How To Determine Your Hourly Rate

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.
Here are some tips to set the precise rate for your services:

how to determine your hourly rate

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.

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.
The right pricing strategy not only helps you achieve the desired business growth but also gives you more confidence. Continuously improving the quality of the services will help you in revising the pricing periodically and getting a higher price for the services.

Every small business must choose a cloud based invoicing and time tracking solution like Invoicera for calculating the hourly rate more accurately.

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Veronika Tondon is a business enthusiast with extensive experience in Invoicing & Payment Process. She has 7+ years of experience in Invoicera, the leading cloud-based invoicing solution as Invoicing Consultant. Sound knowledge in business process execution, offers end to end solutions for complete automation of business processes and AR/AP processes. Contact Veronika for your invoicing requirement.

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