The Biggest Mistakes First Time Contractors Make

The games industry is changing. Working structures are shifting, hiring models are evolving and despite the ongoing fear around redundancy and instability, a lot of what we are seeing is actually the industry maturing into a more sustainable long term shape. One of the clearest indicators of that is the steady rise in contract hiring. Studios are becoming more project focused, more budget conscious and more flexible in how they build teams, which naturally creates a larger need for fixed term and freelance support around production cycles.

For a long time, games has operated in a slightly unusual way compared to the rest of the wider tech and creative world. Most game studios historically leaned heavily towards full time permanent employment, while industries around them, whether that is film, VFX, animation, software or marketing, have comfortably existed with far more freelance and project based structures. In many ways, games is now slowly moving towards the same model those industries have used for years.

Teams scale up and down depending on project stages, specialists move between productions and experience becomes more fluid across companies and IPs. With that shift becoming more and more common, there are a few mistakes we consistently see first time contractors fall into when making the transition.

1. Miscalculating Your Day Rate

This is probably the most common issue by far, especially for candidates moving from permanent employment into freelance work for the first time.

A day rate is not the same thing as a salaried equivalent divided into working days. There are a lot of additional factors that need to be considered which people often forget about initially. As a contractor, you are not being paid for holidays, sick leave, quieter periods between projects or potentially even bank holidays depending on your setup. Travel costs, accommodation for hybrid work and the cost of equipment can also quickly start stacking up depending on the role.

A lot of first time contractors will look at a day rate and immediately compare it directly to a yearly salary without factoring in the gaps and additional costs that sit around it. The reality is that contracting often comes with stronger short term earning potential, but it also requires a more realistic understanding of your yearly outgoings and downtime. Building a proper buffer and understanding your true yearly earnings rather than just the headline rate is incredibly important.

2. Forgetting About Umbrella Costs or Accountants

Another huge one is not properly accounting for the admin side of contracting before starting.

Depending on the country, company structure and contract type, you may need to work through an umbrella company, set up as self employed or establish your own limited company. Each option comes with different costs, tax implications and responsibilities. In some regions, umbrella fees alone can remove a noticeable percentage from your expected take home pay if you have not planned for them in advance.

The same applies to accountants. A lot of people initially think they will manage everything themselves, and some absolutely can, but for many contractors the value of having somebody properly handling invoices, taxes and compliance is well worth the monthly cost. The important thing is simply understanding those costs before accepting a contract, rather than discovering them halfway through your first invoice cycle and suddenly realising your take home looks very different to what you expected.

Contracting gives you more flexibility and more ownership over your work life, but that also means taking more responsibility for the operational side of things as well.

3. Expecting Extensions Instead of Preparing for What’s Next

This is one that catches people emotionally as much as financially.

A lot of first time contractors approach a contract role with the mindset that it will probably extend indefinitely, particularly if things are going well. Sometimes that absolutely happens, but in most gig based industries the expectation is actually the opposite. Projects end, priorities shift, budgets change and teams naturally scale up and down over time.

The people who thrive in contract heavy industries usually understand that they are always partially preparing for the next thing, even while fully committed to the current role. It becomes less of a temporary arrangement and more of a working lifestyle. You build networks across multiple studios, stay aware of market movement and keep your options open long before your current contract ends.

That may sound exhausting initially, but for many people it actually becomes one of the biggest positives of contracting. You gain exposure to different teams, pipelines, technologies and locations at a much faster pace than many permanent career paths allow. The variety can be hugely beneficial both financially and professionally, but only if you approach it with the right mindset from the beginning.

Closing Thoughts

Contracting is not for everyone, and permanent employment will always make more sense for some people depending on their lifestyle, responsibilities and long term goals. But the reality is that contract hiring is becoming a much bigger part of the games industry, and understanding how that world works is becoming increasingly valuable.

Most of the mistakes first time contractors make are not caused by lack of ability, they come from approaching contracting with a permanent employment mindset. Once you understand the structure properly, factor in the real costs and accept the fluid nature of project based work, it becomes much easier to navigate.

For a lot of people, it can also become one of the most rewarding ways to work in games.