As a freelance makeup artist, stylist or really any kind of self employment you don’t want to get your hourly rate out of the thin air. I am a beauty and image stylist. I work with private clients and businesses. This means that I often have scenarios where I have to bill clients hourly. Here’s a breakdown that may help make more sense of how to do this for your business and hopefully arm you with more information to complete your goal setting and business projections. Grab a pen and paper and work along with me.
1. Figure out what you want to make per year. For this exercise we will use my own desired income of $250,000 per year.
If you don’t know, ask yourself how much money do you feel you need to allow you to live the lifestyle you want.
2. Calculate all of the costs of running your business for the year such as office space or the percentage of your home dedicated to work use, business cards, websites, internet, cellphone, etc.. ( I will have a downloadable worksheet coming soon ).
For me the total is $15,000 per year
3. Add to that number your self employment tax based on the at income of and healthcare expenses will be for $250,000 Self Employment Tax-($22,466) plus Healthcare for myself and a family of 5. ($12,000)
My Total is $15,000 for expenses + $22,466 in taxes + about 8% cost of living adjustment ($2,997 ) would give me a total of $40,443
4. Add your original salary amount to these overhead expenses.
In my example my Total Costs are $ 40,443 + 250,000 which is what I want to make
Total I actually need to earn is: $290,443
5. Next, Decide how much vacation time, sick time and days off you’d like per year.
For me I’d like 3 weeks off which is 21 days. 10 Sick Days and 10 Holidays SO 41 days off per year. That’s 328 Hours OFF
6. Take that and now you subtract that from workable hours per year of 2080 or 40 hours a week for 52 weeks.
This leaves we with 1,752 hours.
7. You will then need to subtract 25% of that time because you use hours to get yourself ready to take clients.
438 hours will be used preparing for, driving to, blogging etc in order to secure the workable hours.
8. Take the remaining hours and divide that into the adjusted salary and you will have your hourly rate.
1314 billable hours remain for me, so my hourly rate should be $221 per hour. Of course, tangibles and downloadable help add to this if I fall short of active billable hours in a month etc.
So did this help you? What is your hourly rate? Is it far off from what you thought?
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