How to set your freelance rates

How to set your rates

One of the hardest things to decide when you become a Virtual Assistant is how to set your rates. If you charge by the hour then you’ll never earn more than there are hours in the day which is why it’s better to get a client on a retainer or charge a project rate. “But how does that work and how do I do that?!” I hear you cry. Well let’s look at those options in more detail:

Charging by the hour

If you charge by the hour then you can only earn 8x your hourly rate. Plus not every hour you work is billable – you have your own admin to sort out, documents to familiarise yourself with, phone calls to take and make, and systems and docs to set up.

It all adds up.

The other downside to charging by the hour is that you’ll become quicker and better as you go along so you’ll actually end up being paid less the better you get.

And you don’t want that.

Remember the extras:

Don’t think that a high hourly rate means you’re making more than you did working in a full-time job. When you worked for a company you also received:

  • Holiday pay
  • Sick pay
  • Maternity leave
  • National Insurance and tax was sorted for you
  • Petrol and mileage
  • All your equipment including desk, stationery, phone storage space etc
  • Utilities including broadband, phone lines, water, heating, electricity and rent
  • Free coffee and tea
  • Training and network meetings
  • Guaranteed hours
  • Security

And now you won’t

So when you’re working out how much to charge remember that you’ll be at home using water, heating, broadband, your phone and electricity. You’ll also be buying all your own stationery and paying for all the extras yourself. Yes, you can put a lot of it on your expenses, but it still adds up.

Here are the different ways you can charge:

How much to charge?

In the UK the average rate for a VA is around £25+ an hour and between $30 and $60 an hour in the States dependant on niche and experience.

I personally charge £30 an hour (I specialise in social media and other techie services) but clients are usually given project rates due to the nature of their tasks.. So I quote £x for setting up a 10-email newsletter sequence in MailChimp or Aweber but the quote will vary dependant on the task because no two tasks/projects are exactly the same.

Remember that you will need to add a minimum of 25% to your rates to cover your taxes and other expenses. So if you were thinking about charging £20 an hour then multiply £20 by 1.25 and quote around £25 an hour.

So do not go below £25 an hour in the UK and $30 an hour in the States.

Why £25 an hour?

Below is a post written by one of the members of my VA Handbookers Facebook group on how she worked out her hourly rate. It’s a really popular post and one we refer back to time and time again.

“I’ve seen a lot of posts recently about people considering offering a discount, lower rate, free trials etc so I did a little exercise to work out how much it really costs for me to be a VA. This is quite a long thread but hopefully worth it if you’re doubting whether to charge £25 an hour.

Start with the basics per hour:

  • Minimum UK wage = £7.50 (wait I come back to this**)
  • Business insurance = 3p (due to the type of work I do I took out personal indemnity insurance)
  • National insurance = 15p (self employed contributions)
  • Tax = £1.50 (20% of minimum wage)
  • House insurance = 22p
  • Electricity and gas = 20p
  • Water = 1p
  • Internet = 3p
  • Phone = 2p

Total = £9.66 per hour

** I’d like to be earning more than minimum wage so £12 an hour seems fair and if I got a new job I’d be looking for a pay increase plus I have 14 years experience. (£12 – £7.50 = £4.50 more)

New hourly rate = £14.16

Ah shucks I forgot to add admin website costs and training and there’s bound to be other things I’ve not included so lets say £15.

New hourly rate = £15

But hang on I don’t want to work 35 hours a week anymore. Okay 5 hours a day seems fair enough. Hmmmm… £12 per hour x 35 hours = £420. Divide that by 25 hours = £16.80. That’s £4.80 more than I worked out my hourly wage to be so lets round it up to £5.

Ok new hourly rate = £20

Great but wait I need to make a profit as it’s a business after all. So what’s a healthy profit margin? Google says 25%, so £20 divided by 4 = £5

Well what do you know, £25 per hour is a good rate!

Final hourly rate = £25

I used some science and some estimates but it’s roughly about right. But importantly, no longer will I be justifying my hourly charge in my head!”

