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How does this effect our hourly rate, let's see. Last article we left off at $56 per hour. This represented a yearly salary of $42,000 plus annual business expenses of $15,000. If we take $15,600 in benefit costs and divide by our billable hours of 1100 per year, we get approximately $14 per hour. This brings our total hourly rate to $70 per hour.
Now, we need to factor in our profit sharing percentage. Once again, I choose 10% as a representative number. Your targeted profit could be higher or lower. If you take your $70 per hour rate, multiply by 10%, you end up with $7 per hour. Your total hourly rate comes to $77 per hour.
This is amount you need to charge to cover all we discussed so far.
Compare this to approximately $20 per hour you would need to get paid by an employer to earn our hypothetical $42,000 per year. And yes, I know today many employers require a co-payment on their benefits package. I stated it this way for simplicity sake.
So, you need to charge almost 4 times what you would earn in salary to end up at same place. Don't be discouraged, there are many people out there that are charging a lot more than this and getting all business they can handle. Remember, these numbers are hypothetical, your situation may be much different.
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