Figuring out your rates is probably one of the scariest things you can do as a VA.
Not really, but it sure feels like that.
How do you put a price on your value?
This is one of the most often asked questions in the VA forums and by my coaching clients.
You decide to open a VA business.
You know what services you can offer.
But you have no idea how to price it. How much is too high? How much is too low?
The truth is, it’s actually pretty easy to figure out.
I developed a simple rate calculator many years ago that helps you look at your rates easily and figure out what makes sense for you. Check it out here and start to do your math!
And all of the ‘figuring’ starts with knowing how much money you want or need to make.
When you are running a business, you need to think in terms of what you need to bring in, and then do the math from there.
Here are a couple of examples of how you can calculate your rates:
If you want to make $50,000 a year and work full time as a VA (30 billable hours per week), that is $961 per week, or $32 per hour. So your hourly rate needs to be at least that much.
If you need to make $2,000 per month and can work part time (10 hours per week = 40 hours per month), then you can do that math too – you would need to charge $50 per hour.
In these two examples, we have two completely different hourly rates based on what you need to earn. So it helps you to start with what you want and calculate down.
Many VAs try to pick a number out of thin air and believe me, it’s never right.
When I first started my company in 1998, I had been making $16 per hour at my job. When I was trying to figure out what I should charge my freelance clients, I added $2 for ‘overhead’ and charged $18 per hour. But I didn’t realize all of the expenses that I would have – including taxes – and at the end of my month I was always completely out of money.
I didn’t do any math at all to figure out what my rate should have been. When I did that, it made a world of difference.
What was easiest for me was to start with what I knew I needed to bring in each month to contribute to my household. I knew I needed about $900 ‘clear’, since that is what my paycheque had been. But that meant calculating my actual revenue at the higher rate – I actually needed about $1500 per month so that I could allow for my expenses as well. Big difference!
Give it a try yourself – the rate calculator is fun and shows you a few different scenarios – if you have a part time job, if you want to work on retainer, if you are working as a subcontractor, and it will show you what you need to charge.
The package contains the calculator itself, as well as training video to show you how to use it. Enjoy! And be sure to tune in next week when we go into this even further!