Setting your rates as you get your VA business started is always a challenge.
You don’t want to overcharge, but you also need to be very cautious not to undercharge.
You also need to be sure to provide the right amount of value for your client, while making sure that your business is profitable.
Easy, right? It actually is easier than you think, once you have a strategy for charging your clients.
Calculating your billable rate is important no matter how you charge your clients, but it’s also essential to figure out the best way for your clients to pay you.
When you start out, hourly rates are a great way to charge clients.
Often you will be doing tasks for the first time, and you won’t really know how long something takes to do. It’s the safe option to trade your time for dollars until you can move to packaged rates.
However, getting paid in advance is the key to your success as a business owner.
Doing the work and then getting paid by your client is not always ideal.
Here are a few reasons why:
• You don’t really set a bucket of hours to use for each client
• It makes it harder to manage your time if you don’t know what’s coming each week
• It makes it easy for clients to not send you any work if they are overwhelmed or budget-conscious
• You run the risk of not getting paid after you have already done the work
So what should you do instead? You should set up your clients on a prepaid retainer.
All that really means is that you dictate how much time you set aside to do a client’s work each month, and then you get them to pay ahead of time to reserve that time in your schedule.
To do this, you need to know roughly what you will be doing for each client.
Try to find some ongoing tasks to do for them so that you are not always looking for new work each week. Anything that is repeatable and that will fill the bulk of your week is good.
For instance, maybe you will manage their inbox, or handle their client care or customer service. Anything that needs to be done on a regular basis is a great place to start to build a retainer.
Then allow for other new tasks – but not too many, especially to start. You don’t want to overwhelm the client or yourself.
Try to come up with a 10 hour retainer package to start with. What can you do for the client that will fill up that amount of time? Talk to them during your sales conversation to define what the tasks are that you will do for them.
With a 10 hour retainer, ensure that you are doing at least 2 hours of work for them each week.
This will avoid the possibility of them sending you 10 hours of work to do in the last week of each month.
With a retainer, you get paid up front and that’s how you reserve time in your schedule to do the client’s work.
Asking for money ahead of time can feel icky, but remember that so many people prepay for things now that you don’t need to make a big deal of this transaction. It’s just your policy.
If someone doesn’t want to prepay, then you likely haven’t established the value you are bringing to them and their business.
Offering a package of 10 hours to start makes it easier to ask for prepayment, as that will likely cost the client less than $350 (depending on what your billable rate is, of course).
So, do you agree? The best way to charge your clients is on a prepaid retainer!
Let’s recap:
- Figure out how much time you will commit to them (start low, like 10 hours until you get used to working with clients and talking to them about rates).
- Multiply the hours you will reserve for their work by your billable rate.
- Say your retainer rate out loud as many times as you can. Practice telling clients that this is your rate, and that it is prepaid.
Until you do it, you will have anxiety around asking to get paid up front.
But once just ONE client says yes, you will find it much easier to say it on your consultations.
Then, all you have to do is find the clients!
The Virtual Circle is a small group of supportive VAs who work together through the day to day issues that crop up just like this one. If you are struggling through your VA business, check out this group to see if it’s the right time for you! Our daily and weekly support is just what you need to get things done, and to keep yourself in a positive frame of mind so you can reach that success! Join The Virtual Circle now and start growing your VA business today!