Virtual assistance is vast and competitive, so setting the right price for your services is imperative! Guiding you through a strategic approach in this next blog of my “Gross Error” Series, I will walk you through the art and science of pricing strategies so that they align with your expertise, goals, and the realities of your local economy.
Understanding Your Billable Hours and Business Commitments
Before diving into pricing structures, start by understanding your available billable hours. (These are the hours you have up your sleeve to work with clients). Consider the time you’ll spend directly working for clients and the hours dedicated to business activities such as marketing, invoicing, and networking. A realistic assessment of where your business will need you will help to lay the foundation for an effective pricing strategy.
Local Rates vs. Global Comparisons: The Pitfalls of Overpricing
I can’t stress this enough! Hourly rates should reflect your current location and its economic landscape. Resist the temptation to compare your rates with those in other countries. Factors like the cost of living and taxes vary significantly, influencing what clients in your area are willing to pay. Potential clients from abroad might also overlook outsourcing to you if your rates do not align with your country’s standards, making you appear overpriced and an unviable option. It’s crucial to position yourself competitively both locally and in the global market without artificially inflating your rates to match different economies.
Setting Your Hourly Rate: Experience, Services, and Local Economy
Your hourly rate reflects your experience level, the services you offer, and the economic conditions of your location. Use resources like seek.com.au (in Australia) or local government sites (this is Queensland Based) for award wages to gauge industry standards. Consider your goals for the next 6-12 months, considering your skill level and availability. Be realistic about your expectations and always value your expertise appropriately. There will always be time to increase your rates with clients, but there is rarely a chance to win them back if you were overpriced to begin with.
The Equation for Strategic Pricing
To set the stage for packages and other client offerings, use a straightforward equation:
Goal / (Billable Hours + Non-Billable Hours) = Hourly Rate
This equation aligns your financial goals with the time you can realistically commit to billable and non-billable activities.
Example:
Goal: $50,000AUS
Billable: 15hours per week
Non-billable: 2 Hours per week.
Total 17hours per week| 68 hours per month | 748 per year (4 weeks off)
Equation: $50,000/748 = $66.85 gross per hour*
*Don’t forget to factor in your tax and super into your hourly rate and ensure your net rate will be adequate for your needs.
Now, ask yourself if that is reasonable for your skill level and service offering and adjust accordingly.
As a beginner, you might find more time to work, bringing your rate down. If you are more experienced, you might increase your rate and find more free time than you imagined or, better yet, earn more than you anticipated.
Simply put – Adjust and refine!
Accounting for Business Expenses, GST, Tax, and Superannuation
Consider your business expenses, including website hosting and domain costs, website maintenance, app and program fees, marketing, and office expenses. If applicable, factor in GST, taxes, and superannuation. These aspects are integral to crafting a comprehensive pricing strategy that ensures your business remains financially healthy.
Common Expenses
- Website Hosting and Domain: Costs of keeping your online presence active.
- Website Maintenance: Regular upkeep to ensure your website functions optimally.
- Apps and Program Monthly Fees: Expenses related to essential tools and software.
- Marketing: Budget for promotional activities to enhance your visibility.
- Office Expenses: This includes items like stationery, utilities, and any other costs related to your workspace.
Crafting Your Unique Pricing Blueprint
As you navigate the competitive global market, remember that your pricing strategy is not a one-size-fits-all formula. Tailor it to your skills, experience, and local conditions. Embrace the uniqueness of your business, and let your pricing reflect the value you bring to your clients.
By approaching pricing with this strategic mindset, you will position yourself competitively locally AND in the global market, opening yourself up to a broader potential client base. This strategy will also ensure the sustainability and growth of your Virtual Assistance business.
Don’t forget! Knowledge is power, and armed with the right pricing strategy, you will be set to thrive!
Need some help nailing your pricing? Why not book my 1:1 Clarity Call where you can pick my brains and get expert help identifying your hourly rate and creating magnetising packages?
Or join my Virtual Assistant Launchpad Masterclass Edition on the 6th December 2023. Click here for more details.
