Rates--Part 2
By now, hopefully you've completed Step One of building a rate: deciding on a realistic number of hours that you plan on ultimately working. Some plan on realistically working 20 hours a week when it's averaged out. Others may plan on realistically working 50 hours per week. What's your realistic number of planned working hours?
Now that you have that number, set it aside but don't lose either the number or the documentation for your calculations.
Step Two in building a rate will also take you some time to calculate. For this step, you need to pull together all costs you want your indexing business to pay for.
This is another one of those things that greatly impacts how much a person needs to charge. For instance, if I want my indexing to pay for $80,000 of costs, and I work (realistically) 50 hours a week, then I need to make sure I average close to $31 per hour.
If I have the same dollar amount of costs, but only want to work 20 hours per week, then I need to average close to $77 per hour.
How much cost do you have to support with indexing? What costs should be considered? Do all indexers incur the same cost?
Let's look at that last question first... do all indexers incur the same cost? The answer is an unequivocal NO! This is why some indexers are able to charge much less than others, even if these indexers are working the same number of hours as other indexers. (As far as whether you should charge less, or not, is a very personal decision. We are only going to discuss how to calculate the minimum rate that you need to charge.)
So what costs should be considered when building your rate? Any cost your business has to support.
Some costs might seem similar in nature. Yet, with variations in work habits, even these similar items can vary widely.
I break life expenses into three categories: business expense, salary, and household expenses.
The first thing you will want your business to be is self-supporting. In other words, you want your business to support itself fully. I call these business expenses. Then, you want to pay yourself a salary, unless you are doing this for free (highly unlikely). I call this Salary. Then, you will need to determine what personal and household expenses you want your indexing to support--and the last one can make all the difference even if all else is the same.
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