NOTE: “Your mileage may vary.” For instance, rather than earning a full-time living, you may want just to supplement your family’s earnings. Or some of your expenses, such as health insurance, internet, etc. may be covered by your spouse. (But consider whether you’re earning enough to cover these if your spouse’s income is no longer available.) Don’t count items such as computer or Wifi as “already paid for.” If something happens, you may need to replace hardware or software quickly to keep your business going.
It’s okay if you charge $35/hr. and it means netting closer to $10/hr. That may work fine for you. Just make sure you crunch the numbers so you know what you’re really earning. If you document every one of your business costs, your taxes will give you this information.
|HOURLY RATE WORKSHEET FOR VAs||Example||Your Worksheet|
|a.||Your salary goal||$56,000|
|b.||Employee wages/subcontractor expense||$0.00|
|c.||subtotal labor (a+b)||$56,000|
|d.||Health insurance premiums||$12,000|
|e.||Self-employment tax (15% of a)||$8,400|
|g.||High Speed internet access||$720|
|k.||Website design and maintenance||$500|
|l.||Advertising & promotion||$1,000|
|n.||Repairs/software and hardware upgrades||$1,200|
|p.||subtotal expenses (d through o)||$26,000|
|q.||total operating costs (c+p)||$82,000|
|r.||Your profit goal (5% of q)||$4,000|
|s.||total revenue required (q+r)||$86,000|
|t.||Divide by billable hours in year (from worksheet below)||924|
|u.||hourly billing rate (s÷t)||$93|
Figures a. through s. are rounded to the nearest $100, figure u. is rounded to the nearest $1.
- $56,000 is the median annual salary using the category of Administrative Assistant III at https://www1.salary.com/Administrative-Assistant-III-Salaries.html.
- Most VAs start out with no employees, and many remain that way. But here is where you would enter expenses for employee wages or amounts paid to subcontractors, if you plan to have them.
- Total labor
- $1,000 is an approximation of the monthly health insurance premium cost in 2018 for an individual in a non-group health plan.
- https://www.thebalancesmb.com/self-employment-taxes-explained-397651 has a helpful explanation of self-employment tax.
- If you are renting office space, enter your amount here. Most VAs operate from home and don’t pay an extra amount for rent, so we have left the sample data at zero. However, it’s important to consider the value of the space you’re using for your business. For instance, if you weren’t running your business there, could you rent space to a tenant? Are you paying a fee for storage elsewhere that could be eliminated if you could store stuff in the space you use for your office?
- High speed internet access.
- Because VAs rarely travel to client’s sites, we have left this at zero. If you intend to travel on behalf of clients, you should enter here the amount of auto expenses you expect to incur, unless you plan on charging a mileage fee in addition to your hourly fee.
- Include water, power, gas. If operating from a home office, enter only the amount attributable to your business.
- Include meetings, seminars, education, and membership dues of professional organizations.
- Based on an assumption of 10 hours per year at $50 per hour. Cost could vary greatly depending on the complexity of your website and what your website designer charges. If you yourself do some or all of your own website’s design and maintenance, your amount might be significantly less.
- Include any advertising and promotion costs other than those related to your website: print ads, mailings, printing of brochures, cards and other business literature, etc.
- 5% is the minimum amount of profit over and above your salary you want to reinvest in the business for its health and growth. 10% is a good profit goal for which to strive.
- This is what you must make in gross revenue to meet your salary goal and profit goal.
- See the hour calculation table below to calculate this number for your situation.
- This is the hourly rate you need to charge per hour to meet your salary goal and profit goal.
|BILLABLE HOURS WORKSHEET
|Hours you intend to work per week||40||hours||hours|
|Number of weeks per year||x 52||weeks||x 52||weeks|
|Sick time allowance of one day per month||– 96||hours||hours|
|Federal holidays—seven days per year||– 56||hours||hours|
|Vacation allowance of two weeks per year||– 80||hours||hours|
|Non-billable time @50% *||924||hours||hours|
|Billable hours in a year||924||hours||hours|
*Paydirt online invoicing and tracking estimates that at least 35% of normal yearly work hours be considered as overhead (non-billable) and has tips about how to decrease that time. 50% non-billable time is frequently cited as a guideline in the VA/business support industry, although estimates of non-billable time for a single-person service business often range from 30%-60%. Don’t underestimate!
Produced by Marlene McCall of Creative Office Services & Nina Feldman of Nina Feldman Connections for the Pricing Roundtable at the IVAA 2nd Annual Summit, October 24, 2003 and updated by Nina Feldman in June 2018.
For more helpful pricing resources, see Resources