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Before you can pick a pricing method, you need to understand what goes into a price. A good price should reflect your costs, skill level and desired profit. Let’s go over how we can calculate such a price.
Notes
Formula for calculating your hourly rate:
- Calculate your direct and indirect expenses
Annual expenses = Sum of:
- Rent
- Utilities
- Insurance
- Employee salaries and benefits
- Advertising and promotion
- Outside professional services
- Equipment
- Office supplies
- Business taxes
- Client services
and any other expenses
- Calculate number of working hours
Working hours = (Number of working days a year - holidays - vacation time) * Number of hours worked per day
- Calculate hourly rate:
Hourly rate = (Annual Expenses + Profit Margin) / Number of working hours
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