  or an employee. 

It is, therefore, complicated to compare all these statuses. However, with equal social coverage, the most advantageous option for an independent IT consultant is to go through a management company, allowing them to optimise their daily rate and income, without having to administer and manage their own company.

For more information, contact us!

How Much Is A Freelance Consultant Paid?

IT consultants are undoubtedly one of the best paid self-employed roles. The boom in data usage and new technologies requires complex skills that are still rare and highly valued. This specificity, therefore, justifies the high ADR of freelance IT consultants.

 Independent IT consultants earn between € 300 and € 2,200 per day, depending on their experience, the nature of the assignment, and their specialisation. For example,  a junior Front-End Developer, at the start of their career, will earn significantly less than a Chief Information Security Officer with 20 years of experience.

What Are The Financial Advantages When Employed by A Management Company?

Being employed by a management company allows you to benefit from significant financial advantages and a better salary. Managing companies offer IT freelancers   many services allowing for greater earnings and a smoother running IT freelance business Let’s take a look at some of the key benefits: 

Negotiating a better ADR and therefore a more interesting income.

• Employee-style benefits: social benefits, paid leave, travel agency, unemployment contribution, etc.
• Participation in the profits of the company thanks to employee-status.
• Absence of administrative commitments, which translates to more available time that can be used to invoice other working days.
• Membership of an international network of consultants, allowing in particular to compare different salaries and find new opportunities, to minimise vacant days and therefore maximise income.

Conclusion

The salary and earning potential of an independent IT consultant remains higher compared to the salary of a salaried consultant. 

Though this way of working offers significant freedom, the administrative burdens of managing your status as an independent IT contractor  can be daunting. This is why we’ve developed an innovative solution: employment through a management company. 

With this approach, you can avoid the hassles of self-employment and still optimise your income without the complexities of establishing your own business. 

You can easily complete your own ADR simulation online or request a call-back. Our team is ready to assist you in making the best choice for your freelance IT career.