Have you ever bid on a project and then found yourself having worked way more than you thought you would and realizing you didn’t even make a profit?
I have talked to so many women and have had multiple conversations with entrepreneurs who experience this one too many times.
The fact is that as an entrepreneur you need to make a profit if you want to build a sustainable business. Otherwise, you will find yourself looking for a 9-5 and that is (in my opinion) every entrepreneurs worst nightmare.
Here are a few key indicators that will help you determine if you are charging enough money:
If you find yourself working all the time and still barely making enough money, then you aren’t charging enough.
If you finish a project and feel like you were taken advantage of, then you aren’t charging enough.
If you find yourself constantly adjusting your pricing to what you think will make your customer say “yes” and what they will find affordable, then you aren’t charging enough.
I have experienced all of these things. I have even experienced doing work for someone and them disappearing before I was paid. ( I will talk more about how I stopped this from happening later in this series)
It’s not okay. It’s not okay for people to take advantage of you and it’s not okay for you to work for free.
If you worked a regular 9-5 job you wouldn’t be expected to work for free, so why should you as an entrepreneur?
The fact is that you shouldn’t. And if you have been, it needs to stop right now. I know that sounds very matter of fact, but let me share a few things with you:
You are VALUABLE. Jesus purchased you for a HIGH price, so why are you selling yourself short?
You are WISE. Jesus created you to have His unlimited measure of wisdom. No matter what your education level is, or what you’ve been told, you are smart.
You are GIFTED. Jesus created you with specific gifts and talents and if you have tapped into them then this is how you were made to serve the world-but not necessarily for free.
We live in a world that runs on a monetary currency and the more you have the more you can serve. There will be times when you feel led to bless someone for free (I am currently helping a few women build their businesses for free, but it’s not out of guilt, it’s out of joy and a desire to from God) and then the rest of the time you will need to charge for your services (I will address how to handle family & friends later in this series as well).
Now that you understand those truths, let’s talk about how to charge enough for your services. Iknow that when I first started coming up with a price tag for what I do felt like pulling a random number out of a hat. But through reading articles and with some help from my business coach, I was able to determine what to charge and I am going to give you a very simple equation on how you can figure it out too.
What to Charge Hourly
Even if you don’t sell things based on an hourly rate, you need to set one for yourself. This will help set boundaries on how much time you spend working and will also ensure that you get paid for every hour you work. There are a few ways you can determine your hourly rate:
-Think about how much you have made hourly at previous positions (assuming you did the same type of work)
-Research how much others in your industry make hourly (you can use Google) and find a happy medium that works for you
-Determine how much you need/want to make that will also fit the budget of your ideal customer
Okay, now that you have an idea of what you want to make per hour, you are going to plug it into this equation to determine what your true hourly rate should be:
What you want to make per hour x 2 = your hourly fee
That’s right. I want you to double it. Here’s why:
-A good chunk (more than you probably anticipate) will go to taxes
-Some of it will go to health insurance, dental, vision, etc.
-Some of it will go to expenses (equipment, supplies, website hosting, etc.)
Then the rest of it will do either one or both of the following things:
- It will give you at least 50% of what you charged as profit (money to take home-yay!)
- It will give you some leeway to save some of that money to reinvest into your business
If you want your business to scale and grow, then you need to have some extra cash you can use to do that. Want to build a team one day? Hire a VA? Upgrade your website? Go to a conference? All of these things are important and they will help you grow your business. Having a bit of cash you can save and reinvest will do just that.
Getting Confident in What You Charge
I want you to take a deep breath and think about that number. The one you want to charge and then double it. I know, it scares you. You probably want to run away, hide under the couch, and can’t possibly imagine yourself telling anyone that’s what you charge.
Let me ask you this, do you want to build a business that barely survives, or a business that thrives? Then start getting comfortable with this number. The more you put it out there the more confident you will get. Especially when you hear people say “yes” to it! And I promise that they will.
Don’t underbid anymore projects. Don’t let yourself get bitter about the work you do (that in reality you were passionate about) because you aren’t making enough. Charge what you should so you can build a business that serves more through thriving!