The Real Cost

The Real Cost The Real Cost

Do you have a full understanding of what your business costs are?

Do you know how much profit is in your hourly rate after taking out expenses?

If you don’t know these two things, I can honestly say you’re not alone as there are many business owners that have no idea either.

I beg you please! Don’t assume that when you were working for a boss and on a wage of $35 an hour, you can go out working for yourself and charge $45 an hour and feel that is enough. I can guarantee you it won’t be. I can guarantee though you will be working 10-12 hour days, 6 days a week, just trying to make ends meet. This is not the way to run a business. You will be tired, you will be grumpy and stress will set in. This is not good for your health or well-being and not fair on your family either.

Don’t go by what others charge out either as every business has different overheads. Even being in a different State could change your rate by a dollar or two. You need to be ‘on the ball’ and work out how much everything is costing you in your business. Once this is done, you can add on your profit margin. To work out your hourly rate, you must calculate how many days you actually work ‘on the tools’. I call these ‘Productive Hours’ (quoting, bookwork, holidays, etc, are not producing an income so are not included). There are 260 ‘Working Days’ in a year (taking out weekends). Now subtract all the days you are not physically working, which will include the quoting, bookwork and maybe supervision if you have employees. This may come down to you only being on the tools for 165 days of the year (you have to realise that if you’re not on the job with a brush in your hand, you are not earning your own income). You now multiply 165 by 8 to give you how many hours you physically work in a year. This is then divided into to your total yearly expense (which will include your wage and Superannuation) and it will give you your ‘Break-Even’ hourly rate. (If you need any assistance with this, feel free to contact me at info@mytools4business.com)

The video attached is just one example of an expense if you have an employee. You will be truly amazed at the final cost when all entitlements are included.