006 – Setting Your Hourly Rate & Sticking To It!

In this episode, I talk about how to go about setting your hourly rate, what considerations I made when setting mine and why you shouldn’t let potential clients put you, your rates or your work down!

In this episode I cover:

  • Working how much you need to earn
  • Deciding how much you want to earn
  • Settling on an hourly rate that is both achievable and enough for you & your lifestyle
  • Not letting clients put you down
  • Sticking to your rates (as the right clients will pay them!)

Setting Your Hourly Rate & Sticking To It!

Previous episode: Creating the right working environment at home

Transcript

Hello, and welcome to episode six of the journey to be a podcast. I’m your host, Mark Smith, aka the male VA. And in this episode, I’m going to be talking to youabout how to set your rates and stick to them. You need to know your worth people.

So I’m going to come straight out the gate and say there’s no right or wrong answer to this. One thing I would urge you to consider though, is, how much you need to earn versus how much you would like to earn and settle on a figure initially, that will give you enough to pay the bills with a view to potentially moving your rates up to your desired figure later on. And you can go about this a few ways. The way that I chose to do it was to look at my previous salary. So I left a senior management position at a very large organisation, and was on in and around 50,000 pounds. And so that is somewhere between 25 and 30 pounds an hour.

Obviously, everyone’s different, and everyone has different outgoings and how much they need to earn just to pay the bills. But obviously, I’ve been working for 17 years, and my adult my outgoings up considerably over the years, I’ve also got four children and have a house to run, etc. So all of those were factors that I had to consider. And it wasn’t that I just plucked to figure out the air, I did actually go through like, what do I need to learn how many hours a week do I want to work, I left a role that was paying in and around 50,000, like I said, and I was doing 35 hours a week. That’s what I was contracted to do. But when I decided to become a full-time business owner, I actually wanted to reduce my hours a little bit. So how would I make up for that difference?

Do I increase my hourly rate just to say, just so that I can earn the same amount of money? Or do I take a slightly less overall salary, or guess or income to kind of facilitate the more flexible lifestyle that I want? And that they’re questions that you also need to ask yourself. So the first thing I did really was looking at, say reducing my working hours to 30 hours a week. And if I were to times that by 25, that would give me 750 pounds a week. And 750 over the course of a year. Bearing in mind, I haven’t taken out any time for holidays is 39,000 pounds, so long way off what I was earning originally. And so when I looked at that, I thought I could just work 35 hours a week, but then where am I going to get the flexibility that I desired.

And that’s the whole reason that I started a business. So why I opted for was to charge 30 pounds an hour, and still would class myself in that capacity at 30 hours a week rather than at 35. And that would give me 900 pounds a week in income for my clients. Over the course of the year 52 weeks, that would give me 46,800, which is pretty close to what I was earning before. Obviously, there’s going weeks where you’re unwell or you unable to work. And so you don’t get paid for those that just got me as close as I could get to my salary before factoring in all of those things. And it was something that I would comfortable with when I looked at my total outgoings versus what the income would be at those rates.

And my long term plan and yours probably should be to is to actually try and get some sort of passive income. So we’ll talk about that a lot later on in future episodes, but I don’t want to just be trading hours for money for the rest of my life. The plan is to really build an audience to get some other courses training workshop, something out there that will continue to sell over and over again. And that’s just an aspiration, really, I’m still quite early in my journey. But that is something that I have already thought about. And he’s kind of on one of my Trello boards is a thing to look into.

And so if you’re concerned, you’re coming from a high paid job, or you have aspirations to 100,000 pounds a year, then you just need to consider that trading your hours, or your time for money may not be the best way to do that. If you are looking to earn 100,000 pounds a year, for instance, and you were just trading your time for money, then you’d be looking at somewhere around 65 pounds an hour for a 30 hour week, which is actually doable in certain fields.

As a VA, probably not, if I really pushed it, I could probably get to 35-40 pounds an hour and maybe 50 To be honest, as a WordPress developer, but the services that I am offering don’t wouldn’t really stretch to those sorts of numbers. So you’ve got to be realistic as well, I think 30 pounds, maybe 35 is probably the highest you can charge as a VIP, really, there are some surveys around actually that go into they’ve surveyed, I think a couple of thousand virtual assistants in the UK. And the average is somewhere between 20 and 30 pounds an hour. So you know is in and around the right numbers that we’re talking about here. One other thing to consider is the competition.

