One of the hardest things to decide when you become a Virtual Assistant is how to price your services. 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.
When you’re looking to set your Virtual Assistant rates there are a few different approaches you can take.
Charging by the hour
The problem with this is that if you only charge by the hour, you’re limited by the number of working hours in a day – because not every hour is billable.
There’s your own admin to sort out, documents to familiarise yourself with, emails to write and reply to, phone calls to take and make, marketing to do, accounts to balance and 1000 other bits and bobs.
I read once that there are only around five billable hours in a day.
The other downside to charging by the hour is that you become faster over time – which means you will end up being paid less money the quicker you get.
Also, remember the extras
Don’t forget that when you worked for a company you also received:
- Holiday pay
- Sick pay
- Maternity leave
- Petrol and mileage
- All your equipment including desk, stationery, phone storage space etc
- Utilities such as internet, phone, water, heating and electricity.
- Free coffee and tea
- Tax and national insurance being dealt with for you
- Free skills training
- Guaranteed hours
- Job security
- A regular income.
And now you don’t.
So when you’re working out how much to charge remember that you’ll be at home using water, heating, broadband and electricity. You’ll also be buying your own stationery and paying for extras such as petrol yourself.
Yes, you can put a lot of it on your expenses, but it still adds up.
Charging project rates
Charging by the project is how Virtual Assistants make the most money.
Project rates are brilliant on many levels because you can charge more than an hourly rate but still keep the client happy because you’re delivering what they asked for a set price.
Clients always think tasks take you less time to complete than they actually do, so if you give clients a total price for the entire project, they’re happy because they know exactly how much their invoice will be and you’re happy because you know how much money you will receive.
Remember that the more you do a task, the quicker and better you will be – this means you can earn more money for working fewer hours.
This is the business model all freelancers strive to achieve!
It’s worth noting that project rates are always dependent on the task. So I would quote my hourly rate on my website but then say retainers and project rates are 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
There are a few ways to estimate how long a task will take although, if it’s a task you’ve done many times before then you should know how long it’ll take you!
One way is to run a mock version and time it. So if you want to know how much data you can enter in an hour, ask the client for a sample, enter 15 minutes worth and then multiply it to scale.
Remember to add an extra 33% to the time you estimate though because tasks always take longer than you think.
The most important thing when quoting for a project is to make sure you have a full understanding of the scope. To create a “paper trail” and avoid misunderstandings, send the client an email summarising the task as they have explained it (“I understand the task to be X, Y, Z etc”) and then provide your quote based on that.
In order to avoid “scope creep”, I would also say something like “this quote is based on the perimeters of the project brief provided. If the perimeters of the project change then so may the quote.”
You and your client both need to agree on what the task is, the timelines involved and how much they will be paying you.
If you have provided a rough estimate then allow for a contingency budget. Have this as a clause in your T&Cs and make sure this is clear from the outset.
You will occasionally get it wrong and end up undercharging (all VAs have done this at least 3 or 4 times!) but then you know for next time and try not to make the same mistake again.
When you’re working out how to set your Virtual Assistant rates, retainers are a great option.
Retainers are particularly useful when you have a client who has lots of “bitty” work for you. If your client only needs a few tasks completed here and there, it often won’t add up to much if you charge them by the hour.
The great thing about retainers is that the client knows that their tasks are taken care of and what they’ll be paying, and you know how much money you will be receiving which makes it easier to budget and plan your finances.
Plus, retainers are always charged in advance for the month ahead, not the month just gone.
So if you charge your client for ten hours of work at £27 per hour, they know they have secured ten hours of your time and won’t have to worry you won’t have availability for them, and you know you’re definitely getting £270 at the beginning of the month.
Giving discounts on block bookings
Some Virtual Assistants offer a discount if the client books a certain amount of hours, but this isn’t common practice in other freelance industries.
I think it’s just another example of VAs trying to be ‘helpful’ which translates as giving their time away for free!
Virtual Assistants usually come from an admin background which means they’re often huge people pleasers and exceptionally compliant. They bend over backwards to facilitate other people’s needs and if someone wants something, they will usually try to organise it.
The problem is, they usually forget to charge for it!
There is even a funny video by Denise Duffield-Thomas on how women sell in business vs how men sell. Well, it would be funny if it wasn’t so frustrating!
