This Week In Business

How We Figured Out Our Hourly Rate


People have asked me in the past, “So how do you come up with a rate of $75/hour?”

What I love is when they make this leap: “Wow, you make $75/hour?!? You must be rich!”

If I actually made $75/hour for every hour I worked in a week, that would be lovely wouldn’t it? And technically, I would be rich (though hopefully you’d love me anyway).

For those starting out in a service related business trying to figure out prices or those wondering where the heck we got our hourly rate number, here is the logic and the math which will work for you whether you design websites or walk dogs:

Factor 1: The Concept Of Billable Hours

While I wish someone would pay me to watch reality television while wearing my pajamas and eating Lucky Charms, it is not the case. I have to actually do something to get paid. (And if you are sitting at your job getting paid to have your butt in a chair right now and read this blog, please appreciate that!)

The single most important thing I took away from the one business class I’ve ever taken was the concept of billable hours.

Billable hours happen when you are actually doing work. For me updating or fixing someone’s website, writing up the social media posts or newsletter, or doing some other thing people pay us to do.

What are non-billable hours? Writing this blog. Spending an hour on the phone with GoDaddy trying to get them to change the contact email on your domain. Writing emails telling you about the progress of your project. Filing the 150 pictures you just emailed me digitally so we can access it later. Networking the printer. Cleaning the office bathroom. Writing proposals for prospective work. Invoicing. Answering peoples’ questions about the invoices. Organizing workshops.

As you see, for most people the non-billable hours are not only necessary but they take up a majority of work time. Sadly these are not something you can make your clients pay for (though if one of you wanted to pay me to clean our fridge it would probably happen more often.)

My goal is to have 10 billable hours a week and for Alice to have 5. And as the business gets more established and I can spend more time doing work (instead of asking for it), this number should go up. But when you are starting out, billable hours are usually very low.

One month, when I was just starting out, I had 4 billable hours. For the entire month. Gulp. (Hint: Have savings for these sort of things.)

So when you figure out your hourly rate, think about realistically how many hours of paid work you expect to get then divide that into your living expenses:

$1500 for one month living expenses / 10 hours of expected billable hours in a month = $150/hour

Factor 2: Market Rate

Now I know multiple other people who live in San Francisco, New York, and Boston respectively who all charge $150/hour for the same work I do. So why do I charge $75?

In addition to looking at the average salary of what people in my profession make, I also have to look at what people in the area I plan to serve are willing to pay. Where I live, I know a high end carpenter who charges $75/hour and a plumber that charges $90/hour. They are both incredibly busy and have a reputation for being great. While they aren’t in my profession, looking at other professionals in my geographic area gives me an idea of what individuals and businesses in my area pay for services.

I guess by ‘market rate’ I mean you need to look at not only what range is acceptable in your profession but also what the economic reality is for your customers. My city counterparts can make more money because a) where they live is more expensive so they have higher costs and b) the people who live there are willing to pay more money. At some point I will probably raise my hourly rate but for now, I’m comfortable with this.

Factor 3: Pacing Your Projects

Much of your work isn’t going to be hourly work but project work. So instead of ‘fix this problem on my website that you said will take you two hours’, it’ll be ‘design my website please.’

Knowing how long it’ll take you to do a project will not only keep you sane, it’ll also help you price the projects you do.

So with us I know:

1) We can launch 1 website/month while doing our normal hourly stuff that sporadically comes in.

2) With having an intern helping part time in the summer, we can handle maintaining social media accounts for 10 businesses during the peak season in our area (May-October).

Keeping the right amount of projects spaced out also means we don’t have to rely so heavily on billable hours which can be sporadic.

As you do your work, whether it’s cutting hair or building greenhouses, you’ll figure out what you can handle in a month in terms of regular and non-regular work which will give you an even better idea of what you should charge.

Whatever you do, don’t set your rate too low at first. It is very easy to lower prices but very hard to raise them.

So set that hourly rate carefully… because it’ll be a part of your business life daily. And when people question your rate, you’ll be ready with a thoughtful and very business savvy answer.

Set Up Your Intern For Success: A Cautionary Tale

I will say that interns are a great resource. We’ve had some here and for the most part, it has gone well.

