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Office Support
Services
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Setting Hourly
Rates for the Did you recently leave a job where your salary was $35K a year, figure you were making about $17.00 an hour, and set your hourly rate for your new service business at $17.00? If so, did you know you are now actually earning less than half of what you earned in your full-time job, or $8.50 an hour? According to a common rule of thumb for service-related businesses, you should multiply your hourly wage as an employee by 2.5 (some say even by 3) to arrive at your self-employed hourly price, which would be $42.50-$51.00! As someone who talks to more than 500 people a year who are new to the self-employed word processing/desktop publishing world, I find that the tendency to underestimate charges is one of the main reasons people go out of business and have to return to the full-time working world. One of the biggest misconceptions is that, "If I don't have the lowest rates around, people will go elsewhere." To the contrary; I found that once I raised my rates, I added credibility to myself as a professional. When I began my word processing business at home in 1981 (with a CP/M system using WordStar on 8" floppy disks, and a Diablo 630 impact printer) it cost over $10,000 just to buy the computer setup. Today you can get a setup that is ten times as powerful and efficient for less than $2,000! However, the easy accessibility of computers has made for more competition for those of us who work in the computer trade. Everybody and her cousin wants to offer services on a computer! A tip: when calling around to compare prices among those in your field, call people who are in the Yellow Pages rather than those listing small classifieds. The latter are often just trying to make money on the side; they may have another source of income, or they may be students, or beginners. There are few reasons you should charge any less than someone who rents an office simply because you work from home, if you are providing the same service and level of professionalism. After all, you pay for your office space, too, even if it is just by losing that amount of household space. When you set your rates too low, you often end up with the people who haggle over every nickel, and those are often the most difficult to work with. The question is: will the work you generate from these customers pay to cover your doctor bills while you try and cure your ulcer? Your hourly rate should also cover the costs of:
Your wages also need to incorporate cost of living increases. (The Consumer Price Index has gone up over 50% since I went into business in 1981, meaning that the $15 an hour I charged as a beginner translates to close to $27 an hour now, without even raising rates to reflect increased experience and efficiency!) If you don't add the above figures to your hourly wage (the expenses and unpaid time often add up to 50-75% of your total billing rate), you will be making significantly less than someone working in an employer's office. Do you want your own (or your family's) earnings to subsidize your clients' expenses? When clients try to get you to compromise on your rates, that's essentially what they're asking! Remember: the buck stops with you, so cover your costs, or you may have to go back to calling someone else "boss"! Nina Feldman, author, "How to Run a Successful Homebased Word Processing/ Desktop Publishing Service: A Resource Package" (self-published, nina@ninafeldman.com). Visit her web site at http://www.ninafeldman.com/resources.htm.
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