How to charge enough
From the first day you started planning your business I am sure you were concerned about how much you would charge.
It is always a difficult challenge to get right and you may need to constantly tweak your prices throughout the years. As your business grows as costs changes etc. are reasons to modify your prices.
I always recommend that you create both a personal and a business budget. The budget shows you what you need to earn to survive in business without running out of money due to lack of income. You get a better idea of how hard you need to work!
Maybe you could try a formula like this one:
All Your Yearly Expenses (business and living costs, superannuation, rent, insurances, healthcare etc.) + 20% profit margin = Your Needed Income.
Billable Hours per week (say 5 to 6 per day) x 234 Working Days per year (excludes public holidays and Sundays) = Your Billable Hours
Your Needed Income = Your Hourly Rate
If your business is one that quotes for work, a rule of thumb is to only quote a price that you are happy to do the work for. What this means is that regardless of the end price, high or low, you must be happy to do the work for that price.
Overtime there will be some quoted jobs you win on and some you lose on but hopefully it balances itself out, as you get better at quoting.
When you win it is because you thought the job would take X amount of hours but you were finished in less time. Thus earning more than you originally thought.
Plenty of businesses need to run at an hourly rate of charging. This makes it even more necessary to get your rate correct. Your billable hours need to equate to your needed income!
Additional ways to earn
There are other ways that you can earn ongoing without doing more work.
For example – If you sell products and services, you can earn on the mark up of the product as well as your service or if you have electronic documents that can be downloaded over and over again.
It is important to remember that every ones ideal income is different. Some higher and some lower, yes you need to be within an industry standard but it has to meet your needs too.
Finally your customers will also determine how much you can charge – Know your ideal client!
If you are looking to discuss pricing please contact Kelly to arrange a meeting to ensure you are on track.
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