videobear
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Aug 22, 2004, 10:17 PM
Post #2 of 2
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Re: [rocco] How much do I charge?
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Higher.
When running a business, you need to think like a business.
How many hours will you spend on the job? Figure that at your $25/hr.
How much is personal insurance, continuing education, medical, and retirement? That's your overhead, and is added as a percentage of your hours. Many businesses run with 50 to 100% or more in overhead.
How much do you have invested in your equipment? How much does it cost to maintain and replace it? Don't forget software upgrades. How much time and money do you spend advertising, marketing, doing bookkeeping and mailing? How much do you spend on rent (or what's the equivalent worth of your home office space? What's your postage, business insurance, business phone bills, business cards and flyers, and website cost? All of those fixed expenses, that can't be allocated against any particular project, are your General and Administrative costs, and have to be shared by all projects. For many businesses, G&A is added as a percentage, say 15-25% of the hourly charges, on top of "burdened" hours (labor hours plus overhead).
What's your profit? This is different from your hourly wage. It's the money your business must make to provide a return on investment, retire debt, and expand the business. A typical profit figure might be 10 to 20 per cent.
So, let's see:
20 hours at $25/hr = $500
overhead, 50% 250
Burdened hrs 750
G&A 20% 150
Total Direct Cost 900
Profit 10% 90
Job bid at 990
You might not show it like that to your client, instead preferring to just show an hourly rate and an estimated number of hours. But make sure that "hourly rate" accounts for all your costs and your business's profit.
Regards,
Doug Graham
Panda Productions
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