A question new VAs often ask is, “Should I charge per hour or per project?”
Wonder no more! Let’s jump right to it.
To quickly define what we mean, a per-project fee would mean the VA quotes and receives a set price, one time, for completing a laid out task or project. An hourly fee means the VA would track the hours it takes her to complete mutually agreed upon tasks, and the client would pay the total number of hours spent on the job multiplied by the hourly rate.
How To Set Your Fee
In our course we teach that anywhere from $15 – $20 per hour is a fair starting wage for most new VAs. (An exception would be if the VA has extensive prior business or online experience. Then a higher hourly wage would be warranted to honor that expertise.) For many, starting out at $20 an hour might seem like you’ll be making bank! Keep in mind that if you’re earning income as a Sole Proprietorship, that income is pre-taxed. Everything you earn is tracked through your social security number and come tax time you will be responsible to pay any taxes owed based on that income amount. In this situation, you are responsible for keeping an honest record of your time spent on a job using something like Toggl.com. When it comes time to bill your client on whatever schedule you set – weekly, bi-monthly, monthly – all you’ll have to do is multiple the hours spent by that hourly rate.
Setting a project fee is a bit more tricky, though that one-time sum will still be based on an estimate of the hours it will take for you to complete the job. We suggest outlining the to-dos required with a time estimate for each one. Then, multiply those total hours by your hourly wage. A good rule of thumb is to then up this number by 20% to account for any incidentals. (Personally, I’ve been trying out more project-based fees and it has certainly already happened that I spent WAY MORE TIME than I bargained for on the project.)
So for example, let’s say a client has hired you to share about her new handbag on social media.
These are the tasks you need to do, and time estimates of how long it will take you:
- Write 10 social media post copy about the handbags. (1 Hour)
- Make images for sharing on social media using provided templates. (2 Hours)
- Make any edits from client’s proofreading. (30 Mins)
- Schedule the posts on to Facebook page. (1 Hour)
- Follow up with posts to answer any customer questions. (2 Hours)
You can expect to spend a total of 6.5 hours on this project. And your going hourly rate is $20.
6.5 Hours * $20 Hour = $130
Now, let’s increase this one-time project fee estimate by 20%.
.20 * $130 = $26
In this case, I might round up that 20% to an easier to handle $30. The total one-time project fee I would quote to this client for the work would be $160.
Charge Per Hour or Per Project – Which Is Better?
Now to the question, which model should YOU use as a VA? Here’s the simple truth:
Charging per hour is more risky for the business.
Charging per project is more risky for the Virtual Assistant.
When you set a per-hour rate, the business owner is banking on the fact that you’ll be an efficient and effective worker. They’re expecting to not have a lot of problems to correct. (In our course we do teach that if you have mistakes to correct, you not charge the business owner for that time spent!)
And of course, the tables are turned onto the Virtual Assistant with a per-project rate. The VA is assuming the job will only take her a certain amount of time. If the job exceeds that amount she planned, after that point the VA is essentially working for free!
There are checks and balances you can put in place to protect everyone. Maybe as the VA charging an hourly rate, you can give the client a projected hour amount and frequently check in to report how much time – and their investment – you’ve spent on the job. If you’re charging a per-project rate, maybe you add a clause that if the job exceeds so many hours of your time, you’ll start to charge hourly rates in addition to the one-time fee the business already paid.
Pricing products and services is usually one of the trickiest parts of being in business! But it’s so important to be thoughtful and fair when doing so. Shortchanging anyone isn’t a good business practice at all! Be fair to yourself and honest with your clients. As always, we know your faithful work will give much value to your clients. When their bottom line increases, so does yours. Keep working hard!
Want to learn more about charging clients? Check out these posts: