You have all your research from Part 1 right? If not, start there first. The biggest reason to focus on knowing what your worth, is so you can make informed decisions on where you spend your time and where you shouldn't.
You only have a limited amount of time every day. Knowing where and how to spend your time can make a big difference in your business and your life!
Figuring out your worth and your hourly rate:
Take the corporate titles that you collected from part 1 that are a close enough match to your business, or pick a keyword for your general job title. Plug the title or keyword into one or more of these salary estimator sites. You may need to try a couple different word combinations or single keywords. You'll know you have the best fit based on the job titles the tool brings up as samples.
I'd suggest you try at least two salary estimator sites to get a good sense of the salary range. Once you have the salary, you can do a bit of easy math to calculate the hourly rate.
First, consider if you worked 40 hours a week for all 52 weeks in the year, it'd total 2080 hours. Ok, now consider you probably don't want to work all 52 weeks since a little vacation and sick time helps you stay healthy and happy! Plus, if you're working for yourself, that was one of the benefits, right!
At least take out about 200 hours (25 days for holidays, sick, vacation) which is pretty minimal. If you know you'll want to work less take out even more hours. Subtract the hours you are planning to take off from the 2080 total. Now divide the salary by the total hours remaining. This is the hourly rate in the corporate world!
You're almost there, but not quite yet. Take your corporate hourly rate and consider if you need make additional adjustments.
- Adjust downward, 10-15%, if you're a small business since your overhead (building, utilities, office supplies etc) expenses are less.
- Adjust upward based on how unique your business is, how special your 'secret sauce' and if you've been able to establish a need for your services.
- Adjust up or down based on your target clients. Are your target clients expecting a premium type of service offered only to a few, then adjust accordingly.
Once you have your adjusted hourly rate, compare it with your 'floor' number. Does it cover your standard expenses?
Great if it does! If it doesn't you'll need to adjust your hourly rate up.
What kind of decisions can you make once you know what your worth by the hour?
- Where you shouldn't spend your time. Say the hourly rate you determined is $100 and you are still doing all your social media and blog posts which take an hour for the week (I know you wish it only took an hour!). You could hire it out for $50 an hour and you'd get back half hour of your time to work on growing your business. If that 30 min resulted in gaining just one more client or moving one step closer in the sales funnel, the return on your 30 min ($50) could be double, triple or more!
- Where you need to spend more time. Your hourly rate is $100. You notice you're getting quite a few sign-up your $500 service package when you offer 15 minute free consults. You should find ways to spend more time doing 15 minute consults, since 4 consults with everyone buying a package costs you $100 total in time, but you make $1900 in revenue!
What decision can you make now that you know what your worth?
Leave it in the comments so we can celebrate with you!
Still not sure or math isn't your thing?
Leave your question and I'll help get your value!