There are a lot of lessons to learn when it comes to entrepreneurship. A-L-O-T. There are things to learn about starting a business, launching a business, and running a business. Today, I want to talk to you about a lesson that needs to be learned when you launch and run your business. And that is the lesson of what you charge for your services.
When first starting a business, most people don’t know what to charge or how to determine that. I know I came across that challenge. How do I decide what my hourly rate should be? How do I put a price on my services? It’s great that as an entrepreneur you get to determine that, but do you just pull that number out of a hat? It can really feel that way when you first start. But I want to begin by making you aware of some of the expenses you inquire as an entrepreneur:
- Yearly Business Taxes (for example, LLC’s have a yearly tax of $800)
- Quarterly Business Taxes (what you pay depends on how much you make, but it is recommended save anywhere from 20%-40% of what you make for taxes)
- Health Insurance (being self employed means you are now in charge of your own insurance)
- Business Expenses (think of all the business expenses you will have such as an office, business tools, equipment, etc.)
- Hiring Employees (do you foresee having to hire employees at some point? Add that to your expenses now so you don’t have to raise the price on your clients later)
- Legal Fees (do you need to hire a lawyer for contracts, copywriting, trademarks, etc? Well, they aren’t cheap, but they are worth the investment)
- Business Education (do you want to attend conference, purchase courses, etc. to continue learning? I believe entrepreneurs should always be learning. Make room for this in your budget)
Plus more. This is just a small list of the expenses that can come up for a business. When Iresearched how much I should charge I founda lot of intricate equations on how to determine this. Since I am not a math person, the last thing I wanted to do was sit there and crunch numbers (that’s what accountants are for —another expense, or in my case, husband’s —hooray!) So I decided to create an equation that would work in covering my expenses while also paying me what I wanted to make.
Here is the equation:
How much you would like to make x 2 = How much you should charge
That’s right, take whatever number you would like to make per hour and then double it. Why? Because after expenses and taxes you will probably be left with about half of what you make. And you don’t want that half to be a number that barely gets you by. I learned from personal experience that it really sucks, and I mean REALLY SUCKS, to leave your full-time job only to find yourself working more than you used to, and then get to the end of the month to discover you hardly made any money. You don’t want to work hard and then find yourself disappointed in what you make or barely able to get by. As an entrepreneur, you will work harder than you ever have before. You will put in more hours and more effort. You will love it. But you are now also in charge of making sure you make enough money. So make sure you do that by taking care of yourself and knowing how much you are worth, then charging for it. It takes bravery and courage to know your value and to be willing to tell others what that is. But if you don’t decided that for yourself, others will. People will try to talk you down, and if you don’t have a solid number in mind they will succeed. Know how much you need to make and then charge for it — BOLDLY.
When you first launch your business it will be natural to want to say yes to everybody no matter how much they pay. But as you continue to grow you will discover that doing work for those who are willing to pay is so much more worth it. Plus, you will be more invested yourself. I want to encourage you to be okay with what you charge. I promise you will find clients who are willing to pay for it, and when you say “no” to the ones who aren’t, you make room for those who will. Don’t create a job you hate by undervaluing yourself. Know your worth, and charge for it.