I don't want to be perfect, just better...

Tuesday, April 7, 2009

Tough Issue Tuesday: How much to charge for your services?

I have mentioned before that I have been taking in some extra research work. I do not have time to write and frankly I don't have the inclination either, so I have had to turn down more work than I have wanted too. I write all day at work and don't want to do anymore after 5 pm. By five I am running out of the building like it is on fire and I just want to step away from the keyboard.

I don't mind researching at all. I would spend the rest of my life reading(nose stuck in the proverbial book) if I could but my family doesn't allow that. Anyway, researching for me is easy, apparently too easy. I think in search terms (don't laugh), I hear a word like heart. Then my mind goes automatically to cardiac, cardiac arrest, cardiac cycle, cardiac muscle, cardiac procedure, and on and on.

I didn't know others couldn't do this. I really believed everyone did it.

I know you are thinking. 'Spendthrift, what does this have to do with the price of tea in China?'

Okay, because I find research easy and others don't I have had to come up a pricing scale. Basic search, literature reviews, adding more search terms and so on, I found this article on how to determine what to charge for your services.

I had a good idea of what my services were worth but this is what gave me a better perspective. Without reading this I would have been under charging for my services.

If you're experienced in your field, you probably already know what to charge because you are familiar with market conditions. However, if you're just starting out, you may have no idea what you can or should charge. If you're in this boat, try using a two-step approach to determine your hourly rate:

Calculate what your rate should be, based on your expenses. (
My expenses are minimal, I try to conduct all business over the phone and through email. It is my time that is the important factor. I have an office in the basement but I did need to factor in Internet, electricity, and business cards printing.)

Investigate the marketplace to see if you should adjust your rate up or down: ( I did contact other researchers, they charge more than I for a base rate as well as hourly rate but this is their sole occupation. I do this part time.)

Business schools teach a standard formula for determining an hourly rate: Add up your labor and overhead costs, add the profit you want to earn, then divide the total by your hours worked. This is the minimum you must charge to pay your expenses, pay yourself a salary, and earn a profit. Depending on market conditions, you may be able to charge more for your services -- or you might have to get by on less.

Determine your annual salary. To determine how much your labor is worth, pick a figure for your annual salary. This can be what you earned for doing similar work when you were an employee, what other employees earn for similar work, or how much you'd like to earn (as long as your goal is reasonable). (I know my annual salary, so when I quote someone I factor in all that is made up of the work plus the hours - my hourly rate times how long it would take me to complete the work.)

How do you calculate what you charge for your services? Do you think I am calculating wrong? Any pointers?

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