An hourly rate is probably one of the most common ways to charge clients and pay workers. However, it can be really hard to put a price on your own time that is fair to both you and your client. When it comes down to it, you need to consider your overall income goals and the lifestyle you want to live. Let me show you how.
Setting your Income Goal before your Hourly Rate.
An income goal is how much income you’d like to make by a particular time. This can be annual, monthly, weekly, etc. When deciding on your income goal, you may already have a number in your head or you may not have the slightest idea what you’d like to make. There is no right way to choose what your income goal should be. You can adjust it according to an income that can finance the lifestyle you desire. The number you pick should feel a little scary but doable. Let’s not get ridiculous here which will only make you feel defeated. The key is to set an income goal that you feel good about and get excited when thinking about it.
Using your Income Goal to set your Hourly Rate.
Now that you have figured out your overall income goal, let’s create an hourly rate to get you there! By using your income goal to calculate your hourly rate you can save yourself a lot of time and stress down the road. Have you ever quoted a client a price and then realized (way too late) that you should have charged more? This is likely because you guessed rather than carefully calculating what to charge.
When it comes to figuring out your hourly rate, you need to take into account your income goal, your expenses and the lifestyle you want to have. Why is your lifestyle important? Well, let’s say you want to make a minimum of six figures a year ($100,000). You can technically make this many different ways depending on your hourly rate and how many hours you want to work daily, weekly and monthly. Let’s take a look at a few different hourly rates and the lifestyle you would live if you charged them.
$25/hour = 4000 hours per year = 77 hours per week
$50/hour = 2000 hours per year = 39 hours per week
$100/hour = 1000 hours per year = 20 hours per week
As you can see, deciding your hourly rate makes a huge impact on the number of hours per week you will be dedicating to your business. If you are comfortable spending 77 hours per week working then be my guest, but I would personally shoot for 40 and under because you have to leave room for life! The fact of the matter is that if you work too much you will most likely burnout and that can make you physically ill! If you think you may be getting to this point, check out my video about what 4 things to watch for warning signs of burnout here.
When it comes to figuring out your hourly rate, you need to take into account your income goal, your expenses and the lifestyle you want to have. Why is your lifestyle important? Well, let’s say you want to make a minimum of six figures a year ($100,000). You can technically make this many different ways depending on your hourly rate and how many hours you want to work daily, weekly and monthly. Let’s take a look at a few different hourly rates and the lifestyle you would live if you charged them. Why do I say to keep this in mind? Well, when you calculate your hours spent working per month you aren’t factoring in your nonbillable hours. So, like the example above for the six figure income, the 39 hour per week option may actually turn into 45 when you factor in non billable hours.
Don’t be Afraid to Change your Hourly Rate.
Figuring out your hourly price can be really tricky and hard to stick to as you learn and grow. It’s important to keep in mind that your hourly price can grow with you. If you have more experience, education and certifications then your hourly rate should be more too. So, don’t be afraid to up your prices when you have upped your game! https://www.youtube.com/watch?v=3ozVcGZMG2A&feature=youtu.be
I hope that this quick strategy helps you to figure out an hourly price to fit your lifestyle and company. Be sure to stay tuned all October as we continue to talk about pricing and packaging your services. If you or someone you know is struggling to get their business off the ground or take it to the next step, sign up for my business coaching membership here and let’s get you to where you want to be!