How to Set Your VA Rate in 2019: The Definitive Guide to Pricing Services

The question I get asked most often from new Virtual Assistants as they venture into business ownership is...

How much should I charge for my services?

Setting your rates can be downright daunting. Price too high and potential clients may hire someone cheaper. Price too low and you could end up feeling overworked and undervalued. Then there's the fear factor: Many new VA's feel like they don’t have the skills and experience to justify a premium price.

That’s why I’m going to break it all down for you. I’ll show you how self-employment taxes need to be factored into your rate, how to determine what your starting rate should be based on your experience (not hours), and the definitive difference between the various types of packages and pricing for your business.

Step 1: Remember Uncle Sam

Before you start setting your rates as a VA, it’s important to understand what your tax responsibilities (as a US-based assistant) are.

1. You are considered an Independent Contractor. This means that you are contracted to perform services for others, without having the legal status of an employee.
2. You’ll need to save at least 30% of your gross income to pay quarterly taxes.

Many people neglect to remember that you don't keep 100% of your income as a VA. That $20/hour rate you think you're taking home after taxes really ends up being $14/hour. Price yourself too low before taxes and you run the risk of creating an unsustainable business.

Step 2: Factor In Your Needs

Every VA's situation is unique, and it’s crucial to understand (and meet) your particular needs.

1. Know your monthly expenses. These may include things like rent, mortgage, child care, car insurance, health insurance, technology and software needs, and of course your daily Starbucks. Will your hourly rate provide a livable wage based on your needs?
2. Know how many hours you can realistically work. Your rate has to cover more than just an hour of work or the duration of a project. Consider that in addition to billable hours, you will also spend A LOT of time working on your business, doing things like marketing, billing, finding and pitching clients, to name a few. That will add at least 5-15 non-billable hours to your work week.

Step 3: Analyze Your Skills

Clients hire Virtual Assistants for peace of mind. As such, you should be charging for your expertise, not how many hours you can work.

Generally speaking, US-based Virtual Assistants who offer "general services" like calendar management, travel booking, online purchases, and inbox management tend to fall in the $20 - $30/hour range.

VA's with a specialty skill (Wordpress site creation, ghostwriting, course creation, building sales funnels, etc.) typically fall anywhere from $30 - $50/hour range, depending on how long they've spent mastering their skill.

Depending on the services you offer, you must take into account your level of expertise and experience.

Step 4: Putting It All Together

So, you’ve figured out how much to need to make per month (after tax) to sustain your business, and you know how many billable hours you're realistically able to offer. Now, we will use this information to determine your rate.

Let’s say you can commit 40 total hours per week to your business. Let's subtract 5 hours for nonbillable work like marketing your business and fine-tuning your skills.

Now you have 35 workable hours per week. That’s roughly 120 hours per month that you can be making money in your business.

We will use this simple formula to find your ideal hourly rate.

Gross Income Needed ÷ Billable Hours Per Month = Ideal Hourly Rate

For you, that might look like "$4,000 gross income needed ÷ 120 hours per month = $33/hour."

How does that rate feel to you? Too high? Too low? The beauty of this base rate formula is that it's a starting point. That's because...

Rates Are Meant To Be Flexible

Your rates aren't set in stone. As you continue to master new skills, grow your portfolio, or add to your services, you should increase the price of your services accordingly. 

If you don’t ask for it, how do you expect to get it?

A long-term client once said to me, "I couldn't have done this without you! We should be paying you more." Lightbulb moment!

I realized the only reason they weren't paying me more is because I hadn't changed my rates since I started working with them one year earlier, even though my skills and quality of work had improved significantly.

If you’re not sure how to let clients know about a rate increase, use this script below:

Hi [client],

I hope this finds you well. I want to make you aware of an upcoming rate increase. Effective [date], my rates will increase to [$XX] an hour. For your current plan of [XX] hours per month, your new total will be [$X,XXX] per month.

