It's the first thing on your mind when you go out on your own, how much am i going to charge? Second to that, what is everyone else charging?
To create your hourly rate and charge appropriately, you'll want to firstly work out what your annual earning goal is, aka what you want to take home per year. After that, you'll want to set how many hours you'll be charging per week and the number of weeks you'll work per year. By doing that, you'll be able to get really clear on when and how much you'll need to work, in order to make your desired income amount.
Here's a basic outline and example of how you can calculate the required hourly rate:
Annual Earnings Goal: $100,000
Number of Working Weeks per Year: Typically, there are 52 weeks in a year. However, you might take time off for family, school holidays, fun holidays and sick days. Let's assume 48 working weeks per year for this case.
Number of Working Hours per Week: 40 hours (you can adjust this however much you want!)
Overhead Costs: This can include costs for office space, utilities, software, car, marketing, etc.
Taxes: Depending on your location, this can vary. For simplicity, let's assume a tax rate of 30%.
Here’s my step-by-step formula:
Calculate the total working hours per year: Total Working Hours per Year =Number of Working Weeks per Year × Number of Working Hours per Week =48×40=1920 hours
Calculate the pre-tax hourly rate: Pre-tax Hourly Rate = Annual Earnings Goal divided by the Total Working Hours Per Year = 100,000 / 1920 = $52.08
3. Adjust for overhead costs and taxes. (Let's assume overhead costs are $10,000 per year) Total Earnings Goal = Annual Earnings Goal + Overhead Costs =100,000 + 10,000 = $110,000 dollars
4. Adjust for taxes. (Assuming a tax rate of 30%) Post-tax Hourly Rate =Pre-tax Hourly Rate× (1+Tax Rate)
=57.29×1.3 = 74.48 dollars per hour
Based on the above example, this educator/coach would need to charge approximately $74.48 per hour to meet their goal of earning $100,000 per year, accounting for overhead costs and taxes.
Still unsure how or what to charge? Check out my done for you online calculator - no thinking required!
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