This exercise will help you figure out what to charge per hour (which can be used to calculate the cost for larger projects), how many projects you need each month, how many new clients you need each month, and how many sales calls you need to book in order to get that many clients.
Whether you’re just starting out as a freelancer or solopreneur, or you’re an established service provider who wants to revisit your pricing structure, this worksheet is for you!
A note about being reasonable
Before we dive into the exercise, I want to take a moment to clarify expectations. I’d love for you to throw reason out the window and dream big for this exercise. So, please, by all means put a number in your annual goal that makes you uncomfortable.
However, if you are just starting out or you’re calculating this rate for a part-time side hustle, and your current monthly revenue is, let’s say $1k, an annual goal of $1M is probably a little unrealistic. Not impossible, but certainly improbable. And I want you to set a goal that you feel like you can actually achieve. So keep that in mind and do push yourself out of your comfort zone, but not into a faraway galaxy, ‘kay?
With that being said, I think you’ll find that simply doing this quick math will show you that you can make more than you ever thought you could!
Also, if you’re thinking to yourself, “Why are you making me do math by hand when there are spreadsheets that will do it for me?!” then you should take comfort in knowing that I did consider this. And I do have a spreadsheet that does just this. But, because I have so much love for you and your soon-to-be-booming heart-centered business, I want you to have the a-ha! moment that only comes from figuring it out for yourself!
Download and print the worksheet to get started.
STEP 1: How much money do you really want to make per year?
In the first blank, go ahead and write in the amount of money you want to take home each year (after taxes and business expenses).
Now, we are going to multiple that by 2 to cover taxes, insurance premiums, rent, software subscriptions, contractors, etc.
Let’s take the number and divide it by 12 to get the amount of money you need to bring in each month.
STEP 2: How many billable hours will you be working?
Billable hours are hours that you can charge to a client. These do not include the hours that you will need to run your business (posting on social media, responding to emails, prospecting, etc.). So if you want to work 8 hours a day in total, you may consider a billable hour total somewhere in the 4-6 range, depending on the nature of your work.
In the first blank in Step 2, write the amount of billable hours you’d like to work per day. Note that this is per day that you are actually working… we’ll get to how many days a week you want to work next!
In the second blank, write down how many hours it takes you, on average, to finish a project or complete a program.
What the hell does she mean by that?
Let’s say that you typically have 90-minute sessions with clients and it’s most beneficial for the client to have 6 sessions in order to reach a goal, so you sell coaching sessions in 6-packs. In this case, it takes you about 9 hours to complete this package.
Note: If you strictly book 60-minute sessions with clients and you don’t sell them in packages or require a minimum commitment, your number will be 1 hour. In this case, anytime you see the word packages or programs, you can replace that with clients.
If you have different packages or service offerings, average them together to get this number. For example, you might have a larger program that is 90 days long and will take many more hours. Take your time here to get the number as close to accurate as possible. It’s important for the final calculation!
STEP 3: How much do you want to work?
How many days per week do you want to work?
Are you off on Fridays in this scenario? Then put 4 in the first blank. If you’re doing Monday through Friday, you’re putting 5 here.
Place that number in the first blank and multiply by 4 to get a rough number of work days per month.
Then take that number, copy it into the first blank on the second row and multiply by 12 to get work days per year.
Now, we have got to account for some vacation time. How much vacation will you take? Include anticipated sick time as well. Make sure to calculate this number based on the number of work days you will be taking off. For example, if you want to take 3 weeks, and you work 5 days a week, this number will be 15. If you want to take 2 weeks and you work 4 days a week, this number will be 8. No need to include the weekends or any other days that you don’t typically work.
Okay, so copy your work days per year down to the next blank, subtract your vacation days per year and you get your actual work days per year.
Transfer that number down to the next blank, and divide by 12 and get your actual work days per month.
I know this seems a little backwards, but stick with me!
STEP 4: How many projects/ programs will you need to have each month?
We will use numbers we’ve already calculated to put into the first 2 blanks: copy your actual work days per month from Step 3 and your billable hours per day from Step 2. Multiply to get your billable hours per month.
Next, copy that number down to the next blank, and divide by your average hours to finish a project/program from Step 2. You get the number of projects or programs you will need to complete each month. For some service based businesses, like web designers, this will be more of an indicator of how many projects you have running concurrently each month.
STEP 5: How much money do you need to charge per project/ program?
Hop back up to Step 1 and grab the money that you need per month, copy it into the first blank. Subtract from that the number of projects/programs per month that you calculated in Step 4. This gives you the price per project/program!
If this number looks completely wrong, revisit the steps and make sure you did your calculations correctly!
STEP 6: How many calls do you need to book in a week?
In order for you to get those projects/programs for the month in the queue from paying clients, we’re going to have to also endure some “no’s” from prospective clients. And that’s OKAY. That’s just the nature of business. But assuming you’ve done a good job targeting the right people to get on these initial sales calls, you are probably going to close at least 50% of them.
So, let’s take the projects/programs per month number that we calculated in Step 4 and drop it into the first blank. Divide it by 4 to get projects per week.
Copy that number down to the next blank and multiply it by 2 to get the number of sales calls you need to book per week.
How doable is that?! I hope you feel encouraged and empowered by this exercise.
Still wondering how to package your services into an offer with a premium price? Check out Post #2 in our current series: Clean Up or Create Your High-Ticket Package / Offer for Your Heart-Centered Service Business.