How To Determine Your Hourly Rate

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How To Determine Your Hourly Rate
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Introduction

• 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.
• It also happens that we find it difficult to
  calculate our hourly rate more accurately.

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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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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.

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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.

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Sending Invoices To The Wrong Person

• Sending out invoices to the wrong
  individual/email address is also one of the
  common errors of invoicing. This may cause you to
  resend the invoice to the right individual at a
  later date, wasting a lot of precious time.
• One should make sure that the right email address
  is collected from the client and the invoice is
  sent on the same.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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