Mary Ellen’s Amazing Hourly-Rate Calculator

My coaching clients often ask me for advice and help with setting an hourly rate. While I encourage them to use per-project rather than hourly pricing when talking about budgets with their clients, it’s helpful to have some hourly rate in mind on which to base that project price.

Here is my calculator, in all its math-nerd glory. And remember, this is your minimum hourly rate; your actual rate will be increased based on the value that you provide and the difference you make to your client.

Download Mary Ellen’s Amazing Hourly-Rate Calculator(XLS) or (PDF)

Here’s what it looks like:

Minimum Hourly Rate Calculator

Non-reimbursable expenses & overhead NOTES
Association membership $ Association membership: AIIP and your clients’ key association
Conferences $ Conferences: cost to attend two professional conferences – AIIP and your clients’ key event (registration, travel, hotel, meals)
Insurance $ Insurance: health, general liability, disability
Magazine subs, books $ Magazine subscriptions, books: 1 business paper and your clients’ key sources
Office equipment $ Office equipment: assume new laptop every 3-4 years, plus ~$500/year for software
Office supplies/expenses $ Office supplies/expenses: telephone, ISP, web hosting, email list hosting, premium social media accounts, etc.
Online subscriptions $ Online subscriptions: annual fees, any non-transactional expenses you can’t bill back
Professional fees $ Professional fees: CPA, bookkeeper, attorney, coaching, etc.
Rent $ Rent: Can base it on % of floor space if you work from home
Retirement fund contributions $ Retirement fund contributions
Salary $ Salary: what you want to pay yourself
Profit $ Profit: 10% of your salary (this is what funds growth and risk-taking!)
Taxes $ Taxes: set aside at least 35% of anticipated salary
Other expenses $ Other expenses specific to your situation
Total expenses, salary, overhead $
# of hours/week you work
# of billable hours/year (half your working hours/week multiplied by 45 weeks)
Total expenses / # of billable hours/year $ Your MINIMUM hourly rate, before value-pricing



Why nerdy passion matters

I’m often asked by people who are just starting their business whether they need to specialize and how they can differentiate themselves. I recently had a great opportunity to see from the buyer’s point of view what really matters when buying a professional service.

I am in the process of developing a fabulous course to help reluctant entrepreneurs figure out how to best price their services and I realized that I need a customized PowerPoint template. There are tons of graphic designers out there – how was I going to choose someone who could capture my essence, create something I will like, and be fun to work with? I went to the discussion list of a local group of women writers, knowing that they have similar needs for high quality, professional service and reasonable cost.

After looking at the portfolios of a number of designers, I had narrowed my choice down to a couple of people who sounded good, so I had short conversations with both of them. One of the designers sounded fine; she listened to my description of what I was looking for, she tossed a few ideas my way, and said she would send me a proposal. Ho hum. The other designer got my business, though. Why? In a word, passion.

As we were chatting about the font I was currently using for my template, the second designer commented that she had seen that font around town. “Whole Foods used it in one of their in-store banners, and you know that coffee shop at Main Street and Walnut? They have that font on their storefront. I like how it conveys a mix of informality and excitement.” I was entranced; I had found someone who loves her job so much that she can’t help herself from noticing graphic design as she makes her way in the world. This is someone who isn’t just doing graphic design because it’s a way to make a living; she is doing this because she can’t help herself. She is, among other things, a font nerd.

I want to hire people who are passionate about what they do… whatever it is that they do. My chimney sweep loves what he does and we often wind up chatting about stoves and firewood after he finishes his annual cleaning. My therapist is one of those people whom even the grocery clerks confide in. My housekeeper reorganizes my linen closet just because tidy linen closets make the world a slightly better place.

The professionals I hire all get nerdy about what they do, and they love their work. They are solopreneurs who all have strong client bases and lots of word-of-mouth referrals. They may not be the only person in their field, but they are the ones who get real satisfaction from their work, who care about their clients, and who bring inspiration to their job.

When prospective clients call you, do they come away with a sense that you are a passionate nerd about what you do, too? How effectively do you convey the joy you bring to every client’s project? How else can you show that you are in business because you love what you do?

Why Facebook Matters

I often give presentations and workshops on using social media for both research and marketing, and I am still surprised by how many people look at Facebook with mild disdain. “I have better things to do than post selfies and videos of my dog,” they sniff. “And how could I possibly find value from other people’s selfies and dog videos?”

I’ve got two answers to these concerns. First, you can treat your Facebook account just like any other social network profile. Assume that everyone can view your updates, and keep them at least “business-casual” — vacation photos are OK as long as you’re fully clothed and not holding a drink with a little paper umbrella in it. I use  my Facebook page as a way to show a less formal version of myself than what people would find on LinkedIn or on my web site. A less-appreciated benefit of being on Facebook and interacting with colleagues, friends and family is that I have a better sense of how to search Facebook and what groups to mine for answers and insight.

My second response to the Facebook skeptics is to look at the latest statistics from comScore on smartphone usage. According to comScore’s March 4th press release, 75% of the mobile phones in the US are smartphones. And what are people doing on those 184,000,000 phones? The top app, used by over two-thirds of users, is Facebook.

comScore Reports January 2015 U.S. Smartphone Subscriber Market Share

If that many people are checking Facebook, then I want to make sure that I’m in front of them on Facebook. It isn’t my only online presence, of course, but it’s one where I know a lot of my potential clients are hanging out.