Charging by the project

Psychologically, this works better on many levels because you can charge more and still keep the client happy because you’re providing value.

Clients always think tasks take you less time to complete than they actually do, so if you give them a total price for the entire project (incorporating time spent on the task plus all the extras like email and phone correspondence etc) then they know how much it will cost them and you know how much you’re getting paid.

They aren’t quibbling over your timeframe as only you know how long the project will take you. Remember that you’ll be faster and better the longer you’re a VA so tasks won’t take you as long to complete and you’ll earn more money for working less hours.

Which is the business model all freelancers strive to achieve!

It’s worth noting that project rates are always depended on the task. So I would quote my hourly rate on my website but then say retainers and project rates were available upon discussion. This way the client had a rough ballpark figure of my prices but we could have a chat and come to an agreement if they wanted a project price.

How to know how long a project will take

If it’s a task you’ve done many times before then you should know how long it’ll take you. If you don’t then you might have to give a rough estimate then allow for a contingency budget depending on the scope. Have this as a clause in your T&Cs though and make sure this is clear from the start.

The key is to make sure you have a full understanding of the scope of the project. Send the client an email summarising the task as you see it (“I understand the task to be X,Y,Z etc”) then quote accordingly. Make sure you BOTH agree on what the task is and what you’re billing them for.

You will occasionally get it wrong and end up undercharging but then you know for next time and you most certainly will never make that mistake again!

Charging by the project is how you make the most money.

Charging a retainer

A retainer is a great option when you have a client who needs bitty things done. Some clients need tasks done here and there and, if you charge by the hour, it often won’t add up to much.

The great thing about retainers is that the client knows what they get for their money and what their invoice will be, and you know how much money you’ll be getting each month whether they use up their allotted hours or not.

Plus retainers are usually charged in advance for the month ahead not the month just gone.

So, if you charge the client £100 for four hours work at £25 per hour, they know they can use the four hours over the month and you know you’re definitely getting £100.

Some VAs offer a discount if the client books a certain amount of hours but this isn’t that common in other freelance industries. This is because the client is paying to retain your time  – so bill them for the hours they’ve agreed whether they use them all or not.

Because the client is paying to guarantee your availability, feeling guilty that you’re invoicing them for hours they didn’t use is futile because it’s how retainers work- it’s the whole point of them!

Think of a retainer like a gym membership

If you only go to the gym twice in one month (or not at all) the gym is not going to offer to roll your subscription over because you didn’t use the facilities you are paying for!

Nor would Netflix offer to roll over your payment if you decided not to watch any shows that month.

How to suggest a retainer

Your goal is to get a client on a retainer but only give them this option once you’ve been working together for a while and have proved your worth to them. Neither of you know if you like working together yet – you don’t want to get saddled with a bad client and they don’t even know if you’re good at your job yet.

A client will rarely sign up to a retainer before they’ve spent some time working with you.

The main thing about selling anything to anyone is that you always have to outline what’s in it for them and not you. So you could say something like:

“Hey, we’ve been working together for a few months now, I love working with you and I know you’re happy with my work as well; your tasks always seem to take around x hours so why don’t we set up a monthly retainer instead of billing by the hour. This way you’ll always know how much your invoice is going to be, but more importantly, you’ll be secure in the knowledge that I actually have the time put aside for your tasks. My business is growing quite quickly and I want to make sure I always have availability for you.”

How to set your rates

You’re not here to convince someone to hire you and, if you don’t think you are good at what you do, then you have no business being a VA.

  • Do you think you’re good at what you do?
  • Have your worked hard to gain your skills and experience?
  • Do you think your skills are valuable in terms of saving or making people money or giving them more time?
  • Are a lot of other VAs offering this service or are you a specialist in this area?

Then charge for what you’re worth.

You are a modern business woman. You’re not a little secretary or an office junior and you provide a skilled service. In fact, by doing what you do best, your client is freed up to get on with what they do best – which is usually making money for their business.

