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Further
Reading ...
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New and Improved... Or Is It? - Bill Platt
Twice in the last two weeks, I have come across articles where he author is celebrating "A New, More Effective Way to Promote Your Business on the Web." Exhuberant, I opened each article expecting to see something new and interesting. On both...
Mortgage suiting you best today - Lance
Several mortgage products are on offer today. The big question arising in the mind of the mortgage seeker is: which is the best bet? In the various states of the U.S. the interest only mortgages and adjustable rate mortgages (ARMs) have...
Practical Nine-Step Guide to Max Productivity - Catherine Franz
Step 1: List all the business activities that you complete (regularly or not). Examples: phone calls, meetings, paperwork, projects, sales, follow-up procedures, writing, learning/researching, web site design, delivering core services (substitute...
You Can't Afford To Be In Business - Bob Osgoodby
You Can't Afford To Be In Business by Bob Osgoodby We've all heard the old saying "Penny Wise and Pound Foolish". It never ceases to amaze me that someone will join an income opportunity program, but not effectively promote it and scout out new...
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How To Realistically Set Your Fees - Part 1
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Written By:
Sue and Chuck DeFiore
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We all know there are 52 weeks in a year and 40 working hours in a week. Therefore, we can bill 2080 hours per year, right. Wrong. Too often this is the trap that many new service businesses fall into.
The first step in calculating your billable hours is to define a realistic working year. If you were employed elsewhere, you would expect or want at least two weeks vacation time, one week sick time, one week personal time and paid holidays. So, where does that leave us - 52 weeks minus four weeks leaves 48 weeks minus about 10 paid holidays, or a total of approximately 46 weeks per year.
OK, you say, that means I can still bill for 46 weeks times 40 hours per week or 1840 hours per year. If I charge $25 per hour that comes to $46,000. Not bad, that is more than I was making on my previous job. Wrong.
What you have just established is a realistic working year, not the number of billable hours. You still need to account for marketing time, administrative time, bookkeeping time, equipment maintenance, continuing education, etc. You also need to calculate in equivalent time for self-employment tax, local business taxes, etc. In many locales, this can add up to an additional 20% or so in time or money.
If we assume approximately one hour per day for marketing and one hour per day for administrative, etc., (and this is a very conservative estimate, then we need to subtract: 46 weeks times 5 days per week equals 230 days at 2 hours per day equals 460 hours, from 1840, for billable time left in a year of 1380 hours. Now subtract - continued below ...
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continued ...
approximately 20% for the above taxes or 276 hours and that leaves you with 1104 billable hours in a year. And this may still be high, but at this point, you can see to earn that $46,000 per year you will need to charge $46,000 divided by 1104 hours or about $42 per hour.
There are many factors which need to be examined in setting your fees. We'll look at those items that need to be taken into account, such as business expenses, insurance, pensions and profit margin, in upcoming articles.
Hopefully, this article has at least pointed you in the right direction.
Next article we'll take a more in depth look at the role expenses play in setting your fees.
Copyright 2003, DeFiore Enterprises.
Interested in having your own successful, home based creative real estate investing business? Chuck and Sue have been helping folks start successful home based businesses for over 17 years, and we can help you too! To see how, visit http://www.homebusinesssolutions.com for the latest FREE tips and tricks, educational products and coaching in creative real estate investing and home based businesses. No time to visit the site? Subscribe to our FREE "how to" Home Business Solutions Digest, it's like having your own personal coach: mailto:subscribeHBS@homebusinesssolutions.com
coaches@homebusinesssolutions.com
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| _Additional Resources ... |
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A Landlord's gripping story... - Mark Walters
You are the landlord of a small apartment building that you are offering for sale. You find a buyer and a sale is arranged. The tenants learn of the sale and ask if they will be forced to move. How do you answer? You explain that it depends upon...
Are You a Marketing Octopus, or a Marketing Worm? - Andre Bell
One of the greatest challenges to effectively marketing a business is determining which marketing method is best for your business. Most people look at what their competitors are doing to market their businesses and then simply imitate that,...
How To Get Press To Come To You - Paula Gardner
Have you ever noticed how the same people’s names always seem to appear in magazines and newspapers articles which quote them as a source of info and advice on their own particular subject, whether it is web functionality and design, cosmetic...
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