Are you a consultant, coach, or small business owner that is trying to figure out what you are worth? Are you a corporate employee thinking about venturing out on your own and are wondering what you need to charge to make the money you are making now? Here is a quick way to figure out what you are worth:
1. Calculate Your Dollars per Billable Hour.
The first step is to figure out your dollars per billable hour. Take the yearly salary that you would like to make (this could be what you currently receive, or what the going rate is for the type of work you do), and divide it by 960. Figure that you can bill about 50% of the hours you work, and that you will work for 48 weeks out of the year, thus 48 x 20 hours = 960.
2. Add Your Overhead.
Multiply the number from step 1 by 1.33 to estimate what you need to charge to cover your overhead expenses.
3. Add Your Benefits.
Multiply the number you came up with from step 2 by 1.33 to account for benefits such as healthcare. The result is the hourly rate that you need to charge to make what you would like to make from step 1.
Here is a quick example of the process above:
Yearly salary = $100,000
$100,000/960 = $104 (this is what you make per hour before expenses)
$104 x 1.33 = $138 (the extra $34 covers overhead)
$138 x 1.33 = $183 (the extra $49 covers benefits)
In this example, you will need to charge $183/hour in order to make the $100,000 you need to make per year.
Now that you know what you are worth, compare this to what some of your competition is charging. Make sure that you rates are in line with the competition, so that your potential customers view you as a viable option.