Don’t price yourself too low

It’s VERY important that you position yourself well and a client can see that you’re good at what you do. If you’re really cheap people may think your work will be poor quality and that you don’t value what you do – so they won’t either.

People who are looking for a cheap deal will always go for the lower rate anyway so don’t try to compete with other VAs on price because there will always be someone cheaper than you and you do not want to be in a race to the bottom.

Also, if you go in too low then it will be much harder to raise your prices later.

It’s much better to pitch yourself as having a speciality and charge accordingly.

It’s a fact that many people won’t understand or appreciate the value of what you do, but there are plenty of people on the planet who will. It’s important not to waste your time with someone who just wants the cheapest price; you want to focus your efforts on finding clients who are looking for a fantastic service and who are happy to pay for it.

Warning – One of the most important things I’ve learned (and I learned this the hard way AND more than once) is that anyone who questions your rates, is going to be a nightmare client. They just want the cheapest rate and they’ll be awkward, pay you late and sometimes try to get out of paying you at all. They’re not worth the hassle so give them a wide berth.

But don’t price yourself too high

You might be concerned that if you charge too much then nobody will hire you.

You’d (mostly) be wrong.

Cheapskates won’t hire you nor will people who don’t value a good service – which is good because you don’t want either of them as clients!

A client might be able to find 100 VAs they can hire, but only one (you!) that specialises in the particular thing they need doing. And they’d definitely prefer to hire a specialist than a generalist.

However… if you charge over the going (or reasonable) rate for your service then you’ve just priced yourself out of the market. Know what you’re worth and charge appropriately. See what the going rate is for your speciality then set your rate according to your experience and level of expertise.

One important note here – the more you charge, the better you need to be. If a client is paying top dollar for a VA then they will expect a top service.

Show your value and worth

You cannot underestimate the value clients place on you being reliable, consistent, easy to work with, great at communicating, being trustworthy and both understanding and anticipating their needs. They WILL pay good money for that because it’s actually hard to find. You’d think all Virtual Assistants would be these things but they’re not.

Market yourself as being someone who knows their industry inside out and demonstrate this with testimonials and case studies so a potential client can see you’re really good at what you do and can be confident that you’re worth the money.

Summary

However you decide to price yourself (I use a combination of all three methods) make sure that everyone knows what’s what, you’re getting paid what you’re worth, the client is getting a top rate service, and remember to review your charges and services each year.

Resources and action

35 Comments

Ali Harriman

I’m registered with Timeetc and while its a great place to start as a v.a., it doesn’t take long to appreciate that the hourly method of remuneration isn’t ideal. I recently branched out to taking private clients, with medical as my speciality, and am considering structuring a retainer package to offer potential clients. Great article as always Jo!

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Joanne Munro

You’re welcome Ali! I love that there’s so many different niche’s for VAs and that medical is working out for you. People should always look at doing what they know. Retainers or project-based pricing is always good, I got some great ideas on how to add value and charge more from a book called The Wealthy Freelancer as well. x

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Trisha

Excellent article. I’m an executive assistant with 30+ years experience. I have been considering the VA profession for a couple of years but trying to determine what and how to charge has been my biggest hold back. I’m set up and ready to go but not sure how to get started finding clients and then what to charge.

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Joanne Munro

Hi Trisha, I’m really pleased you’ve decided to become a VA; it’s a great line of work. Everything you need to answer those questions is on this site. The blog posts 23 ways to market your business and the 3 best ways to find your first client will help you. My guide on how to get new clients also shows you the only method I use to get mine. x

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Sue

Hi,

I am looking into setting up as a virtual PA, with legal as my speciality. However, I am unsure as to (a) what equipment would be essential; (b) what equipment would be a luxury; and (c) what clients would expect i.e. should I have a separate land line at my home dedicated to my business or should I simply use my mobile phone/Skype?

Any suggestions would be gratefully received.

