How To Realistically Set Your Fees - Part 3Written by Chuck & Sue DeFiore
Effect of Benefits
We have previously examined realistic billable hours and effect of business expenses on your hourly rate. Now we'll look at effect of benefits.
Once upon at time, when we were employed, we received a benefits package from our employer. This usually included health, life and disability insurance. Many firms also had available pension programs, profit sharing, dental and vision coverage. In addition, one-half of your social security was paid by your employer.
As self-employed individuals, we have to provide these benefits for ourselves. This means an additional boast to hourly rate we've calculated so far. For sake of argument, let's figure a standard benefits package consisting of health, life, disability, pension and profit sharing. Let's figure health insurance costs at $300 per month; life at $50 per month; disability at $150 per month; pension (a SEP-IRA) at $500 per month and about 10% for a profit margin.
If we total these up we get a yearly figure of $12,000. Now keep in mind, that most of these will be paid for in after tax dollars. So, we need to add approximately an additional 30% to this number, for a true total of about $15,600 per year. The 30% represents amount of taxes you need to pay to end up with net amount of money needed to pay for your benefits package. Keep in mind that I chose 30% as a completely arbitrary number. Your own tax situation may be higher or lower.
Networking 2Written by Chuck and Sue DeFiore
Another way to network is by using an 800 number and establishing a network of experts to refer your clients/customers to. An 800 number provides a way for your customers to reach you. You can answer information needs, resolve problems and obtain information from your customers. You will of course need to publicize your 800 number in your promotional materials, and advertisements. The best way to get most out of your 800 number is to have a definitive plan on how you will employ it. Will you have prospects call to find out more about your products/services? Will you provide information when they call and then follow-up with printed materials, or will you direct them to a source?
After you have decided what you want 800 number to do, put yourself in your customer's place, and be sure you are meeting all their needs. Ask yourself, if you knew nothing about what you were selling, would information your 800 number is providing give you all that you need to make an informed decision.
An 800 number allows you to network on a broad level to areas and customers you might not have reached with just a long distance number. Many individuals will not make a long distance call, but will call an 800 number. If your business allows, have a network of experts to refer your customers to, or if you are selling products, additional sources for your products.