What’s the “salary” of an independent consultant?

Are you a consultant and anxious to become self-employed? You are not alone. Every year, the role of independent consultant attracts more and more workers.

IT jobs, in particular, are very profitable and provide successful careers. The expertise and skill sets of IT consultants (e.g. infrastructure management, application management, integration of IT systems, etc.) are essential to companies undergoing digital transformations. 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 consultants (who seem, at first glance, to be financially better off).

What is the difference between a salaried consultant and independent consultant?

SALARIED CONSULTANTS

Salaried consultants perform the same duties as independent 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.

ADVANTAGES AND CONSTRAINTS OF BEING A SALARIED CONSULTANT

Due to having a permanent contract, a salaried consultant enjoys greater job security than a self-employed person. Additionally, they have social benefits linked to their contract (e.g. unemployment, paid vacation, regular income, etc.).

However, 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 independent consultant.

INDEPENDENT CONSULTANTS

Whatever the preferred form of independence (e.g. sole proprietorship, employed by a management company, etc.), independent workers are alone in guiding their actions. They only accept assignments from companies on their own terms, as experts in their field they can set their own rates (aka an Average Daily Rate), and they engage in their own prospecting for clients.

ADVANTAGES AND DISADVANTAGES OF BEING AN INDEPENDENT CONSULTANT

An independent consultant sets their own rates and often earns more than a 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 command hierarchy (i.e. they’re not a subordinate).

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

However, to benefit from the advantages of a permanent contract without suffering from its downsides, independent consultants are increasingly opting for management companies. In particular, they are attracted to the independant-employee status with these management companies, which allows them to exercise their profession as a freelancer in optimal conditions.

Salaried consultant vs. independent consultant: what are the differences in income?

WHAT IS THE INCOME OF A SALARIED CONSULTANT?

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

An independent 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 independent 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 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, which provides step by step support. If you want a custom simulation of your daily rate, contact us or request a simulation online!

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 consultant. As indicated, this difference should be contextualised in regards to the charges, fees, and taxes of the independent consultant. Taxes are not the same for sole proprietorship or an employee. It is, therefore, complicated to compare all these statuses. However, with equal social coverage, the most advantageous option for a 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 an IT consultant paid?

IT consultants are undoubtedly one of the best paid freelance 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 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. 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?

Self-employment attached to sole proprietorship generates many costs and cumbersome administrative procedures. Conversely, being employed by a management company allows you to benefit from significant financial advantages and a better salary. Managing companies offer employees many services allowing a better profitability of the activity:

• Negotiating a better ADR and therefore a more interesting income.

• Advantages of permanent employment: 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.

Still hesitating between the status of salaried consultant or freelance consultant? The salary of an independent consultant remains higher compared to the salary of a salaried consultant. This way of working also offers significant freedom, but may discourage some given the administrative burdens involved in managing one’s status as a sole proprietorship. This is why we have designed the innovative status of being employed by a management company, allowing you to free yourself from all the inconveniences of self-employment and without having to create your own company to optimise your income. Complete your own ADR simulation online or ask to be called back. Our team will help you make the right choice.