The business owners guide to determining what to charge
Factor in your cost of living: Use the 50/30/20 model to set this up. Consider the amount of money you need to cover your essential spending such as rent, food, utilities, Clothing, transportation, and Health insurance, daycare, etc. Your essential spending should be no more than 50% of your after-tax spending. The next 30% should be your expendable income. Here is the money you use for eating out, Netflix, entertainment, etc. Next you should save at least 20% of your income for annual vacation, Down payment on your next home purchase, Rainy day fund, or retirement.
Next: add up your business-related expenses for the last 2+ years. Divide the total by the number of years you included to get an idea of your overhead costs. These expenses include:
Bank fees & service charges
Software and subscription services
Wages and Payroll charges
Equipment and supplies
Workman’s Compensation Insurance
Legal and accounting fees
Merchant account fees
Shipping & postage
Add the total of these business-related charges to what you need to earn to cover your personal taxes and living expenses. Now divide the gross by the number of hours you work in the year. If you expect to work 8 hours a day, 5 days a week, 52 weeks a year, then you will divide your gross income by 2080 which is the number of hours you expect to work for the year.
Now you have the price you need to charge per hour for your services.