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When you start a business, you need to set a rate that you charge. It doesn’t matter what you do as a work at home mom. You need an hourly rate for your projects.
Hourly rates tend to be the easiest way to charge. By knowing your hourly rate, you can create a rate per project, per word, or per product you sell.
I’m a writer, so I’ve worked out my hourly writer rate. However, you may take photos, sell craft products, or sell insurance. There are all sorts of things you can do as a work at home mom, but you need a rate you charge.
How do you go about creating your hourly rate? Here’s what I’ve done to create mine. And yes, this is something I look at every quarter because costs rise.
I work out my outgoings
The first thing I do is create a list of all my outgoings. This takes time, but it’s worth it on a budget level, anyway.
Make a list of all personal and business outgoings you have.
If there’s more than you making money in your home, you may want to work out your percentage of the household bills. I tend to keep it easier and just use the entire outgoings as my base. I simply need to know that my income can cover the entire family if needed.
Now add up all the outgoings. This tells you the minimum you need to make each month.
You’ll also want to add in extra for your savings accounts and a buffer so you’re not just scraping by.
Next I determine my working hours
How many hours do you want to work each week? This isn’t just about the work you need to do that you’ll be paid for, but also any unbillable hours for your accounting or marketing.
It really does add up.
You may not want to work for 30 hours in the week, but that may be necessary to start. Eventually, you may be able to drop to just 10 or 15 hours. As work at home moms, we do get a choice.
It’s important you have all the hours that you need to work in a week.
Don’t do anything with this figure just yet. You first need to work out how many weeks you’ll work in a year. How many weeks in the year do you want to take for vacation?
I divide my outgoings by hours I work
Let’s assume some figures for this part.
Assume that you need to make $4,000 per month. That’s $48,000 over the course of the year. If you’re like me, you need to make that within the space of 48 weeks.
Let’s say you work 30 hours a week (6 hours, 5 days a week). That is 1,440 hours per year.
Divide the 48,000 by the 1,440. That gives you around $34 per hour that you will need to make.
Now I can work out my hourly rate
Finally, it’s time to set your hourly rate.
You technically have your hourly rate above, but I tend to round up. If $34 per hour was my minimum, I’d round up to at least $40.
There are taxes, insurance, and other extras that you may not have included in your outgoings, simply because you’re just not used to them yet. And remember that you won’t be counting in sick pay and other benefits you would have got with another job.
So, your $34 per hour really is just a bare minimum. You need more.
With your hourly rate, you can also set your project rate by determining an idea of how many hours it will take to complete a project. Then your rate would be the hours multiplied by your hourly rate.
For writing, you could price per word. For this, you’ll need to know how long it would take you to research and write the article. Will a 500-word article take you an hour? Is your hourly rate $40? Then you divide 40 by 500 and you get your per-word rate.
This is how I determine my hourly rate. What about you?
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