Question of the Week – Setting Your Rates
Q. How do you go about charging per hour?
A. I’ll start with the standards in the VA industry. I have seen Virtual Assistants charge anywhere from $25 per hour, which I’m dead set against and will go off on my rant about that in a moment, all the way up to over $100 per hour.
The range is really wide. It depends on your level of experience, the type of services you’re offering to your clients, your personal finances and how much you need to make. The higher the technical skills you offer, often the higher the rates you can command.
For instance, I’ve moved into doing a lot of web and blog design and very technical things with shopping carts and ecommerce. Those are very specialized skills that more and more Virtual Assistants are learning, but it’s still a specialty niche area that not a lot of people are well versed in.
To determine your rates, first, you would need to figure out how much money you want this business to make for you. Don’t come from the place of what you need versus what you think your client will pay. You’d be surprised what people pay for. Just starting with an arbitrary number and thinking, “This works,” is not a great way to make that determination.
You need to consider all of your expenses, including taxes, your monthly operating expenses and how much profit you want to make and work backwards. That will help you determine how much you should be charging based on how many hours a week or month you can work.
Most Virtual Assistants are charging too little. It’s a problem for a number of reasons. They’re not making any money and are not covering their expenses. They’re probably feeling frustrated because they’re working too hard and can’t figure out why this business isn’t working for them.
It also sets a really bad precedent for clients. When a client knows they can work with someone for $25 an hour but that person is really worth $50, $60 or $70 an hour, it doesn’t put them on an equal footing. It’s such an important thing to price yourself at what you’re worth.
In the corporate world, the salary you earn doesn’t reflect all of the money your company is spending to employ you. It doesn’t reflect your benefits, 401K, taxes, supplies, and a lot of other things. When you work for yourself, you have to cover all those costs.
When you’re setting your fees, you have to back into that. You need to make sure you’re covering everything you need to cover and still make a profit. That’s how you determine your rates.
I’m really passionate about people charging what they’re worth. I know are worth WAY more than $25 an hour. Please don’t sell yourself short by charging that little. And if you do, please don’t let me find out about it!
For more insight on this topic, visit https://www.eatova.com/2008/10/24/how-to-calculate-your-fees/
I submitted my first RFP to a client a quoted 25.00 an hr. for some of my services and then 35.00 for others and mentioned I would discuss fees per project if need be. The client did not call me back when I called him back he said his wife would be helping him out. So I thought I price myself to high I was going to call and lower my rates. I need to get a clients somehow. What do you suggest? Should I lower my price?
Great question Sonia!
First of all, no, I don’t think you should lower your rates.
Let me ask you a few questions. 1) Was this person an ideal client for you? 2) Did you engage the contact in a conversation to discuss his needs and to see if you were the right fit for the “job”? 3) Do your rates meet all of your costs and fit your business model?
In order to fill your practice with ideal clients, you need to first identify who your ideal clients are. Then you create solutions for them. Then you put yourself in front of them. I guarantee if you do this, you’ll have no problem attracting all of the business you can handle.
When responding to RFPs, my typically response includes a brief note about my experience and qualifications and and invitation to a “get acquainted” call where we can “interview” each other and assess my fit for what they need. I never discuss price in my RFP response. This always weeds out the “price shoppers”. (You don’t want them as clients anyhow, trust me!)
Last, but not least, don’t ever let a prospective client make you second guess your rates. If you’ve gone through the process of establishing your fee structure based on your expenses, expected profit margin, skill set and experience, then you have every reason to feel confident in your fees. If anything, I’d tell you to raise your fees so as to be more attractive to prospective clients. Remember, cheaper isn’t always better…that thinking can actually back fire on you.
Keep me posted on your progress!
Best,
Sydni