Figuring out how you will charge your clients is one area most Virtual Assistants come to a standstill when they first start up their service-business. Most start out with hourly and/or retainers until they get a bit of experience behind their belt and know how long tasks take to do and then they can put together packages/projects if their prospecting clients want these payment options.
In anticipation of putting together packages in the future start putting together your “Company Menu” as you start doing individual tasks for your clients. Every time forthwith that you do a task for a client make sure you keep track of the time it took you to complete that task. As you add these tasks to your Company Menu try to categorize them by skillsets to keep it organized just like a chef keeps their dishes on a menu organized under Appetizers, Main Dinner, Dessert and Drinks. Your menu might have Email Marketing, Social Media, Writing and WordPress categories on it.
For example, if you created a Pinterest image in Canva for your client then keep track of the time it took to create this image and then record this in your “Company Menu”. After a while, you’ll have a whole list of timed tasks on your “Company Menu” that you can then start adding prices to using this equation: Menu Price = Time X Hourly Rate
Download this handy template to help you create your Company Menu (instant download, no email required).
1. Hourly Rate
Pay as you go – This is perhaps the most common and easiest pricing method at the beginning for service-based businesses. You’ll need to know your hourly rate no matter which way you choose to charge your clients so it’s important to figure this out first.
Download here for FREE our handy Pricing Formula Worksheet to help you figure out your hourly rate. All you have to do is fill in the blanks (like your yearly salary goal, your operational costs and your billable hours) and our worksheet does the rest. VOILA! This excel worksheet will automatically calculate the hourly rate you need to charge to keep your business afloat!
The only problem with hourly pricing is that you are limited by the number of available billable hours in a day. It also does not account for the speed you have developed over time and as a result of this, you must increase your hourly rate to account for expertise and experience.
2. Retainer Pricing
Retainer pricing is based on your hourly pricing. Most people that have retainer pricing provide a discount as an enticement for people to “sign up” for more hours.
For example, your hourly price may be $40 and you may set up retainers as follows:
- A – 5 hours – 5% discount $190.00
- B – 10 hours – 10% discount $360.00
- C – 25 hours – 15% discount $850.00
- How quickly must the retainers be used?
- Do the hours expire?
- Will you provide a refund?
- Must retainers be paid in advance?
- Do extra hours revert to old rate or does this guarantee the new rate?
This will vary depending upon each Virtual Assistant’s business protocols as each business is unique.
3. Package Pricing
It takes me 10 hours per month which is $400 per month – I can’t afford that.
They do not realize that these same tasks would take you only 5 hours to complete. This is when your “Company Menu” will come in handy that you have been creating since day 1 in your business.
When providing package pricing you simply provide a list of products you will provide within that package and the price it will cost. You determine this price by estimating the time to complete these services each month and multiplying it by your hourly rate.
An example of package pricing might look like this:
Article writing – $XX per article
Monthly social marketing package – $XXX per month
- includes 12 blog entries
- includes 3 daily tweets
- maintenance of a Facebook page
Even though these packages are based on how long you think it will take to do these services and is still based on your hourly price, your client simply sees the bottom line and what they will get for those services. The client is not left guessing how many hours they may need – they simply know what services they want and how much it will cost. It is great for them for budgeting purposes. It also allows you to make more money as you develop speed without having to increase your package pricing.
Keep in mind that as you learn your client’s business and their needs you will undoubtedly get faster. Hourly pricing does not allow you to benefit from this … package pricing does.
TIP: On your website tell your potential client that you can customize a package to fit their needs and their budget.
4. Project (One Time)
So often I am asked the question…
I have a potential client that needs me to do XYZ, has anyone ever priced something like this?
Some examples of things you might find a request for project-based pricing include one-time customer projects, mass mailings, calling projects, database entry, etc..
Project pricing works similarly to package pricing. In essence, the client is simply looking to be able to budget how much a particular project will cost.
Next time you are asked to provide a project price, here are 3 quick and simple ways to determine the price:
- Industry Standards – Research what the industry standards are. For example, transcriptions are based on a 1:4 or 1:6 ratio. You can usually do 100 letters of a mass mailing per hour including addressing and stuffing. These standards are available if you do the research online or ask at our #VAforum.
- The “test” – Take a small sample of the project and then multiply your results
- Company Menu – This is where having that Company Menu comes in handy in determining the project price.
The biggest problem with project pricing is that until you become familiar with how long something actually takes it can be hard to come up with a fair price. Many VAs tend to underestimate the amount of time something takes, especially when it is something they enjoy doing. If I was to ask you how long it would take to type 40 handwritten pages what would your answer be? For each person the answer is different. For this reason, you can see why project pricing can be very difficult.
Project pricing is a great way again to allow yourself to be paid for your speed and expertise. As with package pricing, the client is simply looking at the total cost the project will be and whether they think that is a feasible amount to pay to outsource the project.
Keep in mind, as I have stated, that hours to complete a project are subjective … often times those that are not in our industry haven’t a clue how long something will take. If, for example, you were to have someone build a house for you and they said they charge $100 per hour including costs … what on earth would this mean to you? Do you know how many hours it would take them? Probably not.
Pricing is very simple once you breathe and work through the numbers. I hope this helps you figure out your pricing in your Virtual Assistant business.