Please let me know if you have any questions or concerns, and thank you for your continued service

[Name]

Clients are busy people and want to know what they’ll be paying for your services moving forward, not necessarily why you’re increasing your rates.

But if they do ask why here’s how you can be prepared. Keep a list of the services you include when we begin working with a client. As you continue working with them, add any new services you do for them.

This way, if they ask why you’re increasing your rate, you will have a helpful list to refer to and easily show them why your work is more valuable now than it was when the original rate was set.

Conversely, if you find that you have trouble securing clients are your current rate, it may be time to reevaluate. Analyze the feedback you've received, and consider a slight rate decrease in order to land clients, start making money, and build your portfolio.

Pricing Types

Now that you've determined your hourly rate, it's time to choose how to "package your services.

Hourly Rate

Hourly rate pricing is where you set a particular hourly price for your services, keep track of your time, and bill your client after the work has been completed.

Pros:

• You work when you want and get paid accordingly (some clients prefer this method because they only paying for hours that were worked specifically for them.)
• Hourly tends to force clients to be more selective (and clear) about what they use you for.

Cons:

• No incentive on your end to work more efficiently (you make less money the faster you work).
• No guaranteed monthly income.
• You're susceptible to disputes if your client feels that you worked too many hours or didn't track time accordingly.
• The client doesn’t know exactly what the project will cost them (especially if you underestimate the scope of a task).

Personally, I think hourly billing is the worst option for any type of freelancer and doesn't place any value on your work.

For example, let's say it took you 5 hours to design a logo for a client's startup (yay, you just made a hundred bucks). Little did you know that your logo brings in thousands of dollars in new business each month for your client. If you had priced your graphic design services using a flat fee, you could have made more income that placed an emphasis on your skill, not how fast you created a graphic.

Flat Fee

A (typically monthly) flat fee is best for VA's who are keen to work with clients on a long-term basis. This is best done by approximating how many hours of assistance a client needs per month and multiplying those hours by your hourly rate.

Pros:

• The client knows what they are paying each month for your services.
• You're guaranteed a set income, even if you finish your tasks ahead of schedule.
• Guaranteed income each month creates a sense of security and the ability to "future-plan."

Cons:

• VA's who underestimate how many hours per month a client needs run the risk of working extra, unpaid hours.
• You may be underpaid if you haven’t calculated your costs, overhead, and project requirements correctly.

Creative / Project Based

Creative or Project Based rates are offered when a client has a one-time project to complete, and you will charge them a flat rate fee for the project. This type of pricing is typically used for large-scale creative projects, like web design, graphic design, course creation, or ghostwriting.

Creative projects often also begin with collecting half of the funds up-front and the other half after the project has been completed.

Pros:

• 50% payment up front means you can begin working on your project with peace of mind.

Cons:

• If your client tries to add on extras to the project, you may have to renegotiate, which can get uncomfortable - fast.
• If you’re not careful about clearly identifying the scope up-front, you will get to a point where your client expects you to keep working on it until they feel that it’s “done." Good luck if you both have different opinions about what "done" really means...

Custom

None of these fit your business? The beauty of being an independent contractor is that you can pick and choose elements from the previous examples that work best for you. The world is your oyster!

Wrapping Up

Know your worth. Once you've set your rates, be confident, and don't let people pay you less than you're worth.

It's up to you to know what clients you want to work with and who will value your expertise. Sometimes saying no to bad offer in the moment will allow you to say yes to better offers in the future.

The old tale about Henry Ford wraps it up best:

"I once read a story about a time Henry Ford hired a mechanic to fix one of his machines. The mechanic came in, replaced one of the nuts that had come free, and gave an invoice for $100. When Henry Ford got the bill he was furious, 'How can one nut cost $100?' So the mechanic submitted a new invoice listing $1.00 for the nut and $99 for 'knowing where to put it'. Henry Ford paid the bill, or so the story goes."

There will always be people that will try to convince you to work at a discounted rate or for free “for exposure.” Don’t get offended. Be professional, politely decline, and keep on hustling.