I am just starting my administrative support business. I have seven years of administrative expertise, but one thing I am unclear about is my compensation. I know that most charge by the hour or on a monthly basis, but how do I know how much to charge? And considering that I am just starting out so I am taking on side jobs that are here and there, how should I charge for smaller list items? Thanks in advance? –KT
My first caution is to always be conscious about the terminology you use. This is important because when you are communicating with others, and especially clients, the words you use in explaining things can have very real effect on how and what expectations are formed, as well as how and whether folks understand what you mean for them to understand.
Words like “compensation” have no place in your vocabulary as a business owner. That is a term used in the context of employees, which you are not.
As far as what to charge, ask yourself these questions:
- How much does your business need you to charge? That is, how much do all the expenses and overhead cost to run your business?
- How much more money do you need to set aside for incidentals and/or continuing education?
- How much do you need to charge to pay for your own time? How much do you want/need to earn each month/year to pay your own bills (not the business’s)?
- How much does it take to make something worth your while?
- How much would honor your skill, value and expertise as an administrative expert?
- What rate or amount would send the message that you are an expert, not an unskilled amateur, who has what it takes to improve the client’s situation?
- How much profit needs to be built in for you to achieve your own goals and dreams (e.g., for travel perhaps, or special family vacations, or buying a home)?
- What kind of cash flow do you need to operate with ease and not be stressed with bills and due dates? (Cash flow is a concept different than simply income; it’s the amount of money you reliably and consistently expect each month that you can use to plan and budget).
- How do you want to position yourself in the field? How do you want potential clients to look upon you? What “perceived value” message does your pricing send?
You can’t just work to be paying the bills. What you charge can’t just be enough to pay for your expenses and time in your present circumstances only.
In order for you to grow a solvent, sustainable business, you have to make sure your fee covers all the practical business considerations. It also has to be intentioned enough that you can plan, set goals and grow.
Pricing is every bit a marketing strategy as well.
How you price sends a message to clients. I can tell them that you are a top-notch expert who has real value to offer and can really help them or it can convey the idea that you are desperate (which isn’t attractive to clients) and/or not very highly skilled.
I would also add that it’s not your job to be “affordable.”Keep that word out of your vocabulary as well.
It’s your job to deliver a solution that helps clients move forward in their business and accomplish things. That’s your value and that’s where you want to keep your message focused. So if you consider all the ways that what you do helps clients, how your work ultimately helps them achieve their goals and dreams and make more money, what would you say is the value of that?
Have a look at the Free Resources page… we have a free automated Excel Income & Pricing Calculator that will help give you a beginning frame of reference about what it costs to run a business and what kind of fees you need to charge. It’s a great way to start becoming conscious and intentional about this area of business.