And you should know your worth, and you charge what you believe you’re worth. And also enough to pay the bills, of course, but it’s going to be more difficult to go up against someone charging 20 pounds an hour, especially for basic admin, if your virtual system then is someone charging 1520 pounds. And there are lots of people with into for 10 or 15 pounds an hour,

I actually got into a bit of bother in a Facebook group fairly recently where I challenged someone who charged very little, in fact, I think they ran a VIP agency or something and paid staff less than 10 pounds an hour and then charged client 15, which is great for a business model. But I would argue that that’s not really being a virtual assistant, an agency anyway, the point was that actually by charging 1015 pounds an hour, you really do value in the industry.

And I think on the whole the virtual assistant community in all the Facebook groups I’ve been a part of in the paid membership group, I’m a part of that really, really supportive and come together, they’re really good and they help each other out. And I think that’s really good. And by charging 15 pounds an hour, you’re essentially undercutting a lot of the industry, probably 90% of the industry is charging more than 20 pounds or more. So going low is difficult.

And I get the need to pay the bills and to earn more than you were previously earning. So if you’re leaving a job where you as an admin assistant, for instance, on something like 16,000 pounds a year, even 18 20,000 pounds a year, that is only 1112 pounds an hour, most definitely talk about in front of me, but I’m pretty sure that’s what it was. And so even by charging 15 pounds an hour, you’ll get given yourself a considerable pay rise.

But just know that the lower you start your hourly rate, the harder it is to get it up to anywhere near the industry average. So you just need to bear that in mind as well. So the final thing I just want to say about this is, if you go into high, I think it’s an awful lot easier to reduce to a tourist an accepted market rate. If you start at 15 pounds an hour, it’s very difficult to get to 25 without losing some customers or at least patients and customers off. Whereas if you were to start 30 pounds, for instance, you could gradually come down to 25. I’m not saying you should, what I’m saying is if you can’t find clients at 30 pounds, and price definitely is the issue. And you could come down feasibly to 25 pounds an hour.

And actually, that would be an awful lot easier. Of course, bank going from, say 15 all the way up to 25. So there are two ways to go about, I’d rather go in high. And if people tell me I’m too expensive, then I know that’s an issue. If I go in low, nobody’s going to tell me that actually, they think I’m worth more. Or, please, I know you’re only trying to charge me 15 pounds an hour, but when you invoice me do it for 20, please, that’s fine, honestly, it’s just not going to happen, is it? So let’s be realistic.

So once you’ve got your number settled on, and I would advise somewhere in and around 25 pounds, if you’re starting out, it is absolutely imperative that you stick to your pricing. So if you do go in at 25 pounds, and you’re told you too expensive. That’s nonsense. The average for the industry, as I said is the example I gave previously was at 30 pounds, where you can find quite a few VA that are less than 30 pounds an hour. And that’s why I charge it because my services are slightly different. So but at 25 pounds, there’s no one that should really be telling you, you’re too expensive. Because it’s not just a case of paying you 25 pounds an hour is it? It’s you’ve got to pay your insurances.

If you’re offering bookkeeping services, you’re having to pay an Annual Registration to HMRC to be monitored for tax and money laundering. There are all sorts with your insurances. Your Home Office costs the additional heating electricity using by working from home from your home office, then there’s just other factors at play here. So it’s not like you’re taking home the 25 pounds or whatever it is you’re charging, nevermind the tax, the National Insurance and all of those things you’re liable for as well. So if anybody does tell you that 25 pounds too expensive Old Firm that potentially not the customers that you want Anyway, why do you want to work with clients that are constantly trying to barter your time down when really you know you’re worth you know how much you need to live. And you also know that there are thousands of other VI’s finding clients at 25 pounds an hour, so stick to your guns, and don’t be made to feel like you’re more expensive, because it’s only admin.

Some of the things you hear on some of the Facebook forums and stuff is ridiculous stories of clients putting vas down saying it’s only admin work, I don’t understand why you’re charging so much, etc, etc. It’s like, if it’s that easy, just employ someone. You can employ someone an awful lot cheaper than you can have a VA for, if you can get someone who has got our skills, and that’s where the problem lies. So they do need us sometimes they just like to try their luck!

Okay, if you want to follow what I’m doing, you can get me on pretty much every social media channel and I am @themaleva. So that’s Instagram, Facebook, Twitter, so you can find me there or if you want to drop me an email, give me some ideas for future content. Or if you want to be a guest on the show, you can email me at mark@themaleva.co.uk. Also, you can check out the website themaleva.co.uk where you can see show notes, look at all the previous episodes and read some of the content I’ve got on the blog, which is useful for business owners, MBAs alike thanks again for listening. I’ll see you next time.

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