Discounts are not a good idea because every hour you’re working at a discounted rate is an hour you could be working at your full rate for another client.
Clients are paying to retain your time. They want the security of knowing you will always have time for their tasks.
It’s the time part of that sentence that’s important, not the money bit!
Clients don’t always use all of their retained hours
Remember that a client is paying to guarantee your availability so you bill them for the hours they’ve requested – whether they use them all or not is not your business.
I remember when I was dating a Programmer who charged £600 + VAT per day. The client retained him for ten days, they only used him for four days but he billed them for the full ten.
Because that is how many days of his time they asked to retain. Days he put aside for them instead of giving away to other clients.
Of course, his client paid without a quibble… because that’s how retainers work!
Some Virtual Assistants feel ‘guilty’ about doing this but you’re a professional business owner and this is the entire point of a retainer and how you make your money.
You can inform the client of how many hours they’ve used up as you along but they’re also a professional business owner and you’re not their Mum.
I also remember a very wealthy client I had previously passed over to another local VA.
One day I was having coffee with the VA and he said “you know, Kevin pays me £350 each month but only uses me for 4 or 5 hours. I feel really guilty taking his money.”
“I’ve seen Kevin pay more than that for lunch”, I said. “It’s not up to you to decide how much Kevin should pay you.”
Kevin was happy to pay £350 a month to retain my VA friend’s time. He wanted to know that, should he need it, it was there.
Rolling over hours
It might help to think of a retainer as you would 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 signed up for.
Nor would Netflix offer to roll over your payment if you decided not to watch any shows that month.
Also, if you allow a client to roll over their hours you will never know how many hours you will be working that month which means you can’t plan your time, you’ll lose money and your calendar will be chaos.
Minimum retainer hours
Some VAs only offer a minimum number of retainer hours but this is entirely up to you.
When asked, some of the more experienced Virtual Assistants in my VA Handbookers Facebook group said ten was the minimum number of retainer hours they offered.
“My min is 10hrs a month. I used to offer 5 but they never move up from 5 and also, 5 hr people are quite hard work! You just can’t make a big enough impact in 5 hrs.”
“My minimum 10 hours. It takes time to really dig in and get to know a client and their business, and less than that in an entire month does end up feeling like you’re always playing catch-up and “Oh yeah there’s this other thing, but it will have to wait…” And yes, the ones who are on very small packages often end up being the most high-maintenance.”
“I used to do 5-hour packages but soon got rid of them as they were a real pain. I don’t take people on retainers unless they need at least 10 hours.”
How to suggest a retainer to a client
Your goal is to get a client on a retainer but sometimes they will only do this once you’ve been working together for a while and have proved your value.
Neither of you knows if you even like working together, 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 for a retainer until you’ve been working together for at least a month.
When suggesting your client sign up for a retainer, you need 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 your tasks.”
How much should you charge for your Virtual Assistant services?
According to the Society of Virtual Assistant’s annual survey, the average rate for a UK Virtual Assistant is around £27 an hour.
My Facebook group members inform me that the average hourly rate in the States is between $30 and $60 depending on expertise and experience.
I charge £30 an hour (I specialise in social media analysis and other techie services) but clients usually pay project rates due to the nature of their tasks.
So I might quote £x for setting up a 10-email newsletter sequence but the quote will vary depending on the specifics of the task because no two projects are exactly the same.
Remember that you will need to add a minimum of 25% (I’d err on the safe side and go with 30%) to your prices to cover tax and other expenses.
So if you were thinking about charging £22 an hour then multiply £22 by 1.25 and quote around £27 an hour.
As a rule of thumb, do not go below £25 an hour in the UK and $30 an hour in the States.
Why £27 an hour?
Below is a post 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 Virtual Assistant.
This is quite a long thread but hopefully worth it if you’re doubting your hourly rate.
Start with the basics per hour:
- Minimum UK wage = £9.50 (wait I come back to this**)
- Business insurance = 10p (due to the type of work I do I took out personal indemnity insurance)
- National insurance = 45p (self employed contributions)
- Tax = £1.90 (20% of minimum wage)
- Simplified Working from Home Allowance = 22p (based on HMRC self-employment guidelines)
Total = £12.17 per hour
** I’d like to be earning more than minimum wage so £15 an hour seems fair and if I got a new job I’d be looking for a pay increase. Plus, I do have 14 years of experience.