The backstory as to why I’m writing this now? I spent a total of two days of billable hours fixing the work of a Client X’s intern from this summer.

This wasn’t doing new work, this was fixing work that had already been done. To the tune of $75/hour.

Doing this has pained me, not just what it is financially costing this client but because of what it can cost you. Because if you think this upcoming generation of ‘digital nomads’ always knows what they are doing on a computer, I am here to tell you that is not even close to always the case. Whether your intern is 13 or 31 or 113, the rules are the same.

Give them a structure.

So in this case the intern for Client X did keep the site up to date… but there was no method to where the information was placed on the website. A new page was created for every event and there was no hierarchy. For example, if you wanted to see all the events that happened in 2013, there was no way to do that easily since they were scattered all over the place.

Also, all the pages were formatted differently. Some were centered with big pictures, some had thumbnail size pictures and were left justified. Some even were in different fonts. So if you looked at a couple in a row, it looks like a crazy person maintained this website. Only it wasn’t someone crazy, it was someone who had no structure.

As the person hiring, you need to create the structure for the person to follow. When in doubt, create the how-to document for them so they can refer back after the initial training.

If part of the reason you hired this intern to create methods, have that be the very first thing they do. For example, say that you want a consistent new format for every flyer your company creates. Have them not only figure this out (possibly after researching how other places use flyers for event promotion) but make the how-to document so anyone creating a flyer in the future can follow the instructions. This will ensure the work is done consistently.


Evaluate their actual skills.

With Client X, the intern told them he was a website expert. But before giving anyone the keys to the car, why not give a small driving test? Have them write some copy for your website or chose and resize images for a slideshow. (These can be given to someone like me to upload very quickly.) If that goes well, have them do something a little technical like make an intake form that gets automatically sent to three people when filled out, including yourself. Over the course of a couple weeks, you will have a very good idea of what they can do (they do it right away, it works great) and what they can’t (they’ll ask a lot of questions, the work doesn’t get done, an outside expert sees the work and warns you).

I’m not saying give them fake work during this period. Give them things that need to get done… but do so in small pieces of increasing complexity, testing different skill sets during the process.

I can say this from experience: I once worked with a subcontractor where I assumed that, since they could use Twitter to send tweets, they could successfully schedule these tweets in Twitter. I went in to check their work, only to see they had all the tweets scheduled to go out on the same day instead of throughout the month. Had I not caught it, this would have been disastrous. (31 marketing tweets from a company = lots of people unfollowing and otherwise annoyed) From then on, I had the intern write the tweets and I did the scheduling. The moral? Play to their actual strengths, not the ones they mention on their resume.

Note: If you were going to have this person for over a year, by all means train them on more difficult tasks. But if the point of an intern is short term work that helps you move forward, you are best playing to strengths versus training out weaknesses.

Double note: If you don’t know enough to evaluate this person’s skills, find someone who can help you. This is not a step to skip.

Check their work. 

Just because an intern is there, doesn’t mean you have less work. It means you spend more time on other things, one of them is checking this person’s work, especially at first.

If you don’t like what you are seeing, speak up. Talk to your intern, showing them concrete examples of what you want different. Otherwise they will do what they are doing for the whole period of time, making cleanup for the person behind them that much more substantial.

Give them training.

Give your intern a leg up by giving them some training. An online seminar, adult ed class, or even someone coming into the office for a couple hours can be relatively low cost and give the intern some of the skills they need to do the work you want them to. If during the initial testing period you find, for example, that they can’t code well in HTML but you need them to do that regularly, offer to pay for their time to take a class on the topic online. If you want them to edit video but no one in your office can use the software you want them to use, look around for a local expert and have them come in to train your intern. (Sure, I taught myself how to use Sony Vegas with the owner’s manual at one job I had but it took me a couple months. I could have gotten there a lot more quickly if someone would have sat with me even for a couple hours to show me around.)

While this idea of training seems like an up front cost, this will save you hundreds of dollars of productivity time or staff time redoing intern work. Bonus? You can send a staff person with the intern to also get the training so then you have two people in the company who can do new things, one who will leave and one who will be around to help other people in the future.

