From the course: Consulting Professional Weekly Tips

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How to set pricing for hourly work

How to set pricing for hourly work

From the course: Consulting Professional Weekly Tips

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How to set pricing for hourly work

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- As a consultant, one of the most critical decisions you have to make is setting your rate. It may feel awkward because the number might seem really high. But remember, you have to cover a lot of costs that were previously covered by your company when you were employed. To set your rate for hourly work, take your annual total cash compensation, which is your base salary plus your bonus. Divide that number by 250 days. Divide that number by eight hours and then, here's the important part, multiply that number by three. That will give you your hourly rate. Let's say you made $150,000 as a base salary, and you got a bonus of $17,000 a year. Your total cash compensation is $167,000. Divide that number by 250. That comes to $668 as a daily rate. Divide that number by eight. That's $83.50 an hour. Now multiply that number by three. That gives you $250 dollars. That's your hourly rate. That hourly rate accounts for time you won't be billing clients. That includes vacation time, sales time…

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