For service based businesses it is one of the trickiest things to decide – how much is my time worth?
It’s vital for the growth of your business that you charge a reasonable rate but at the same time undercharging may have a detrimental effect on your business. It can often negatively impact your business just as much to charge too little as to charge too much.
It seems like a tricky balancing act doesn’t it?
As human beings with real, human insecurities we need to add into the mix the emotional factors that come with deciding on your hourly rate.
After all, you are inevitably putting a dollar figure on what you believe your skills, abilities and knowledge are worth. In my experience, it is far more likely for female business owners to charge less than they should be rather than more.
Before you even attempt to make any calculations there are 2 steps that are helpful to take first:
- Deal with your own stories. Whether you work through this alone or with the help of a business coach it is a part of the process that will help you most to make your way through the calculations and be happy with the end result. If you are starting out in your business and you are considering charging a slightly lower rate and then increasing it then make that clear, offer it as an introductory rate and make sure you include a time limit.
- Research what your competitors are charging. Look for companies or individuals with similar experience, skill set and target market. The third consideration – target market, is important as it will impact your hourly rate. For example if your target market is mothers with young children who do not work then your rate will be very different from someone whose target market is corporate women with no children. Now I don’t necessarily mean that you should copy or compete with what others are charging but it is a good way to ensure you are providing value to your market. Rather than reducing your rate here you may need to think about what you could add to provide more value.
Once you have those 2 steps completed it is time for the fun bit! Ok, well maybe you don’t all think number crunching is the fun bit but luckily for you I have created this easy to use Hourly Rate Calculator which will do most of the hard work for you.
This calculator approaches your calculations from the perspective of how much you need to earn to live the lifestyle you want and meet your financial obligations.
The mistake a lot of people make is to instead approach is from a perspective of – how much can I charge?
When you make your calculations from this perspective you are at risk of working all the available hours you have and still not be able to meet your income goals. So download your calculator now and begin to collate your finances so you can fill out as many details as possible for accuracy.
If you are still struggling to get a grip on your budgeting and financials why not sign up to our mailing list to be advised of our next workshop in Perth. And for those of you not in Perth why not take up my offer of a free Skype consult to go over your individual situation.