In short:


Not because interns can’t be smart or helpful or life affirming… but because they need some help from you to get there.

Seasonal Businesses And Social Media

closed-signAbout half our clients are seasonal businesses. This isn’t surprising when you think of the town we are in swelling from its year round population of 5,000 to at least double that for the months of May-October. A coastal town with the second most visited national park in the United States, there are cute shops, ocean views, and as much beautiful nature as you can stand. And most people prefer this in the warmer or foliage changing months.

But after Columbus Day (mid October in the US), about 70-80% of businesses close or open for very limited hours until Memorial Day (in May). Many storefronts are literally boarded up as the seasonal workers leave and the seasonal business owners move south to work another seasonal business or relax post-summer craziness.

Since I am online and local, year round, I do notice a dip in people keeping business social media accounts up-to-date. Most people will post they are closed for the season and not touch their Facebook page, Twitter account or website until they, in April or May the following year, come back and try to get everything ready for the upcoming season.

In general, I have lived here long enough to know not to counter this approach. I have tried doing the ‘let’s get your website ready early’ pitch or holding workshops in February when seasonal business owners are least busy but it seems people aren’t interested.

What I will say though is there is merit if you are a seasonal business to updating your social media profiles year round, even if you do so less often in the winter. Here’s why:

Maintain momentum.

When you update a Facebook page daily (for example) you get a lot more engagement (see 5.95% and 5.26% on the daily one) versus 2.78 and 2.36 percent on the several times a week page, even though the lower engagement one has more then double the fans:



If your page is growing like crazy in the summer, updating it through the winter will sustain growth and keep those fans engaged. (As you can see the more often you do it, the more people see/react to it.)

Let locals know when you’re open.

I got engaged in January. The part of the story I didn’t mention? Driving to FIVE restaurants looking for a place to celebrate and only finding Geddy’s, a dive bar turned tourist trap, open. I am still annoyed at the two restaurants whose Facebook pages I checked (their hours on Facebook said open but hadn’t been posted to in about a month. We had figured one of the two would actually be open!)

If you want more locals to come in (and recommend your place to their friends who visit in the summer), seem like you’re open on social media, especially in the offseason. There are plenty of times I would have cleaned off my car of snow and drove into town if I knew that more than Geddy’s was open, not just that particular evening.

Promote your online store or virtual events.

While your storefront might be closed, winter is the perfect time to sell some stuff online. Whether you are selling on your website with an online shopping cart or using something like Craigslist, post what you’re up to on social media to a group of customers who already like you. You might be surprised to make more money off your merchandise in the slow months… or how holding a virtual event can get some new prospects to try you out. Keeping it online means locals don’t have to drive anywhere and your far flung fans can support you year round.

Tempt people ahead of time.

Especially if you are in the lodging or transportation business, there is nothing like teasing someone with a beautiful Maine photo mid March and urge them to book their vacation. We had a rental client do this via an email blast to a couple hundred customers and he got four weeks booked before April 1st.

So consider working your online presence year round… you might get more out of it then anyone is expecting.

What Are My Social Media Accounts Worth?

Our friend Christina asked an awesome question on Facebook:


As someone who has had a business valuated, I understand there is way more than one way to quantify how much a business is worth and that each way can be seen as valid. Rather than using one formula, it might be wise to average a few.

Similar to this, I’ve seen Facebook fans being valued anywhere from $0.50 to $1000+, depending on the product being sold (the $1000 one was a bit of high end software).

But let’s try two ways for fun to valuate fans, using the Breaking Even page as an example.

Option A: How much traffic is it driving to your website? Do these visitors convert?

This calculation says, how many people came from Facebook (who otherwise might not have come) and what was their purchasing power.

Why is this good? It looks at who got to your website and regards Facebook as a marketing tool to get people there.

I went into Google Analytics and looked at what drove the most traffic to over the last two years. Here’s what I found:



Three of these are Facebook (the first one is the app that pulls our blog automatically into Facebook).

So let’s go to each source and see if people get to one of two pages I want them to get to: 1) contact or 2) schedule meeting.

