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Further
Reading ...
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How To Protect Yourself From Work At Home Scams - Tina Barraclough
You have decided to start a home based business, but you want to find a honest, legit home based business.With all the scams out there , you are unsure of how to go about finding one that is not a scam. Before starting a home business, there are...
Before You Dive Into Online Marketing, Get Your Feet Wet - Sharon Fling
My children took swimming lessons this summer. Actually they're called "water confidence" lessons, designed to get non-swimmers comfortable with being in the water. At 5 years old, my kids have a healthy fear of the water, and didn't want to get...
How to Drive a Stampede of Laser Targeted Traffic Using Postcards - Rob Taylor
How would you like to make $4 for EVERY visitor who hits your site? How about $8? Would you be interested? This kind of money sounds insane doesn’t it, especially when you consider that most websites are lucky if they can make a $1 out of a...
National AMS Users Group Conference Held in Reston, VA - gomembers Inc
[Herndon, VA] The National AMS Users Group (NAUG: http://www.naug.net), a membership organization dedicated to maximizing efficiency and usage of their gomembers’ AMS software solutions held their Annual Conference October 20-22, 2004 at the...
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How To Realistically Set Your Fees - Part 3
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Written By:
Sue and Chuck DeFiore
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Effect of Benefits
We have previously examined realistic billable hours and the effect of business expenses on your hourly rate. Now we'll look at the effect of benefits.
Once upon at time, when we were employed, we received a benefits package from our employer. This usually included health, life and disability insurance. Many firms also had available pension programs, profit sharing, dental and vision coverage. In addition, one-half of your social security was paid by your employer.
As self-employed individuals, we have to provide these benefits for ourselves. This means an additional boast to the hourly rate we've calculated so far. For the sake of argument, let's figure a standard benefits package consisting of health, life, disability, pension and profit sharing. Let's figure health insurance costs at $300 per month; life at $50 per month; disability at $150 per month; pension (a SEP-IRA) at $500 per month and about 10% for a profit margin.
If we total these up we get a yearly figure of $12,000. Now keep in mind, that most of these will be paid for in after tax dollars. So, we need to add approximately an additional 30% to this number, for a true total of about $15,600 per year. The 30% represents the amount of taxes you need to pay to end up with the net amount of money needed to pay for your benefits package. Keep in mind that I chose 30% as a completely arbitrary number. Your own tax situation may be higher or lower.
How does this effect our hourly rate, let's see. Last article we left off at $56 per hour. This represented a yearly salary of $42,000 plus annual business expenses of $15,000. If we take the $15,600 in benefit costs and divide by our billable hours of 1100 per year, we get approximately $14 per hour. This brings our total hourly rate to $70 per hour.
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/>Now, we need to factor in our profit sharing percentage. Once again, I choose 10% as a representative number. Your targeted profit could be higher or lower. If you take your $70 per hour rate, multiply by 10%, you end up with $7 per hour. Your total hourly rate comes to $77 per hour.
This is the amount you need to charge to cover all we discussed so far.
Compare this to the approximately $20 per hour you would need to get paid by an employer to earn our hypothetical $42,000 per year. And yes, I know today many employers require a co-payment on their benefits package. I stated it this way for simplicity sake.
So, you need to charge almost 4 times what you would earn in salary to end up at the same place. Don't be discouraged, there are many people out there that are charging a lot more than this and getting all the business they can handle. Remember, these numbers are hypothetical, your situation may be much different.
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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How Do You Set Consulting Fees? - J Stephen Pope
How Do You Set Consulting Fees? by J. Stephen Pope One of the most frequent questions I receive from those who are trying to start or grow their own consulting business is: "How and what do you charge clients for your consulting services?" The...
Affiliate Programs 101! - BB Lee
Joining an affiliate program is one of the easiest ways to start an online business and generate income for your website. These revenue sharing programs are very popular on the net. And is the way many new entrepreneurs started online. When you...
FIVE WAYS TO EVALUATE AN ONLINE BUSINESS OPPORTUNITY TO SEE IF IT'S RIGHT FOR YOU - Violet Bartholomew
So you've decided you want to work from home, and you've signed up for a few of those 'Business Opportunity' mailing lists. Every day there are interesting-looking possibilities turning up in your email inbox... but how can you tell the 'real...
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