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Joanne Munro

Hi Sue, you’ll find the answers in my guide on what tools you need (and don’t need) to set up a VA business which you can access by signing up to my newsletter in the sidebar on the right. I say no to a separate land line otherwise you’re not going to be very virtual! I just use my mobile. You can have a Skype line if you want to though – I sometimes get one when I go abroad. Having legal services as your speciality os a fantastic niche and you will do well. As long as you can do the work, invoice and get paid, the rest just sorts itself out and isn’t that important. x

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Peter Crispin

Hi ,I’m new to this I didn’t know VA,s existed until recently browsed 9th Internet how to get extra income. I’m 60 yrs old experienced Logistics Route Planner. With 32 yrs – 18yrs in Logistics Planning Management I am wanting -willing to work from home as a VA .I cannot see this anywhere on the VA websites .Believing it to be new how do I start up .Could you be honest and advise me is it a good idea. I’m sure given correct contacts it would work.
Pete

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Joanne Munro

HI Peter, good to see you. It is perfectly feasible for you to offer your services as a freelancer. Being a VA is kinda simple really: you offer your skills to people you know and people you don’t, you do the work, you get paid. That’s kinda it!

Many people over think it but it sounds like you have the skills, the experience, the knowledge, the contacts and the drive to succeed – and that’s all you need really. Everything you need on how to set up is here on this site so just keep reading. The START HERE page is the best option as you can see a list of everything I’ve written so far. x

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Rindy Anstee

Thank you Jo for another great article. I am steadily working my way through the course and all the various blog posts etc., so many great nuggets of information. The video is hilarious and really hits home – very, very helpful. “I am enough!” 🙂

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Lesley

WAIT! I need help. I’m a new VA and my heart nearly exploded when you said, about not every hour being billable, that there’s emails to answer… What exactly do you mean by that? When I’m communicating w/ a client via email or having a meeting with them or talking to them on the phone about work, I am billing them (I work at an hourly rate). Am I doing something wrong by that? It’s part of the job, getting instruction?

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Joanne Munro

Hi Lesley, thank you for commenting. No, you’re right, you DO charge for emails and calls that are completely client-related, but there will definitely be times where you will be doing your own admin stuff that isn’t directly client-related but will eat into your time such as sorting client folders and familiarising yourself with some of their systems. Unless a client says they’re happy to pay you to learn their systems then a VA should know how to use them if they offer that as a service. I don’t think I made that clear in the post and I can see why you thought that so I have amended it. x

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Alison

Very useful article Jo, please can you assist me in what packages you use as obviously the licences on the Microsoft Home packages are not acceptable for business and business packages are expensive for start-ups. Thank you

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Joanne Munro

Hi Alison, I do actually use the Home version as I don’t need Outlook and the other things they offer. I just wanted Word, Excel and PowerPoint.

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Chris

Hello J,
I am a property manager in real estate( residential high rise management) and I have about 8-9 years experience doing this. I feel there are so many levels of property management and believe I could offer my services in this specialty. Not sure if anyone is on this area yet.
Any advice on this front?

Also, how do I name my business?
Thanks and great articles.

Chris Chicago IL

Reply
Joanne Munro

Hi Chris, good to hear from you. I have a blog post on how to go about naming your business that you can find listed on the ‘Start Here’ page. The Facebook group (link in the sidebar) would be a great place to find out if there are any other VAs who specialise in real estate (I think there are) and it would also be a good idea to find out if this was viable yourself by asking your contacts. I look forward to seeing you in the VA Handbookers Facebook group if you aren’t already a member.

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confiance

Hello Joanne,
I loved this website, I am Confiance from Rwanda, I want to start VA in Rwanda, I have not heard anyone here doing this business but my concern is on pricing, and contracts. any assistance?
Thank you

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Diana

Hi! After being laid off I decided to be a VA without too much research and by pure luck, I landed a dream client! She was searching for a pay per hour VA. I now know that isn’t ideal, but since I already gave her my price ($40/hr – it sounded good to me at the moment), I’m not sure if you have any tips for me regarding being paid per hour or what to include in the contract because that hasn’t been written yet.

