Welcome to another episode of the podcast that teaches you how to be a ridiculously good virtual assistant.
Today I want to talk about how to bill your Virtual Assistant clients. How should a Virtual Assistant charge for their services?
Today’s Quote: Know what your customers want most and what your company does best. Focus on where those two meet. – Kevin Sturtz
Click the play button above to tune in, or choose your favourite podcast player below:
Connect with Tracey D’Aviero, VA Coach and Trainer
Episode Notes:
So today we are talking about the very common question … how to bill Virtual Assistant clients.
There is a misconception that billing by the package is better and smarter.
But that’s not always the case.
Why do VAs want to charge by package? The main reason is they want to stop tracking their time.
But you still need to track your time with packages!
Well, in a manner of speaking anyway.
Which is better, charging by the hour or by the package?
The answer can be … either … it really depends on what services you offer and what kinds of clients you work with, and how you want to work.
Let’s start at the beginning.
You start your Virtual Assistant business.
You set your rates.
Hopefully you have done the math to figure out how much your billable rate needs to be in order for you to be profitable.
If you haven’t, stop what you are doing and go do that now. No pricing strategy is going to work if you don’t know how much you need to charge.
Okay if you know your billable rate, then let’s talk about how to bill your clients.
What is Billable?
First things first, everything you do for your clients is billable to them.
Everything.
I don’t want to go off on a tangent about this, but it’s really important to address when we are talking about billing.
Every time you communicate with them, every time you respond on their behalf, every time you do their tasks. Everything.
I start with that because a lot of VAs don’t charge their clients for all of that. And then they lose tons of time every day that they don’t get paid for.
I used to think the communication part was part of my ‘overhead’ too. If you think that now, you’re wrong.
Your overhead is your fixed or variable expenses like your internet, your equipment, subscriptions, etc.
When you do anything for a client, that’s billable to them.
So, the clients who are organized and communicate well should get billed less than the hot mess clients that need to ask you every last thing.
Simply put, the more time it takes you to do any client’s work, should cost the client more.
If you are not billing your clients for communication and all of that, you need to start.
Look at how much time you are spending communicating. Checking emails or tasks, having project meetings, updating clients on status.
How much time are you losing during any given day that you aren’t getting paid for? Have you even stopped to think about that?
Whether you charge by the hour or by package, you must incorporate your everyday admin and communication into your client’s pricing.
It’s not your responsibility to absorb that cost. What you DO need to do is to manage it better, especially if it’s out of control. I’ll talk about solutions to that later in this episode.
So let’s get to the two options of today’s episode – hourly or packages.
Hourly
It is perfectly fine to bill your clients by the hour.
Let me say that again, it is perfectly fine to bill your clients by the hour.
A lot of chatter in the VA community comes around billing hourly.
There are definitely a lot of opinions on it – and a lot of it is negative.
VAs try to get away from it, but not for the reason you may think.
One of the things that people will tell you is not to bill hourly because as you get faster at tasks, you get paid less. That’s an actual issue. I’ll actually talk about that in a minute.
But the main reason VAs don’t want to bill hourly is that they want to stop tracking their time. That’s what I read, that’s what you tell me,
And one thing I’ll tell you back is that it doesn’t matter how you are billing your clients, you need to track your time.
If you are billing them hourly, you need to track it to know how much to bill them.
If you are billing them by package, you need to make sure your package price is still profitable.
Billing by the hour is the simplest way to do VA work. The client sends you stuff to do, you bill them for the time you spend doing it.
We are service businesses – trading our time for money is essential what we are meant to do.
However, there are issues with billing your actual time.
For one thing, if you miss that communication time we talked about, or any other time that you worked for a client, you are losing money. Working for free.
Being able to track your time meticulously is essential when you are billing hourly.
When is it okay, or easier, to bill a client by the hour? If you only have a couple of big clients it sure makes it easier. Either you are doing work for Jack or Jill.
When I was at my busiest, I worked with 13 clients of all sizes. If I came to the end of my day and realized I only actually tracked 4.5 billable hours, and yet I worked a full day, it was difficult to figure out what I missed counting.
It gets challenging sometimes to account for every minute, so sometimes we lose time, or money, when we are trying to track the actual time spent doing client work.
If you are jumping from task to task, you can lose time.
So, it is good to get really good at time management, task management, and productivity if you are billing clients by the hour.
That might mean working free of distraction, using systems or processes or routines, or simply blocking off time to complete a number of things at once.
Efficiency is the name of the game when you are billing by the hour – and that’s where the second piece comes into play.
The faster you get, the less you make.
When you get really efficient, maybe now you can do 4 things in an hour where you used to take 90 minutes. You are suddenly making less money to do those 4 things than you did last week or last month.
But you are better at it!
This is the one reason that a lot of VA coaches will tell you not to charge hourly.
And they aren’t wrong. Not completely.
What I teach VAs is how to bill by task – still based on time, but not using actual time.
What does that mean?
Simple – you create a procedure for every task you do. You set a billable time for that task.
For instance, creating some social media content for a client might take you 30 minutes. You set up templates and branding, and then maybe after that it only takes you 20 minutes. You still have to write new content or captions, but the images are taking a lot less time. Efficiency has made that hourly task worth less to you even though you are doing it better.
My way sets a regular procedure for creating that social media, and sets a reasonable time to do it – and that is what the client pays every time you do it.
Why is this acceptable? Because if someone else were to step in and do that task, it would take them longer than it does for you after you have done it a number of times.
So the time to do that task takes the 30 minutes. That’s what we bill the client.
We have made things as efficient as possible for ourselves, and we are getting rewarded for that.
Maybe social media is a bad example, because many VAs charge by image or package of images, but it’s the concept that’s important.
Billing by the hour can be done well, when you are charging the billable time to do something, not the actual time.
I used to charge my clients one hour for their weekly newsletter. They sent me the copy and any images they wanted in it. I set it up in the template we had for them. I edited the images as necessary and added those. I also had other updates to make like event calendar and other partner or affiliate links, etc. Sometimes we changed out the programs or services they wanted to promote. Following my procedure, you could take that task over and get it done in an hour. So that was my billable rate every time I did one.
If the client needed 4 newsletters in a month, it was $200 (4 x my billable rate of $50/hr). If the client only needed 2, it was $100. Simple, and it covered.
And I still needed to track my time to make sure that I was spending less than an hour on each newsletter – if the client suddenly changed the template or format or if we had unusual edits, etc. that time all has to be accounted for. You don’t work for free.
In the beginning of course it’s best for you to track your time until you know how long everything will take you to do it.
But switching to billable task time, still based on your actual time, is the simplest way to shift how you bill your clients.
You can still tell your clients you will bill them for 20 hours a month – but you will also be able to tell them what tasks will be completed every month in those 20 hours.
It helps with scope creep too – billing by the hour can be simple and easy.
Packages
Packages seem to make more sense because we hate tracking our time. It’s tedious and – as I pointed out earlier, if we miss time, we don’t get paid for work done.
Packages, however, are actually based on the billable task time I outlined a few minutes ago.
When you create a package, you need to know how much to charge for it.
You can’t just pick a package price out of thin air.
You have to do the math on that too.
And how does it work? We say ‘you can have xyz tasks done and it will cost you this much’. Essentially.
Packages give the client peace of mind that their work will get done within their budget.
If someone buys a $500 monthly package, they know that’s what they will spend.
They should also know what they will get done for that amount of money.
When you are thinking about setting up a package price, you still need to define that – your work scope.
Another part of the reason that VAs get worked up about billing and packages, is that the client starts asking them to do things that they don’t know how to do or that they don’t want to do.
With any client you need to define your scope of work.
Packages can solve that problem easily.
Here’s what you get, this many times a month, and here is what it will cost you.
If they want something else you can point to the package and say ‘that’s not included’, and then find a way to charge them.
I had an a la carte service menu (with billable task times, naturally) and added on extra stuff if I wanted to do it for the client.
We don’t have to do whatever a client asks – it doesn’t matter if they buy our time hourly or by package.
We set the scope of work before we start working together – and it’s up to you to hold that.
Billing is super easy when you define it.
I have almost always found clients to be more receptive to a well define package of services, even if it’s based in hours, as long as they know how much it will cost them and what they will get in return.
I always say:
“Clients want to know two things – what you can do for them and how much it will cost them.”
Tracey D’Aviero
It’s your VA business. You need to be able to define that and communicate that to them.
It’s the best way to get great clients that stay with you a long time.
