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VA Directory

VA Directory - Connecting clients with Virtual Assistants

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Is $5 an hour too cheap for a VA?

I answer a lot of questions at Quora – are you familiar with this site? Today I was asked if $5 an hour too cheap for a VA. My answer was this:

Depends on a number of things:

  • Where you live and your cost of living
  • The currency you’re working with
  • The type of services you’re providing
  • Your background experience and skill-set
  • How many hours a week you want to work
  • How much you want to earn on a weekly/monthly/annual basis

budget, money, incomeHave you actually done a budget forecast for the year to ensure that you are charging sufficient per hour? For example, if you want to earn just $10,000USD per annum and plan to work a minimum of 30 hours a week for 52 weeks a year, then that would be close to sufficient. However, if you want to earn double, triple or more than that, you need to seriously consider how many hours a week you want to work, and how many weeks per year. Do you want to allow for holiday time? What about sick leave? Will you need to be covering insurances and equipment purchases? What about software purchases or monthly payments? When you add these into the equation, $5 per hour probably doesn’t cut it.

In fact, on reflection, it would be closer to 40 hours a week and would not allow for time for this VA to do their own admin or marketing based on the above unless eating into hours outside of normal working time.There’s more to running a business than just servicing clients and invoicing them for your time. You need to factor in business expenses and your own time for running the business as well.

So important you work out your base annual income and work backwards to ensure you are charging sufficient to cover your expenses and to be able to live.

How much should I charge?

Regularly on the VA forums, and sometimes via direct email, I see this question from new VAs.  They have worked out what services they are going to provide, have begun seeking ways to network and find new clients but then when they get asked ‘how much?’ they get stuck.

That’s ok, we’ve all been there in some form or another.

What did I do when I was treading this same path 15 years ago?  I looked at what I was earning the previous year in a corporate job.

I knew that if I was going to make this business work and not have to go back to a ‘job’ then my goal would have to be to earn a similar income.  I was aware that I would have more taxable expenses and because I was now working at home I’d have less travel expenses and wouldn’t have to keep buying new clothes or even lunch.  So I could probably get away with earning a bit less per week and still be ok.

I created a budget for the type of income I would need weekly and used that as a guide for what I could not go below.  Then I created a spreadsheet and looked at what my projected annual income would be.  From there I counted up the amount of public holidays and leave days I was entitled to.  I deducted this from the number of working days in a year and then broke that down to the number of working hours.  I then divided this figure into the annual income to come out with a base charge rate for my business and rounded up to the nearest dollar, or more likely the nearest $5 or $10.  Periodically I review this and increase it as my expenses increase.

This is just a very simplified way of doing it. I have a formula in my book “How To Become a Virtual Assistant” that is more detailed in Section 4 on “How Do I Charge and Where Are the Clients?”

After going through that formula and setting your rates, it’s probably a good idea to do a bit of market research in your area to find out what the ‘going rate’ is for similar services nearby. It’s important that you don’t set rates that are too low as this can cause damage to your business and the industry.  Make sure you read my article about this from a couple of weeks ago.

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