Setting rates as a VA is a topic that I think you’re going to find really helpful.
Why? It addresses one of the most common questions posted in our community:
“How do I set my virtual assistant rates?”
I have both good news and bad news. The good news is that we have some practical guidelines and ideas that will make this process much easier.
Side-note: This is also a topic that’s covered in-depth in a post we wrote about becoming a virtual assistant.
The bad news is that the process is part art, part science. That means that there is no perfect answer and no “one size fits all” solution. Setting your rates is a personal decision that needs to take into account a wide variety of factors that we’ll cover shortly.
But don’t despair, we have plenty of experience with this topic – not to mention the advantage of being able to talk to course participants and successful VAs on a daily basis. The ideas and information in this post are straight from the trenches.
Let’s jump right into it…
The Art and Science of Setting Virtual Assistant Rates
So, you’re a new (or aspiring) VA and you’re struggling with the idea of setting your rates.
Welcome to the club! This is a challenge that even experienced VAs struggle with from time to time.
Every time you start a new project, begin working with a new client or decide to offer a new service, the topic of rates will rear its ugly head. There are two specific reasons for this:
- Every project is different. Pricing often needs to be adjusted accordingly. Even managing two different inboxes for the same client can prove to be a vastly different experience.
- Every client is different. Let’s be honest, some clients require more work (or patience) than others and an increased workload justifies a corresponding increase in rates.
Over the long-term, you also need to take into consideration things such as experience, efficiency, the ROI from your client’s perspective and your desired income level.
Complicated, right? So how do you determine a good starting point?
- Should you be charging $15 or $100 per hour?
- Should you even be charging hourly?
- Is project based pricing a better option?
Let’s take a look at some of the determining factors.
Your VA Business Has an Overhead
At first, the whole idea of becoming a virtual assistant – whether it’s to earn some side income or to replace your corporate salary – can seem a little euphoric.
You’ll be thinking about how nice it’ll be to work from home, set your own hours and be in charge of your own destiny.
As awesome as all of those things are (which really IS awesome, BTW), it won’t take long for the reality to set in that you’re running a business. That means you have to think about overhead, aka business expenses.
Business expenses will vary depending upon where you live, but let’s take a look at a few examples:
- If you’re in the US, you’ll need to think about self-employment tax. (In Canada, you may need to pay both the employee and employer portion of CPP in addition to your regular income taxes.)
- Then you need factor in the fact that there are no paid sick days, paid vacations or health insurance.
- And retirement? Don’t forget about planning for retirement.
In order to cover these basic expenses, you should add a minimum of 25% to your rates. For example, if you were thinking about charging $25/hour then multiply $25 by 1.25 and quote your rate at approximately $31/hour.
Once thing that I can’t over-emphasize is that speaking with a financial planner or accountant early in the self-employment process can pay huge dividends.
With taxes and benefits out of the way, we can turn our attention to office expenses. Here are a few that come to mind:
- Building and launching your website
- Accounting and invoicing software (such as Freshbooks)
- Accounting and legal advice
- An adequate computer
- Advertising and marketing
- Continuing education (you should never stop learning)
These are the kind of expenses that every solopreneur and virtual assistant must deal with on a month-to-month basis. And you need to factor these expenses into your rates if you want your business to be profitable.
Personally, my office overhead typically runs around 28-33%. That might be a little higher than what you experience since I also have a part-time VA and pay for some additional software. There are also occasions where my expenses jump to 50% if I enroll in a course or replace a piece of computer equipment.
When You’re Unsure How to Quote for a Project
When you first start working with a client or take on a new project, there can be a lot of unanswered questions.
- Will you and the client work well together?
- Will you enjoy the work?
- Will scope creep be a problem?
- Do you fully understand each other’s expectations?
- Do you get along on a personal level?
- Is it worth it?
The last thing you want to do is find yourself in a situation that is either unprofitable or unfair – it rarely ends well. While you can never anticipate every potential roadblock, it still pays to plan ahead.
Five tips for when you’re faced with the uncertainty of setting your rates:
- Insist on maintaining an open line of communication. This works both ways. Not only should you keep your client apprised with how things are progressing, but they should keep you in the loop with how they’re feeling about your work.
- Outline your deliverables as clearly as possible. Fewer unanswered questions will usually result in fewer problems.
- Start new projects and new relationships with a two-week trial period. Agree with your client to sit down and discuss how things are going after getting to know each other a little better. This can be a great opportunity to talk about both the fairness of rates and the satisfaction of your work.
