Part ONE: Working for yourself

25 hours a day, 8 days a week
Here's the first in a series of posts on WORKING for yourself.

Calculating Billable hours per week

A NORMAL job is working 40 hours per week. But, you decide, you want to work for yourself. SO, Welcome to the NON-normal world. How do you decide how much to charge people? For some, it is "as cheap as I can get, so that I can get business. While that may work for a brief time, I suspect what you are really doing is, letting people know you don't value your work. Perhaps, its better to do a little market research, first, before deciding on a rate?

Let's look at some numbers, first:
What is the number of hours you can bill a client in a year?

40 x 52 = 2080 Normal Jobs are 40 hours X 52 weeks in a year.
40 x 2 = 80 Vacation 40 x 2 = 80 hours
2080 - 80 = 2000 Hours - vacation = 2000 hours in a typical year available to bill for most people.

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Most people also have some holidays, plus some sick days, right?

8 x 6 = 48 Hours for Holidays 8 hours a day, times 6 days year = 48
8 x 5 = 40 Hours for Sick 8 hours, times 5 days = 40

2000 - 48 - 40 = 1912 Total work HOURS available = 2000-48-40= 1912 HOURS

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Most metrics, from reputable places, like the US Small Business Administration, recommend about 500 hours a year of marketing, accounting, phones, IT support, administrative tasks, etc

1912- 400 = 1512

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Which is nice, but there's travel, meetings, etc. perhaps as much as 100 hours a year?
So, now we are closer to 1400 hours of actual work.

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Take your annual salary, and divide that by 1400.
Let's try an example:
If you think $70,000 USD is a good amount, then,

70,000 ÷ 1400 = $50 an hour. Remember, most of your year is NOT going to be spent billing clients, so, this rate is for covering your costs, plus, the cost of running your business.

I've been writing in my upcoming book about the Business of Production Management. (It's my day job!) As a company owner, I have spent some silly amount of time, learning by making mistakes. And so, the goal of this series of posts, is, perhaps, to pass along a bit of my hard earned lessons.

Part 2 WORK For Yourself: Wait? You Charge HOW Much?