Closing the Sale

8-ballOne of the biggest challenges for entrepreneurs is getting the client to say “I do.”  Many of us don’t like being turned down, so we wind up not asking a question that runs the risk of eliciting a negative answer. However, you could be the world’s best marketer, a world-class leader at what you do, and skilled at eliciting your clients’ underlying needs, but if you can’t get the client to sign on the dotted line and approve your proposal, you aren’t going to get paid for all those wonderful skills.

The challenge comes when you have sent in your proposal or project estimate and then you sit and wait… and wait… and wait. No word from the client. So you finally pick up the phone and call the client and pray that he doesn’t answer the phone. But, if your luck runs out and you actually can chat with the client, how do you handle his objections to your proposal?

Following are a few of the most common objections I have heard, and a suggested response. Try these out for yourself and see how you can tweak them for your own clients.

It’s too expensive; we couldn’t afford more than a third of this budget.

Your response: “What if we break this down into phases and tackle it bit by bit? I can focus on this one aspect of the job for $1,000, and then we can evaluate the best way to proceed once you have a chance to review.”


“Sure, so is your budget approximately $XXXX? What aspect of the proposal has the highest priority for you? Let me work up a new proposal that just addresses this aspect of the project.”

(Keep in mind that this kind of response also indicates that you weren’t able to have a conversation about budget during your initial conversation. Next time, screw up the courage and ask your client “So, what’s a rough estimate of what you’re budgeting for this?” If your client is ready to buy, she already has some idea of what she’s going to spend. If she has utterly no idea, she’s probably not ready to buy yet.)

This really isn’t what I had in mind.

Your response: “Ah, I must have focused too much on one aspect of what we discussed. Would you like me to expand the proposal to include the entire market, or would you like me to refocus on another angle? Tell me more about what is most important for you.”

“It sounds like you’re going to outsource some of the work. Heck, I can find an intern who can help me.”

Your response: “My goal is to be a one-stop shop for my clients, and to provide them with the best results from the best people. I have the expertise and skills to do much of the work myself, and I bring in other experts who have specialized skills. The person who will be working on this is one of the best in the profession, and together we can provide you with a much better result.”

I need to get my boss / co-worker / CEO to approve this.

Your response: “Sure! I would be happy to reword the proposal; what are the biggest concerns of your boss/co-worker/CEO? I would like to make it clear in the proposal how this will help him accomplish his goals. What other information would help him approve this proposal?”

What’s common among these responses is your commitment to finding a way to address – not argue with – your client’s concerns and shift the conversation back to the value that you bring to each engagement. You acknowledge your client’s concerns, ask for clarification and to understand your client’s reasoning, and then find a way to adjust your proposal to better address your client’s needs.

Attracting, Not Chasing After, Clients

Attract the WorldI was thinking recently about what kinds of marketing really work for entrepreneurs who own professional-service businesses. Even when we deliver something tangible – a new web site, or a consulting report – we are still selling our expertise and insight. And we generally are not cheap; most one-person businesses charge $100 or more an hour, so our clients usually aren’t impulse shoppers. (Although I do have an image in my head of buying a half hour of time on the QVC network, in between “Beauty By Tova” and Diamonique jewelry, where I can encourage people to buy my consulting services now and SAVE!)

Recently, I was talking with a coaching client who had just started his business providing research services. He told me that he was calling companies that were advertising for researcher positions, telling them that he was available to do this work as a freelancer. The problem with this approach is that he was spending his time doing one-on-one calls to people who were looking for an employee, not a freelancer. They probably do not have the authority to hire consultants, and the hiring manager is focused on filling a position, not bringing in a freelancer. As he found out, most of his marketing time was spent identifying who was NOT interested in his services.

The goal of marketing is to get people to come to you rather than for you to go looking for prospects. This is why cold calling virtually never works for professional services; people generally aren’t willing to invest in services by someone they don’t know anything about or have any reason to trust.

Likewise, direct mail to people who don’t already recognize your name and know your reputation for excellence doesn’t work − at least not as a primary means of getting clients. Think about it… If you needed a doctor to treat your child’s epilepsy, would you go to someone who had just sent you a postcard or brochure?

No, you would rely on recommendations from your physician; you would conduct research to find the experts in the field; or you would consult with a patient advocacy group. In other words, you − the client − would look for the best person with the expertise you need.

Rather than casting our marketing material onto the waters, we are much more successful when we work on establishing our credibility within our clients’ environment. I’ve been watching this approach work well with one of the people I’m coaching. Marketing professionals are his client base, so he identified his local chapter of the American Marketing Association to focus on. Not only has he been attending the monthly meetings, but he volunteered to serve on the membership committee and is now the membership director. He has the opportunity to contact all new members, to work closely with the chapter board, and to establish his credibility within his market.

Had he put in the same amount of time (and spent considerable money) developing and sending out direct mail pieces or making cold calls, he would not have had the success he has seen so far, nor would he have built a referral network of well-regarded marketing professionals who know his work and respect him. Telling anonymous prospects about your skills and expertise is one thing; demonstrating it to people who will become clients and referral sources is in another league altogether.

Steps for Starting Your Business

I just read a nice summary of what it takes to start a service-based business, over at The $100 MBA. Omar Zenhom’s Ultimate Guide to Starting a Service Based Business walks you through the mental shifts you need to make in order to turn yourself into a successful business. (Yeah, he thinks of them as action steps, but each step requires an attitude, a mind-set, as much as an understanding of what needs to be done.)

This post covers issues like knowing where your value lies and believing that you offer value, re-thinking your web site, setting rates (gulp), and dealing effectively with clients.