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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.

Who sets the rate?

Many ‘trades’ set their own rates, although some might be guided by industry requirements and expectations. Solicitors, bookkeepers, accountants, business coaches, plumbers, painters, mechanics, and so the list goes on.

So, why then, do many of the public feel they can tell Virtual Assistants how much they should be charging?  I’ve heard many VAs talk about this – they get contacted by a potential client who wants a lot of stuff done, often things that require someone with a great deal of experience but in the next breath, they tell the VA they will only pay (or ‘can’ only play) $xx per hour. What right do they have to tell the VA how much the VA should be accepting? VAs are not employees, they’re business owner/operators – just like all these other services and just like the majority of potential clients, who are usually business owners too.

Maybe they mean well, or think they’re being generous, or helpful, but it is really important to understand that service providers, business owners, independent contractors set their own rates. No-one else. And in the VA Industry, there is no governing or legislative body (as there may be with some industries in different countries). Generally VAs are encouraged to work out rates that are right for them, according to their cost of living, currency and where they live. Like all other business owners, they have taxes, insurances, equipment and other overheads to cover. And many VAs continue with professional development, taking courses to improve their skills and knowledge, as well as their service offerings.

As a business owner, would you like it if someone outlined what they wanted you to do and then told you they can only pay $10 an hour, or maybe even $5 an hour? What about $15 an hour? For some business owners, depending on what they do, that might be a good rate in their country, but for most in western countries, it won’t be.

If you’re a prospective client of a VA, it would be better for you to outline what you need to have done and tell the VA what your budget is for the week or month. That way the VA can tell you what they can get done for what you can afford. The reality may well be (and this is often the case), the VA can get things done a lot more quickly than you can, because they’re experienced in those things, and consequently, what might take you 4-5 hours to do, may take the VA only a couple of hours. In which case, money well spent and you have gained those 4-5 hours to concentrate on earning more income from your own business.

Let the service provider set their own rates – and let them get on with the business of supporting you, without feeling like you’re trying to screw them down. No-one wins in that scenario.

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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