How much do I charge?

 

You can charge for your services in different ways: by project, using an hourly rate, on a retainer, or other methods.

 

The hourly rate is a useful starting point for estimating how much you will charge.

Don’t look at your salary and go by your hourly pay.  At your job you do not have to spend half your time looking for work.

 

A 40-hour workweek, and working 50 weeks a year (only two weeks for time off, including vacation and sick days) would give you 2000 hours a year to earn a living. Until proven otherwise, you can count on spending 1000 hours a year looking for work, writing proposals, and other activities that do not bring in any money.

 

You will need to pay for benefits yourself, and you will have overhead expenses.  As an employee, besides receiving a salary, you may have health, life, and liability insurance at a group rate. Some companies offer a retirement plan, such as a 401K, and may match your contributions up to a certain dollar amount.  This would be extra money for you.  Then there is paid time off.  They may offer and encourage training, and pay for you to attend industry or trade conferences.  You have a work space and they pay for equipment, such as computers, phones, printers, software, stationery, and other overhead expenses.   Consider these expenses, and how much you will need to earn to pay for them.

 

Because you may only be performing billable work about half of the time and you will be paying for your own benefits and expenses, you may need to charge at least 2 and a half to 3 times the hourly amount you would expect to earn in a regular job. This is not a fixed rule, because you can only charge what a client is willing to pay.  Ask around and research for yourself what most consultants are charging in your area of work. 

If you are able to make the transition, while you have a job, you will have a better grasp on what your cost of bsuiness is likely to be.

For more about establishing and growing a consulting business, visit the blog.