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Joanne Munro

Hi Diana, there may be different laws in the states to the ones in the UK regarding what needs to be in a contract because we have to comply with the Provision of Services Regulation 2009. I would use the free ones on this website or ask other US VAs/freelancers for advice. Regarding being paid by the hour, I would use Toggl time tracker (I discuss this in my post on how to invoice and get paid) and try to move them on to a retainer after a month or two when you are both happy with each other. Good luck with your new client!

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Shani

Hi Jo, I am in the process of setting up my VA business and deciding on my rates now. After reading your post and the Lifehacker one, I don’t want to list an hourly rate on my site. I just want to list the project and the retainer options. Would not listing an hourly rate turn some clients away?

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Shani

I also had another question that I forgot to ask. The author of that Lifehacker article wrote that occasionally a client won’t pay at all. He said to just accept this. That sounds awful to me, and I would not stand for it. Is it true and how do you deal with that? I did have a co-worker at my last job who was also a freelancer. He said he’d been waiting awhile for payments from a few clients. How long do clients usually take to pay? Does it just vary from client to client? Thanks so much for all the information and advice on this website! It’s helping me so much.

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Julie @ JAM Business Support Services

Hi Joanne, Thanks for this post, its been quite useful as I am just starting up a new VA business and wondering how much to charge, and if I should charge by the hour, pre-paid package or by the project. This has given me much to think about 🙂

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Toks

“Warning – One of the most important things I’ve learned (and I learned this the hard way AND more than once) is that anyone who questions your rates, is going to be a nightmare client. They just want the cheapest rate and they’ll be awkward, pay you late and sometimes try to get out of paying you at all. They’re not worth the hassle so give them a wide berth.”

This paragraph really resonates with me, as it’s something I’m currently dealing with right now. It sucks, but I guess you live and you learn!

Thanks for this brilliant article. I go back to it time and time again whenever I get a new client, especially for project work, which is a bit trickier to work out, but hopefully I’ll get better at it in time!

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Dr. Karen

What a fantastic website you have! Well done! So I’ve been hiring my millenial kids to help me out since my formal VA retired to focus on her passion (dance). They are quick to learn anything related to internet and one is studying marketing and is good with video, webpages, audio. The other is learning the ropes and will in the future become a health coach. Right now, doing some work for me is helping her by offering her a job and she’ll need to know this stuff when she’s a coach. So neither are worth the $30-40/hour plus at the moment. Do you offer any courses that teach the actual VA skill sets (not necessarily how to be in your own business and attract clients since they already have a client – me – since they both will move onto their own coaching businesses in the future)? Thank you!

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Joanne Munro

Hi there and thank you very much for your comment. How lucky you are to have two children who are so eager to learn and get on in life! How marvellous.

I don’t actually offer any admin courses (a VA’s main skills are administrative) but there are many free admin courses online; Microsoft have a lot of good ones and so does Lynda.com. It doesn’t sound like your children actually need any specialist admin training if they are going to work in coaching though. Thank you again for reading and taking the time to comment.

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Tonita Haynes

Hi Joanne,
I was wondering if all 3 days can be used in the way rates can be set? I’m a newbie and I’m trying to set up. I’m specializing in medical/healthcare bc I’ve worked as a unit secretary in hospitals and have at least 6 yrs experience. Please help me!

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Joanne Munro

They can indeed. You just pick the rate appropriate for the task. A client is unlikely to go for a retainer if they haven’t worked with you yet and also you won’t have an idea of how long their regular tasks will take so hourly is preferable for both parties in the beginning.

So you could have one client on an hourly rate then move them over to a retainer, you could have another client who you charge a one-off fee for doing specific tasks and you could have a few other clients on retainers (and then by the hour if they occasionally go over their hours). You could even have a client who is hourly (or a retainer) then you quote a one-off project fee for setting up a newsletter etc. There are many tasks that should be package/project rates because otherwise you’ll never earn more than there are billable hours in the day. Moving away from an hourly rate is the goal.

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