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Better Business: Setting your charge rates

It is important to set an hourly charging rate or project fee that adequately reflects the costs involved and the value of your expertise

Question: There are times when I need to charge an hourly rate or project fee as opposed to pre-determined percentage or activity-based charges. How should I go about this?

Answer: There is a lot of work involved in answering this but there is one action that really helps start the analysis and justifies your charge.

For specific projects (such as developing a client plan or complex tax analysis), prepare a simple spreadsheet that includes: 

  • Each single item of work – make sure nothing is missed
  • Which job role and person will undertake it
  • How long it will take
  • The hourly charge-out rates
  • Running total

It is important to take this as a starting point because it only provides a charge based on hourly rates. 

For many projects this is exactly what you need, but what about work that can be undertaken quickly or is specialist and requires somebody with a lot of expertise and training?

It is very important not to sell your expertise too cheaply so you have to make a judgement on the ‘expertise premium’. You could link this to tax savings or the qualifications of the lead person undertaking the work.

Finally, make sure your approach is consistent so that you can demonstrate a fair approach to charging.

David Shelton is the author of “The Business of Advice” book and website www.businessofadvice.co.uk

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