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Setting an Hourly Rate A Quick Guide

Setting an hourly rate

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Page 1: Setting an hourly rate

Setting an Hourly Rate A Quick Guide

Page 2: Setting an hourly rate

Why do you need an hourly rate?

• So that you can quote accurately when looking for work

• To ensure that you work for a worthwhile return

• It assists with budgeting

Page 3: Setting an hourly rate

What you needWhat annual salary do you want?

What are your goals?

What is a realistic estimate of how many working days you have?

Be realistic in estimating how much time you'll have for work.

For example, ensure you allow for holidays, sick days, administration time, and non-work days.

Make sure you know your minimum needs to cover business and living costs.

Page 4: Setting an hourly rate

The Calculation: Working Days

• There are 52 weeks in the year with five working days each. Total: 260 days

• Under Australian law, workers get 4 weeks of annual leave. That subtracts 20 days from the total leaving 240 days

• Under Australian law, workers are entitled to 10 days of sick leave. That leaves 230 days

• You'll need to allow for administration time to run your business. That will use about 20% of your time. That leaves 184 days

• Lastly, you need to subtract public holidays. That's another 10 days leaving 174 working days

Page 5: Setting an hourly rate

The Calculation: Earning Goals

• I suggest setting three earning goals

• The first goal is survival - the minimum salary you need to keep the business afloat and survive

• The second goal covers business expenses and allows you to live comfortably

• The third goal covers business expenses and allows you to enjoy some living luxury

Page 6: Setting an hourly rate

The Calculation: Setting Rates

For this, l going to set three earning goals of $50000, $75000 and $100000 per year

$50000/year $75000/year $100000/year

174 days $287/day $431/day $575/day

8 hours $36/hour $54/hour $72/hour

Page 7: Setting an hourly rate

The Take-Away

• Don't accept work or quote for work below your minimum hourly or daily rate. It might be hard to do that you'll be better off putting your efforts towards better laying clients

• Never be scared of charging your highest, aspirational rate