Some random thoughts this afternoon on rates and such:
Many times, small business owners hit a wall in setting their rates or charging for their services. This is because they are still in that “job” mentality of hourly rates, etc. If you are in business for yourself, you will need to break out of this line of thinking.
If a job pays you $20 an hour, that’s probably only 1/3 of your true cost to them. Because there are taxes, benefits, your office, your computer, your chair, company services, the copier repair guy (who is always there), and 4 billion other things you don’t really know of.
That means if you were in business for yourself performing the same job as the above-mentioned example, to cover everything you probably should be charging $60 per hour. Fair enough?
But let’s take this a step further – that rate makes things equal to a job. Is that really all you want? To be worth only as much as a job would pay you? I gotta tell you – if I’m only going to make what a job would pay me, I’ll just go get a job – it’s 1,000 times easier.
No, to be happy working for yourself, you have to get paid what you are truly worth. And how much is that? Well, there’s no set number, but here are a few things to take into consideration:
- Competition – if your competition generally charges about $100 an hour, you need to be somewhere within that rate. It can vary some, but you need to be somewhat competitive.
- If the competition is all over the place in price (like in my business), you need to find a number that you are comfortable with and charge that. And make sure you are happy with this rate, not grudgingly accepting it.
Per Project Price
A good way to avoid the whole hourly thing (and I hate hourly, as it feels too much like a job) is to charge a per-project rate. This is what I do 95% of the time: tell me what you want, and I’ll give you a complete price for the job.
Avoid feeling bad about getting paid
This is another roadblock that many entrepreneurs must overcome – the guilt associated with charging a fair rate. Again, the “job” mentality doesn’t help here.
Back when I was doing freelance programming, I had trouble with this – for my first job I charged $60 an hour for (a VERY low rate, but a fortune to me at the time, as I was used to a “job” that paid around $20 per hour). The project was going to be 20 hours, and I was astonished that I’d actually make $1,200 for it. I did the project, and I felt a little apprehension (and a bit of guilt) as I sent the invoice – am I REALLY worth that? (silly question, I know, but I was starting out )
Anyway, my apprehension went away fast – not only did the client happily pay the $1,200 right away, they booked me for several more jobs right then and there. Turns out, I was an outright bargain in their eyes.
So set a fair rate for yourself, and send out those invoices with confidence.