How To Determine Your Hourly Rate

Introduction ● Many a times, as a business owner we feel that we are being underpaid for the services. Getting the right

set of clients is important to get paid for the services appropriately. ● It also happens that we find it difficult to calculate our hourly rate more accurately.

Every small business must choose a cloud based invoicing and time tracking solution like

Invoicera for calculating the hourly rate more accurately.

Never Undercharge● Undercharging for the services will be detrimental for the future prospects of the business. ● When you undercharge for your services, you start getting clients who wish to underpay

you.

Do A Market Analysis● Analysing the market, on a periodic basis gives you an understanding of the market

and what are the going rates in your industry and your region. ● This helps in deciding on the most appropriate pricing for your services.

Sending Invoices To The Wrong Person● Sending out invoices to the wrong individual/email address is also one of the common errors of invoicing. This may cause you

to resend the invoice to the right individual at a later date, wasting a lot of precious time. ● One should make sure that the right email address is collected from the client and the invoice is sent on the same.

Expense Analysis● Your pricing should be such, that it makes you cover all your expenses and keeps your

business profitable. ● Make sure you include all expenses and costs in your pricing strategy.

What is The Price Of Your Service● Understanding your professional worth will give you a clear idea about the hourly price of

your services. The experience and the skill set you possess has a market value. ● Understanding this value and then deciding on the price of your services can be helpful.

Calculate Your Monthly Earning Potential● Calculating your monthly earning potential can be helpful in analysing the various

pricing strategies and comparing each for their monthly earning potential. ● This can help you set the right sort of expectations for your business.

Deciding On The Hours● Your hourly rate is also dependent on the number of hours you are going to work in

your business. ● Determining the number of hours you will work weekly, monthly and yearly, will help in

deciding the most appropriate pricing for your services.

Project Cost Analysis● Understanding the costs and expenses related to the client project helps in

determining the hourly rate with ease. ● The project price can be determined first and this can be divided by the number of

hours that will be required to complete the project.

Include Fixed Costs● You have incurred fixed costs of running a business. These include, furniture, computers

and equipment costs. The depreciation costs must be added to business costs on a monthly basis. These can be calculated by dividing the price of the asset with its life.

● Such costs should be included while calculating the price of services.

Include Travel Expenses● Travelling to meetings with clients are a part of business expenses. These should be

included, while calculating the prices of services. ● Similarly meal costs of client meetings, along with the time spent on client meetings

must be calculated as well.

Discount Strategy● Consider having a discount strategy for the lean season. ● Providing discounts and offers when you have lesser number of clients, helps in

promoting the business.

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