Becoming a VA is a great way to make to earn extra income or to work full time and enjoy working from home. I have had the pleasure of working as a Virtual Assistant for years while also working full time. The opportunities to help business owners and entrepreneurs are almost limitless.
Where I see many new virtual assistants get stuck is when it comes time for deciding on how much to charge for their services. Before you start undercharging or working at an hourly rate let me share with you the ways you can set rates for your work.
The first step to determining your service rates is to determine how much you need to make and then working backward. I like to call it reverse engineering or starting with the end in mind.
First of all, you need to keep in mind that you will be paying taxes. You should pay them quarterly, but you may want to speak with a tax advisor in your area for further advice on this. For the sake of simplicity, you can safely save 30% of your income for taxes.
Next, how much time a week can you work your business? If you plan on working full time, you still need to leave time to market your business and find clients to work with. This should take about an hour to do each day which would equal 7 hours a week and 28 hours per month.
So if you plan on working 40 hours a week, you will only be able to work with clients 33 hours.
That being said, let’s say you make $2,000 this month for your services as a VA.
You will need to save 30% of that for taxes.
$2,000 X .30 = $600 you will need to save for taxes.
You will have $1400 for that month in profit.
What about fees, expenses, software, and other bills for your virtual assistant business?
Be sure to add these up and subtract them from your profit too.
Let’s use an example so you can understand how to determine your hourly rate.
Michelle is a virtual assistant who specializes in customer service and support. Her hourly rate is $25 per hour. She commits to working 40 hours per week for her clients.
Her monthly bills, fees, and expenses total $300 per month. Michelle needs to make $4,000 a month in her VA business.
- Michelle’s billable hours per month: 132
- Michelle’s monthly fees: $300
- Michelle’s income goal: $4000
- Fees (300) and taxes (30%) $1275
- Gross Income = $5575
If you are just starting out as a virtual assistant, an hourly rate may seem like an easy way to get paid. However, it can have many drawbacks:
- You can only work so many hours in a day.
- You are trading time for money which can leave you feeling burnt out and underappreciated.
- You may not include your monthly expenses such as software, website fees, and other business expense into your rate.
- You will have to “clock in” to log the number of hours you work every day.
Some of your clients will require you to use software that you are not using for other clients. This fee will not be paid by your client (unless this is decided in your contract) so you have to take on this additional monthly (or yearly) charge.
As a virtual assistant, you are an independent contractor for your client is not required to pay for any software, fees or equipment you need for your business. If you do not roll in the cost of services in your business, you will start to see you are working just to pay for business software and services.
That is why I suggest working on a retainer or creating packages you can offer instead of single services.
If you feel that an hourly wage is the best option, be sure to set your hourly rate 25% higher so that it includes any taxes, services or other fees that would be added specifically because of this client.
Also, many people ask what the average rate for a virtual assistant. While this may vary depending on your skill sets and services, the majority of virtual assistants that are starting out charge $20 to $35 per hour.
When you use the same software for several clients be sure to split the difference fairly. Being ethical is the most important part of this business. We are creating content AND freedom for our clients first. The quality and value we give our clients are returned in the form of money.
The money comes second to the VA services you provide. Make sure you develop this mindset and you will never fall short with clients who want to work with you.
Calculating Your Virtual Assistant Hourly Rate
Do you remember Michelle? Let’s calculate her hourly rate.
HOURLY RATE = GROSS INCOME / BILLABLE HOURS
$43.75 = $5775 / 132
Go ahead and calculate your hourly rate now. If you need help post in the Create Your Virtual Business group and the community will help you with your hourly rate.
Project-based packages can be used when a client has a one-time project they need to be completed. For these types of packages, you can charge a flat rate for the entire project. The best way to calculate the fee to charge is to estimate the number of hours it will take for you to complete the project in its entirety.
Be sure to charge the client for any expenses or fees that you will need to have for the project and add these fees to the project package. You then multiply your hourly rate by the number of hours it will take to complete the project.
For this type of package the client typically pays half of the price upfront and the other half when the project is complete and approved. This type of pricing structure is used for VA work on website design, course creation or copywriting work.
Retainer packages are for clients who need your services regularly. They are typically paid on a monthly basis and are usually pre-paid at the beginning of the month for work you will complete.
For example, a client wants you to post and manage a social media account for their business. They will pay you $200 per week for 10 hours of service a week. You will charge them $800 for the month up front.
This type of pay structure is great who want to estimate their monthly earnings and have more security in their business.
You will still have to keep track of your hours to validate your work each week.
These types of packages the client can pay for a certain amount of hours and can be used at their discretion. The hours are non-refundable and you should be clear in your contract that the hours do not roll over if they are unused or that the hours expire after a certain time period.
These types of packages are great for data entry services and email marketing campaigns when content does not need to be created on a daily basis. This can also be useful for clients who work part-time and do not need a monthly service package.
Do you have a different payment structure that I did not mention here? I would love if you shared it with me in the comments below.