Here is what I see when I run the numbers:

296 contact visitors got to the contact page from Facebook (combined from the 3 sources).
240 schedule meeting visitors got there from Facebook (combined from the 3 sources).

Now if I look at the success rate of each of those forms we can get some better numbers.

1% of visitors fill out the contact form and 1.7% of visitors fill out the book meeting form according to analytics so…

296 x .01= 2.96 people filled out the contact form from Facebook (let’s call it 3)
240 x .017= 4.08 people filled out the schedule meeting form from Facebook (let’s call it 4)

So 7 people got to the website from Facebook and bought something: consulting time, a website, social media marketing…could be anything. If our average customer is valued at $500, that means Facebook generated $3500 of revenue for us via our website in the last two years (or $1750/year).

When you valuate a business, it’s usually earning power over the course of about five years so let’s say this rate was steady, that would value this Facebook page (if it was maintained at the current rate) at $8750 ($1750 times five years).

Value from this scenario: $8750

Option B: How many of your fans are customers who have actually purchased something? What is their average spend? 

This one is way more time consuming to run.

Looking at our actual Facebook fans and their spending power is different than Option A because it treats Facebook as its own community, not just a tool to get people to your website. We can also argue this looks at the idea of repeat customers a little more closely.

At the moment, we have 463 fans and, for the sake of this exercise, I went through and assigned a monetary value to each actual customer that has spent money with us.

Total fans: 463
Number of fans that are actual customers (versus friends, relatives, or general well wishers): 60
Number of those 60 fans who have only ever spent $25 with us: 20 (1/3)
Number of repeat customers (more than one invoice in Quickbooks): 42 (70%)

OK so our social media customers are repeat customers, even if not a large part of our fanbase. But what is the average value per customer we have on Facebook? If you take the total these 60 customers have spent (ranging from $25 to $10,000, the total was $62,950) and divide that over the 60 customers:

Average Facebook customer: $1,049.17

These are people who actually spent money. And if we divided the total revenue over all the Facebook fans (including the friends, relatives and well wishers who haven’t bought from us yet):

Average Facebook fan value: $135.96

The $10,000 customer throwing you off? Let’s take that number out of the equation and make it 59 customers who have spent a total of $52,950.

Average Facebook customer: $897.46
Average Facebook fan value: $114.36

(Aside: Now our average customer is probably worth more than yours if you sell, say, ice cream or t-shirts. But if you went through your Facebook fans with your staff- even a random sampling of them- and assigned an approximate value per customer, you could run similar calculations and figure out how much your average Facebook fan is worth. You might have more fans that are worth less but that is still valuable!)

Is there a way to export your fan list? Not easily but it can be done theoretically: I just sat here and made the list the copy and paste way.

So the page valuation (in my opinion) would be to take the amount of repeat customers (in our case 42) and multiply that by the average Facebook fan value (we’ll use the lower one):

42 x $114.36= $4,803.12

Value from this scenario (on the low end): $4803.12

Ideally, the longer you’ve had Facebook, the better of an indicator this is. Also, just like with any valuation formula, running a few different ones will give you a picture.

But to be fair, you need to subtract the time it took for you or an employee to maintain the account, since that was a cost. 

So Facebook value – time to maintain = true value of Facebook page (While I think it’s a bit nosy to go into how I pay myself, I will say with both valuations if I subtract my time, I am still in the black, though barely for that second lower one)

Now the price of anything is really what someone is willing to pay for it so this is subjective. But bringing some well reasoned numbers to the table will make the person buying your business think of this asset as being much more valuable than they were probably originally thinking.

And looking at Facebook as both a way to get buyers to your website and a way to engage a community of customers is a more complete way to think about this asset, or at least begin the conversation with the person buying your business.

Are You Busy?

I can't go anywhere without it looking beautiful, so I take 2 out of every 7 days to enjoy what's around me.

I can’t go anywhere without it looking beautiful, so I take 2 out of every 7 days to enjoy what’s around me.

Ah summer. It’s a good time of year filled with iced coffees, strolls in scenic places, and charring meat.

