During my VA Starter Kit training courtesy of Susan Mershon, the techie mentor, we discussed how to compute for your virtual assistant services’ price. I was in fact shocked that we can decide how much we want but of course, we also have to take the necessary work to get it done.
First, Compute For Your Own Expenses
1. Make a computation of how much you spend on a monthly basis. All expenses you’re making starting from rent or mortgage, food, groceries, transportation, even your weekly night out. This is how much you should be earning.
2. Consider all your business expense. Taxes, monthly internet subscription, allowance for equipment depreciation and normal wear and tear, the online tools you’re using, your medical benefits, 13th month pay and savings.
3. Set aside a budget for continuous education. This is a must if you think you need to learn more skills to be able to increase your rates in the future.
4. Once a year, give yourself a break. A simple vacation to unplug and think of nothing but to have fun and fully enjoy the fruits of your labor. Everyone deserves this. You may never do this on the first year of your business but it’s very important to keep it in your expense sheet. Allot something for this.
How to Compute My Hourly VA Rate?
5. As as you’re done computing for your expenses, you already have a fixed figure for your Monthly Expenses. Try this formula:
Monthly expenses/22 working days per month = Daily Income/Number of hours you want or need to work
Example: $3,000/22 = $136.37/ day / 4 hours = $34.09 (Ideal Rate)
If $34.09 is your ideal rate, (may round it up to $35/hour) you need to keep what you have budgeted for business expense and taxes, savings and medical expense in a separate account or you may be tempted to use it personally.
Other people just add at 30% on top of their ideal rate and set it all aside for business overhead so they don’t have to compute for that anymore. At the end of the day, it’s your business and your choice.
6. You may be asking Why didn’t I put 8 hours as an example? I kept it like that so I can still work on growing my own business and not get stuck in having one (1) client only.
Growing your own business means you have to continually market your services, keep your social media active, build relationships, take care of your marketing plan, SOP, answer RFP’s, Phone calls, network in events, answer emails, blog for your website, take care of your email lists, freebies, client interviews from time to time and who knows what else?
Four (4) hours a day may not even be enough to complete all those tasks on a daily basis but that is my own opinion, you may set it at eight (8) hours if you want. Again, your business, your choice.
How To Create Price Packages, Retainers and Discounts?
7. Now that you pretty much have an idea how to price your services, the next thing you should do is to embrace it. What do I mean? Embrace your rate means you have to stand your ground that it’s your rate and don’t let other clients belittle you by asking way below it.
I’ve heard other VAs that DON’T really negotiate on the prices. Their argument is, “Take it or leave it, this is how my time is worth”. It’s their business so it’s theil call.
Others allow negotiation or reduce prices on a certain bulk of time purchased. For example, if the client buys 1-5 hours, regular price applies but if he buys 10-20 hours or more, other VAs give a certain discount. Let’s say, 10-15% or again, it’s UP TO YOU as the BUSINESS OWNER.
I heard a VA said, “I negotiate with my price but they’re not cheap.” Nice way to look at it. You can be flexible as a business owner but always remember to keep your prestige. Your business is your brand. The moment you set your prices too low, you may have a hard time pulling it up.
8. What if your price is not per hour? Example: you write web contents or copy, that may be priced on a per value basis. If you have been blogging or writing a lot, you pretty much can gauge how many minutes/hours it takes you to write a certain number of words.
For example, a 500-600 words blog takes you an hour to write, and 30 minutes to edit/proofread, so you may want to ask for $50/piece to save you from timing yourself as you write. It also saves you the hassle of turning the timer on/off and let’s you concentrate on writing alone.
Others priced writing per word. Around $0.15-20 cents or more per word for some seasoned writers. You may ask in forums, VA groups and other VAs to know more about it to make sure you’re not pricing too much or too little. This is just to give you an idea.
9. What if you have arrived at a price you that think may be too much for a VA service? For example, your ideal VA rate is $80/hour based on all your personal and business expenses and you don’t feel comfortable asking that amount to clients yet?
Simple. You may divide that amount into 2 ($80/3 = $26.67) or 3 ($80/2 = $40) and make that your hourly rate. You may be asking, what to do with the balance ($80-$26.67 = $53.33) or ($80-40 = $40)?
That has something to do with your marketing. The reason why I set four hours for growing my business is for this purpose. So I can have enough time for finding more clients and get more work to sustain my expenses and the lifestyle I want.
Still confused what to do when you get a new client and your four-hour-work-day is already filled up?
Outsourcing or sub-contracting is the answer. You may still take more clients, pay a reliable virtual assistant for the task/s and get profit from it. That way, your business is growing but you’re not adding more hours in your work. You’re adding people and providing job or business opportunities, instead.
This is a great help for new VAs that want to get experience, learn how the VA business works and still earn while at home with your online supervision. You must learn how to delegate tasks and manage them though. Another additional responsibility but it’s an answer.
You’d have to compute how many clients and working hours you need to cover for that difference ($40 or $53/hour based on above example), less whatever amount you’ll be paying for your own VA. It’s not easy but it can be done through extensive marketing effort and properly managing a team.
We’ve pretty much covered everything about pricing and how to deal with it so I’m going to leave you with one question in mind. ARE YOU READY? Leave a comment below for your answer and feel free to share this for other VAs having trouble determining their worth.