When to take a rate cut

by Dale Davidson March 18, 2026

If all goes well, I'm will start a new project at a different agency with a new prime. I took a $20/hour rate cut, which is significant.

The reason I took a rate cut was because I wanted to hire someone on to this new project. The prime was mostly interested in me, but they couldn't afford my current rate, so I told them if they let me bring on another person through my company, I'd come along too. The "Dale and employee" package.

In addition, this gives me a chance at replacing myself with another employee for my current position. So I could potentially bring on two more employees in exchange for a $20/hour rate cut.

This is more strategic for me long term because I'd like to be able to get away from direct billable work by hiring more employees.

But as a solo 1099, there are also good reasons why you may want to take a rate cut:

To get a better commute
To get a better client
To get away from a terrible client
To do more interesting work
To get onto a new project with a longer contract period

Taking a rate cut isn't ideal, but rate is just one lever to pull when optimizing your 1099 life.

Want the full playbook? Check out Going 1099.