As I see it, there are two sides to the coin we call “rate of pay”. On one hand, there’s what you need to charge, and on the other, what you can.
What you need to charge is the product of simple math. First, figure out how many hours of productive, billable work you can complete each month. Here’s a hint: it’s not 40 hours each week, because there’s email to write, accounting to manage, phone calls to take, etc. I’ve settled on the rough figure of 25 hours each week.
Next, decide how much contribution to your checking account your business needs to make. You might have a spouse who works, or maybe you are single and loving it. Either way, you need to know how much you need to earn to make sure the bills are paid at the end of the month.
Now it’s a simple matter of math. Divide the amount of money you need to earn each month by the total number of hours you think you can manage each month, and that will give you a base hourly rate. If it’s wildly low, use common sense and charge more. If it’s vastly higher than your market can support, consider working more hours or another profession or market.
Use this hourly rate to build package prices for all of your services. If your hourly rate is $50, and one of your services tends to take you 3 hours to complete, charge at least $150. It may take you months to nail down the right mix of pricing and hours that you and your clients can both feel is a good value, but work for it.
That’s one way to learn what to charge your clients. Tomorrow we’ll discuss the other method.