Rates--Part 3

Therefore, it behooves you to learn, right now, before projects start to roll in, how to do these business administration tasks quickly and efficiently to reduce the amount of time they require later!

It also demonstrates the need for you to be tracking all time that you spend on every task! Be diligent about it. You need to build a rate, and you must take business administration time into consideration. If you are not tracking it, you cannot build a good rate.

Why do you need to track your business administration (BA) time?

Let's use an example to explain. Our example is spending an average of 20 hours per week working. But 4 hours of those 20 hours are spent on business administration each week, leaving 16 hours that you can really devote to indexing projects.

These 16 hours are the actual time that will be supporting you, not the full 20 hours. The business administration (BA) time helps indirectly support you, by marketing to new clients and such, but it's not directly supporting your business the way a project does.

A general way to tell if something is supporting you directly or indirectly is to ask yourself, "When I complete this task, will it be directly tied to a project that I get paid for?" Marketing is not tied to any singular project. When you are done marketing for the month, no one will be sending you a paycheck just because you marketed your services. You can market for 6 months and never receive a paycheck! However, when you are done with that indexing project, someone will be paying you.

So, let's look very closely at the remaining 16 hours, and how they relate to rates since these remaining hours are the ones that actually support you. And for this example, we'll say there are $25,000 of expenses that must be met.

If you rushed ahead, you might be thinking: "OK, $25,000 divided by 1,040 hours (average of 20 hours per week multiplied by 52 weeks) equals about $24 per hour that I need to earn."

Close, but not quite. You haven't taken into consideration your business administration. It would really be: $25,000 divided by 832 hours (average of 20 hours minus 4 hours for BA, leaves 16 hours, multiplied by 52 weeks) equals about $30 per hour that you need to earn.

This $30 per hour is the average you need to earn while working on an actual indexing project.

Let's take this through the formula using different

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