So, 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… £15 per hour x 35 hours = £525. Divide that by 25 hours = £21
Right, new hourly rate = £21
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 £21 divided by 4 = £5.25.
That makes the new rate £26.25
New hourly rate = £26.25
Ooops, I forgot to add admin, website costs, and training and there are bound to be other annual costs I’ve not included so let’s round it up to £27.
Well, what do you know, £27 per hour is a good rate!
Final hourly rate = £27
I used some science and a few estimates but it’s roughly about right. But importantly, no longer will I be justifying my hourly charge in my head!”
Mindset is key when it comes to pricing your Virtual Assistant services
Imagine if you wanted to hire an Accountant or a Web Developer and when you spoke to them they seemed to lack confidence in their skills and were apologetic about their rates.
You’d be worried.
Now, this sounds harsh but if you don’t think you are good at what you do, then you’re going to struggle to run your own business.
You are a professional business owner and it’s important to come across as confident in your abilities and your fees – even if you’re new and don’t feel that way inside.
This is why I always recommend that you start out by offering what you know.
If you do this then you’ll know how to do the tasks, you’ll know what to charge, you’ll know who to approach and you’ll know how to market your services.
If you offer or take on tasks that you have no idea how to do when you start out, the opposite of the above will be true. Plus, if you mess up your confidence will take a beating, and you’ll start to question whether you’ve made the right decision.
Don’t price yourself too low
It’s important that you position yourself well so potential clients understand you’re good at what you do. If your rates are really low clients may think your work will be of 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 Virtual Assistants on price because there will always be someone cheaper than you – and you do not want to be in a race to the bottom.
If you go in too low then it will be much harder to raise your prices later.
It’s also worth knowing that the previous average UK hourly rate of £25 an hour was set after the last recession because the cheaper VAs couldn’t afford to stay in business.
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.
You shouldn’t waste your time on someone who just wants the cheapest price instead, you need to focus your efforts on finding clients who are looking for a fantastic service and who are happy to pay for it.
This is why you should focus on leveraging your niche.
Show your value and worth
You cannot underestimate the value clients place on you being reliable, consistent, easy to work with, great at communicating, a brilliant problem solver, and able to understand and anticipate their needs.
Clients will pay good money for these qualities because they’re actually hard to find.
You’d think every Virtual Assistant would have these qualities but they don’t. Many VAs have poor communication skills, they don’t update their clients on the status of their tasks, they use personal problems as an excuse for missing deadlines, they leave their clients in the lurch and they mess them about.
So market yourself as being someone who is reliable, good at what they do and knows what they’re doing. If you can back this up with testimonials and case studies as evidence then even better.
If you’re confident you’re worth the money, your clients will be as well.
Be mindful of freebies
Sometimes you may want to ‘be kind’ to clients and end up massively overservicing them and giving away time for free. While a small amount is understandable, it can easily add up. For instance:
Imagine you charge £27 an hour and you give one client a free 15-minute catch-up call each week. That means you’re giving away one hour a month – which equals £324 a year.
And that’s just one client for just 15 minutes a week.
So again, while how you manage your clients is up to you, please be aware that time is money… your money.
When it comes to setting your Virtual Assistant rates, you will probably use a combination of the approaches outlined above. Some tasks may be better priced if included within a retainer and sometimes, you’ll make more money by quoting a project rate.
While the price you quote will depend on the task, remember that your job is to make lots of money for yourself!
This isn’t a hobby. You’re a professional business owner and if you prioritise your client’s business over your own and keep finding ways your clients can pay you less, then you won’t have a business before long.
The most important thing is to be clear about how much you charge, make sure your clients always receive a top rate service (but don’t overservice them), check they always know what they’re being charged for, and charge at least the going rate.
Oh, and be sure to review your rates each year because inflation and the natural rises in the cost of living mean you will have to regularly raise your rates.
Want to make more money without working more hours?
My pricing course shows you how to break through the hourly rate trap by charging project and package rates. I also explain the psychology of pricing and introduce you to pricing tricks you may not even be aware of.