Are you starting a new business? Or are you in business and working hard, but not seeing the profit margin you’d like?
Service based entrepreneurs are often face this dilemma. Their hourly rate “sounds like” a lot, but when they factor in overhead expenses, vacation time and the number of hours they’re available to work in a week, there’s often very little left.
I’m including a link to a simple form to help you take a closer look at your rates.
(it’s a fill in the blank form in Excel. Don’t let that scare you! Only the White Fields you see on this document need your attention.)
The example I have here is for a part time business with a desired salary of $45,000. When she factors in operating expenses and time she’ll take off for vacation, her billable rate must be $70.00/hr to see a 10% profit margin.
When I look at it this way, I see why so many entrepreneurs struggle. They’re trying to ‘compete’ with hourly/salaried employees, and often overlooking the rest.
After you’ve filled out your own, leave me a note in the comment section. Did this bring you any clarity? Are you charging enough to meet your income goals? Are there things you can do to make changes today? (Increase rate, decrease expenses, or other ideas?)
To your success!
p.s. I’ve updated my product/services page. Take a look at different ways we can work together. I’m looking forward to it!
I love this worksheet. I needed something like this to see where the money was truly going. Thank you so much!!
I’m so glad it helps Denise! Your comment reminded me to go in and run through this again with this years numbers. Thanks for the reminder 🙂
It’s my intention this year to get over my fear of dealing with money. I’ve recently gotten over some serious money blocks, so I’m earning it, but I know I have to do some work around keeping and saving it – what a concept for me!
This was one of my toughest questions when I started. That is a sweet tool. It was fun to fill it out, my estimate came out below what my current rate is, but it is always a good practice to see if that is still holding true.