For the past year, I’ve forced myself to take weekends off, despite the fact that my workload almost doubles in the summer.

I just want to eat waffles on a stick in my free time... like anyone else. (My friend Jen has them sometimes in her cafe.)

I just want to eat waffles on a stick in my free time… like anyone else. (My friend Jen has them sometimes in her cafe.)

Baring an all caps email from a client saying something to the equivalent of ‘ Turkish hackers got my website’ or ‘People are doing the internet equivalent of throwing rotten tomatoes at me on social media’, I won’t do any work on the weekend.

Part of this is a need of rest. My arms need the rest, my mind needs the rest, and honestly, I think my quality of work has also improved since I enacted this policy.

Part of it was a need for a perception change. I am certainly happier and it’s been awhile since the word ‘workaholic’ was used to describe me. Good signs, progress in the ‘become a more well rounded person’ department.

But my project management system reminds me that I have 25 overdue tasks just about every day. I creep above 100 un-dealt-with emails in my inbox weekly. One client texts me 25 photos, one at a time, because she can’t get Dropbox to work on her phone. How do I stay the serene, strolling, mocha sipping, steak eating, weekend version of myself with all that happening?

Self employment commandment #1: There is always more to do.
Always is, always will be. I embrace the unfinished because I have to.

A short memory that can focus on the task at hand (even if the task is relaxing), takes little personally, and doesn’t dwell in regret is a quality you can cultivate to an extent. I used to be more high strung and overwhelmed, ask anyone who knew me well in high school.

Self employment commandment #2: No one will probably die if I don’t do it.
There are few things that *have* to get done. ‘Have to’ in your work world is not ‘have to’ in the real world. Few professions control whether someone will live or die and, even in those professions, large portions of the work day are not focused on this. So let it go. People won’t die if it doesn’t get done. And most important to you, you won’t die either.

Self employment commandment #3: Sometimes the problem goes away if you ignore it. 
Perfect example: I wanted to hit myself over the head after following a ‘simple’  27 step setup of a program on a website (I know, only a programmer would think a 27 step process was simple). Just couldn’t get the thing to work despite following all 27 steps to the letter. Paid someone smarter than me to see if they could get it to work. Nope. The company emails me a few days later that they updated their software and now it’ll work. It does.

Had I just put the darn thing down and let it go for a week, the problem would have fixed itself and I could have those 4 hours of my life back.

Listen, I’m not saying ignore a bleeding wound, I’m just saying if there is something slightly uncomfortable going on, ignore it and look at it later. The solution will present itself, or you won’t care, or it’ll just go away. Really, try it. I am shocked at how often this strategy actually works.

This week, I’m taking a day off… in the middle of the week. More accurately, I am taking a day off to volunteer for my local Rotary club. (Please come to our pancake breakfast or our seafood lunch if you are in Bar Harbor on the 4th of July- all the proceeds go to scholarships and local non-profits! I’ll be there from 6 am until 10 am if you want to say hi!)

The only picture of me in a bathtub you will ever see on the internet.

The only picture of me in a bathtub you will ever see on the internet.

I know, I’m crazy.

So relax, people. It’s going to get done. And in the meantime, take at least a day a week and go lie in a 7 foot clawfoot bathtub in your friend’s store just because you can. Because there’s always more to do… you’ll just do it on Monday.


How To Handle Control Freaks

This is what happens when Alice is gone and Nicole does graphics. I know, scary.

This is what happens when Alice is gone and Nicole does graphics. I know, scary.

Someone has hired you to do a job for them. Based on their goals and other factors, you’ve decided a way to do it and they’ve signed off on your plan.

Or so you thought.

Suddenly, they want to be involved in every little detail of the process. (Why are you using 14 and not 16 point font? Or my favorite: How long does it really take you to do that?)

It’s one thing to have clear (ideally scheduled) communication and answer an occasional question… but it’s another to have someone asking you ‘why’ at every step or needing to call you multiple times a day.

People who take it to that endearing next level are control freaks… or as they would call themselves, detail-oriented project managers. But when you are on that other end, these people can be exhausting to deal with.

I’ve come up with a few ways to stay sane, in business and life in general.

