How do you determine your hourly rate as a VA/PA?
Setting your hourly rate is perhaps one of the trickiest steps in setting up your business, but also one of the most important. Many VAs and PAs make the mistake of setting their rate too low, at the risk of ending up losing money instead of making money.
So what should you all consider when determining your hourly rate?
- Fixed expenses and operating costs: Consider your workplace, equipment (laptop, phone), software, licenses, internet costs, insurance, and any fees from your bookkeeper/accountant
- Taxes: Remember that you still have to pay taxes from your income. Reserve a portion of your revenue for this, usually about 30% to 40%.
- Vacations and illness: As a self-employed person, you do not have paid vacations or sick days. Therefore, you must include this in your hourly rate as well.
- Training and development: Do you want to keep developing yourself and stay up-to-date with the latest trends? You should also include the cost of courses and training in your rate.
- Unpaid hours: Think acquisition, administration, client consultations. You cannot charge for these hours, but you must factor them into your overall rate.
Suppose you want to earn €3,000 a month and you work 20 hours a week. So in a month you work an average of 80 hours.
Calculation example:
- Desirable monthly income: €3,000
- Costs (e.g. software, insurance, taxes, etc.): €1,500 per month
- Gross monthly rate: €4,500
Hourly rate = €4,500 ÷ 80 hours = €56.25 per hour (add to this your knowledge and experience)
For example, if you were to charge €30 per hour, in a month you would earn 80 hours x €30 = €2,400.
But after deducting your expenses (€1,500), you’ll be left with only €900.
That means you will either have to work more hours, or you will have to add money from your own pocket for your fixed expenses.
Of course, the above calculation is very basic and depends on many factors, but adjust the amounts to your own situation.
Moral of the story: Determine an hourly rate that will not only make you a profit, but also keep your business healthy. Dare to be realistic and make sure there are no surprises!
How did you determine your hourly rate? Share your experiences below!