When you aren’t sure, neither are they.
A sample package might be a customer service package – checking email daily, responding to inquiries and client issues, weekly email blasts or newsletters, CRM management for new leads, Facebook group admin. Whatever your clients need. Decide the tasks, the frequency of the tasks, and set your price.
I’m not going to go into a lot of detail today about open ended tasks. You can check out my other podcast episodes to learn about that.
Estimate Client Work Needs and Work Within Their Budget
But the idea is to determine the tasks, how often they are done, and add them all together, to get a package price.
You can actually do it either way – figure out what the client needs and then build them a custom package (that’s what I do), or offer a standard package that is suitable (like social media packages or website packages might be done).
The key is to know what you can do, know how long it takes to do it, and know how you are going to bill the client for it.
Last I want to quickly cover time tracking and management.
Time Tracking and Management
I said off the top that the main reason I see VAs wanting to charge by package is so that they can stop tracking time, and that’s true.
But it’s not always because they don’t like to track their time or that they lose time.
Sometimes billing by the hour means that you are simply waiting for the client to send you work all the time – and if they don’t send it you don’t get paid.
This happens far more often than it should.
I talked about work scope. It’s essential for you to know what the client needs help with so you can help them in the best way possible.
If you just say yes to a client to do ‘anything’, that’s when time management and time tracking become challenging.
When you set billable time per task as I outlined in this episode, it’s easy to track what you did.
And it’s easy to manage your time when you can map out your day with ‘I need to do xyz for client A’, instead of ‘I need to do whatever client A needs all day long’.
There is a big difference and it will set you apart from other VAs to manage your time well.
Time tracking of course is about making sure you are spending the right amount of time doing a client’s work, based on the budget you are working with.
Whether it’s 20 hours or $500 package, tracking your time and making sure you are keeping it within the budget is important.
Keeping a client’s work scope in mind is also important no matter which way you bill them.
Define it and stick to it.
Which way you bill your clients is up to you – both ways work, as long as you are taking everything I talked about today into account and not shortchanging yourself.
Remember everything you do the client pays for.
All the time you spend doing their work is billable.
And you need to create that work scope, assign procedures and time estimates to what you are doing – so you can make sure you are managing your time well.
Set the price and then work within it.
And how do we decide what to do within our scope of work?
For that we are going to circle back to today’s quote:
Know what your customers want most and what your company does best. Focus on where those two meet. – Kevin Sturtz
Talk to your clients about what they need done. Talk about their budget. What can you help them with? How long will it take to do? That’s your scope of work.
When you are working with their budget – what they want most is essential.
When you are working with your services – what you do best is essential.
Focus on where those two meet – love this quote to define our professional services and how we get to decide what we do, and for how much.
A client’s budget is important to them, but it doesn’t mean we try to cram everything they want into it. We do what we can, and if they want more they need to pay more.
That’s why the billable task rates and procedures are so critical to do.
I’m going to leave it off here for this week.
Do You Need Help?
If you need help creating your billable rate or setting your pricing, get in touch with me. I’m here to help. It’s the only reason I’m here at all, as you know. To help you become a ridiculously good VA.
I have helped hundreds of VAs who are stuck get moving through private coaching, group coaching, and live and self study trainings. If you want to talk about how we can work together, let’s connect on a Cut to the Chase call. You can book yours at YourVAMentor.com/chase
Thanks for tuning in this week! I’ll see you next time!
What You Need to Do Next:
Let’s work together privately to get you to your really big goal. It’s the fastest way to get results and we can start right away. Learn more about private coaching here.
The Virtual Circle (TVC) is a monthly mastermind group for Virtual Assistants just like you. We get together 3 times a month for group Zoom sessions to talk about what you are struggling with, working on, or celebrating. It’s a close knit community of your VA colleagues that provides the best kind of support for your VA business. Learn more about TVC here.
My self study program Getting Started as a VA can help you get your VA business started easily and quickly too. You can sign up right away and be on your way to getting clients by the end of the program, with all the right foundations in place. Check out the program here.
Click here for more tips to help you with your productivity and time management in your Virtual Assistant business.
Reach out to me if you need to talk about where you are stuck and what the right option might be to get you moving. It’s literally all I’m here to do is help you get to where you want to go. Book a complimentary Cut to the Chase call with me here.