Head them off before it even starts.

Are there times I could really use some money? Yes. Is there ever a moment where I will consider working with someone who will be unreasonable? No. Because the second you say yes to that crazy person, something legitimate you actually want to do presents itself. And you can’t do it… because you agreed to work with Mr. or Ms. CrazyFace.

As with anything, the easiest thing to do is avoid working with control freaks to begin with.

What are some telltale signs someone is going to be a control freak?

  • Very focused on hours, right up front. Listen, I get that you want to get how much something costs but it’s the equivalent of asking me to go steady on a first date. Can we exchange some information first? 
  • Seems very particular but won’t offer specifics. They say they know what they want but when you ask them one or two basic questions (Have you looked into what software you want to use? When customers get to your website, what is the three things you want them to do?), they have no answers. Bonus points if this person thinks you are pumping them for information so as to ‘steal’ their multimillion dollar idea.
  • They can’t find anyone to work with them. “My graphics person took another job then my web designer moved away. And what’s weird is my freelance writer won’t return my phone calls.” One flaky person in someone’s life, I totally understand. Multiple people flaking and you should probably wonder why everyone is running away.

How do you subtly tell these people ‘no’ without saying no:

  • Force them to focus on what they specifically want before you speak with them again. ‘I’d love to see a list of criteria you see needing to be fulfilled during this project.’ Control freaks are often secretly insecure people who might not know how to answer this… and might not contact you back. 
  • Tell them you have a full plate and aren’t starting new projects for 2-3 months. If they want to wait, at least you know they are committed to working with you. Chances are if they want someone to boss around now, they will go find that other person.
  • Help them do it themselves. I’ve noticed people are less likely to boss themselves around then other people so letting them do it can be a good workaround.

So let’s say you head off the majority of control freaks (like we do). What happens if you find yourself working with one anyway? Here are a few tactics I’ve learned:

Force them to list everything and give it to you at once.

This does two things besides give you a bit of breathing room.

The first is it forces people to see how often they change their minds or how accidentally contradictory they are being. I want a modern website but I really want you to use this old timey font. I want my hairstyle to be edgy but I want it to look natural. By putting all ideas together and having a conversation, we can get to the heart of what the person really wants, an old timey looking website with bright colors, or a hairstyle of natural blonde highlights with chunky layers. Had they not listed out everything, we wouldn’t have gotten to that place where they could be happy.

The second is it’s usually easier to do batch changes, especially when they might need to be done in a certain order. If you have a list of things you want done to your website, it is much easier for us to log in and do them at once. This is partially a ‘while we’re at it’ issue and partially because one thing might effect other things you want done and therefore the order we should do them in. Ex: You want new kitchen cabinets and counters, you need to decide what you want for both before your whole kitchen gets ripped out so that as the bottom cabinets get built, they can accommodate your countertop.

Divert their energy to something useful.

If someone has a lot of energy they need to direct at a project but I need time to, say, work on the project, I need to give the client something constructive to do to help. For example, pick out the 50 best pictures for a slideshow of images. Or have them research x, y, and z to see which solution will work best for them so you can implement it.

This actually helps the project move forward and gives the person some decisions to make that have a direct impact. I like these kind of control freaks since they make my life easier by making some decisions I’d otherwise be making!

Know where it’s coming from. 

Sometimes, people are used to treating people badly to get what they want. These people are called rude, and it is important to not let rude people treat you in a rude way.

Ruling out the fact the person is an irredeemable jerkface (few people are), know where the control freak is coming from. Are they under the gun with a deadline? Did they have a bad experience with a different service provider and are now skiddish with you? Knowing where someone is coming from lets you put up with a certain amount of crazy (at least it does with me). Realizing it’s not personal is a huge burden lifted so get to the root of the controlling nature if you can. The best way to do this is to have conversations and get the person to trust you over time.

In short, control freaks are a lot like you and me: they want something great and they want to control the outcome of their lives. Give them things to do to help the project, make them outline all concerns up front and be patient with them. Control freaks help us think of new ways to work and can uncover unknown issues, so be thankful on a certain level this person is in your life… and will be back out of it when the project is finished.