Virtual Assistants – How much should you charge?

This is an extract from the 30 Day Setting up as a VA Challenge by @HelenStothard

We’ve worked out what services we want to offer, we’ve researched our market and we’ve looked through the support sites. We should have the information we need now to start looking at our rates.

What we are NOT going to do is ask friends and family what we should charge. If they own their own business and want to use you they’ll come up with a low rate and if they don’t have their own business they’ll base it on their own employed hourly rate.

As a Virtual Assistant you carry out the tasks yourself. This means that there are a finite number of hours you can work during the week. Don’t think you can work a 40 hour week because it’s not possible to do this and run your own business at the same time.

I’m going to suggest that when you are looking at the hours you have available to workthat you allow one day a week to carry out your own admin and marketing.

Establish the hours that you are able to work, excluding your admin time. You will need to take travelling time into account if you visit client premises. Now work out the amount you want to earn and divide that by the hours you have available. Great! Actually no, not so great. There’s probably a load of things you haven’t taken into account here.

  • National Insurance – this works out roughly £12 month for your additional contributions
  • Self Assessment – a very basic rule of thumb here is to put aside a third of what you owe to meet your tax bill
  • Insurance – we’ll cover this later but we’re talking professional insurance, property insurance, vehicle insurance, income insurance and health insurance
  • Professional Memberships – depending on the services you offer you may find you need to pay an annual fee, for example in order to offer bookkeeping I have to pay for my Money Laundering Regulations licence which is £110 year
  • Networking – you may decide to join local networking groups or organisations like the Federation of Small Businesses
  • Utilities – if you’re working from home there’ll be an increase in bills for heating, telephone, possibly internet and you will need to take these into account
  • Software Licences – all the software you use must be correctly licensed. If you use cloud-based systems some of them will involve a monthly or annual cost
  • Office Equipment – you’ll need to buy stationery, replace computers as they wear out, buy a desk and chair etc
  • Travel – do you have to travel to a clients’ premises, a networking event or training or conferences, will you need hotel accommodation?
  • Childcare – will you need to pay for child care?

This list isn’t exhaustive. There are loads of things that you forget about when starting up a business, and whilst a lot of them are allowable business expenses, the business has to make a profit in order to pay you a wage.

Challenge Six

For today’s challenge I want you to start thinking about your rates. We need to see if your business is viable before we start spending any money.

Take the research that you have done and taking into account the costs mentioned above I want you to start thinking rates.

In my opinion you cannot run a successful Virtual Assistant business if you charge less than £25 hour. There is also the question of perception. If you visit small business forums a common misconception about Virtual Assistants is that they are back bedroom
hobbyists or cannot be trusted. If you’re charging £10 hour not only are you unlikely to be able to run a professional or profitable business but what perception will clients have of you?

Pounds Sterling

Pounds Sterling (Photo credit: 917press)

I assume if you’re considering making the move to self-employment you have years of experience behind you. That experience is valuable. You’re also going to learn some important new skills as you build your business. It gives you a whole new outlook on business, and you can share that experience with your clients.

Do not undervalue yourself. Charge an appropriate rate that will generate the incomeyou wish to receive as well as paying the overheads and expenses incurred by your business.

Charge what you are worth. If you have a very specialist skill then charge the appropriate market rate for that skill.

Beware of barter arrangements. If a client offers you a service or product in exchange for your services look at it closely. Work it back to an hourly rate if you need to. I spoke to someone who had been offered a service worth £60 month. When we looked at
the amount of work that was expected in return, it equated to less than £8 hour return. This was not a fair exchange. Whilst there were added benefits that you couldn’t put a monetary value on, they weren’t enough to make this a sound business decision.

Don’t go in cheap. There’s a temptation when starting out to offer low rates. If you must do this then ensure that there is a time limit on the offer, and make it clear that after this time your rates will revert to the standard rate. This avoids landing a client at the initial low rate that stays with you on that low rate for years.

Consider offering packages. Ideally you want your clients to buy a retainer. This is a set amount of work every month for a fixed fee. Generally if hours are unused during that month they are lost. However, the benefit to the client is that they are guaranteed your time during that period.

Another option to consider is pre-payment. This means that you have a more attractive rate for clients who purchase a set number of hours in advance.

Both prepayment and retainer are paid in advance of the work being carried out and therefore do not have the disadvantages of your invoice not being paid when the work has been completed.

Today I want you to come up with:

  • Standard hourly rate for virtual work
  • Increased hourly rate for onsite work – decide if you are charging travel time and mileage or if this will be covered in the increased rate
  • At least two retainer packages
  • At least two prepaid rates – for example block of 5 hours and block of 10 hours
  • If your work is specialist then work out either a specialist hourly rate or project rate – if you are considering project rates double check your calculations to make sure this isn’t working out below your standard hourly rate

Like this post? Want to know more about starting out as a VA? You can buy the 30 Day VA Challenge below!

30 Day Setting Up As A VA Challenge - eBook
With the 30 Day Setting up as a Virtual Assistant challenge author Helen Stothard will share her experience of running a successful business and help you over the pitfalls that many start up Virtual Assistant businesses encounter. Out now!
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