- Don’t discount your rates. Just because it’s a new client or project does not mean you should be lowering your rates. Stick to your guns and feel confident about the value you’re providing.
- It’s okay to offer a beta period. If you’re launching a new service (for example, Pinterest Management) it’s okay to offer a beta period at a lower rate. Just make sure your client knows it’s temporary, short term and only because it’s a new service.
Set Rates That Work for Your Business
Every virtual assistant will set their rates a little differently. As you’ve read in the preceding paragraphs, there are plenty of individual factors that need to be accounted for in your pricing decision.
Ultimately, you need to decide what works for you and your business. If you’re trying to earn some extra pocket money every month by working evenings and weekends, your needs will be very different than someone who’s goal is to replace their $60k annual salary.
In terms of statistics, there is little reliable information that talks about average virtual assistant rates. At Payscale.com they quote total annual pay for VAs between $20,996 and $62,942. However, at the same time, they list typical VA tasks as “make appointments, arrange for advertisement and provide basic customer service activities online.”
Not a very accurate description if you ask me.
You and I both know there are many more potential VA tasks that just those three. We put together a list of 150+ potential services, and there are dozens of potential areas in which you can specialize.
Our experience at Horkey HandBook is that VA rates can range from an absolute low of $15/hour (at least domestically) to over $100/hour for high-ROI services. So if you talk to someone who’s looking to pay minimum wage or less, you might want to offer up a quick, “Thanks, but no thanks!”
Where you are in that range is entirely your decision (and should in part be based on your experience and skill set), but here’s how you might run the numbers based on replacing a current gross annual salary of $50,000:
- $50,000/year divided by the number of pay periods (which is 26/year) = $1,920 per pay period.
- Next, divide $1920 by the number of hours per pay period (80) = $24 per hour.
From there you can adjust your hourly rate as required. For example, you could add estimated taxes of 25% which would be $24 x 1.25 = $30/hour.
You also need to keep in mind that not every hour is billable (that privilege is reserved for the legal profession :)).
If you want to offset part of your office expenses, save for an annual vacation or set aside money for retirement, those items can all be added to your rate or taken off the top. It’s up to you.
If all you want to do is work a few extra hours per month to set aside money for your child’s post-secondary education or save for a vacation, you might not need to worry as much about accounting for your overhead. If your regular job provides medical and vacation benefits, for example, you could either charge less or maintain higher profit margins.
Our Advice on Setting VA rates:
Your rates will change over time and with each client.
Don’t spend too much time stressing about where to start, just get started. Initially, $20-$25 is a great target. Once you have a little experience under your belt, increase your rates. If you start at $25 and then move to $27.50, that’s a 10% increase.
You could easily implement two of those rate increases in your first year. When is the last time an employer offered you two 10% raises in the same year? Self-employment isn’t all unicorns and rainbows, but having control over your income is a huge benefit.
We wrote a whole post of setting your virtual assistant pricing structure which you might want to check out.
Want to hear it for yourself?
Here’s an interview that Gina did with Carrie from Careful Cents (skip to 17:40 for the section on rates). An important takeaway from this video is the huge difference in starting rates between two successful VAs.
Four Ways to Structure Your Virtual Assistant Rates
There are several ways to structure your rates and again, this is a personal decision. You might even find that a combination of methods works best for your virtual assistant business.
For example, personally, I have some services that are productized, some that are essentially provided on retainer and others that are hourly. You can learn more about how to structure your service packages in this post.
Creating the right mix for your business can add stability and improve cash flow — there are a lot of independent aspects to consider
This is the most common method of charging for virtual assistant services.
But that doesn’t necessarily mean it’s the best. The upside is that when you work, you’ll get paid—scope creep is rarely a problem here because you’re simply billing for time.
The downside is that you’ll need to track your hours and some clients might request different levels of reporting depending on the level of trust. They’re also likely to insist that you work reasonably efficiently.
Instead of invoicing on an hourly basis every two weeks, you can also offer clients the opportunity to purchase a block of hours. Those hours can then be used at the client’s discretion.
As a general rule, we don’t advise offering discounts. But what you could do instead is set your larger retainer package (say 20 hours per month) at your regular hourly rate. Then offer successively smaller packages at a small premium (10 hours at your regular rate + 2.5% or five hours at your regular rate + 5%).
As you become more experienced, you might decide to begin introducing project-based pricing. An important distinction with project-based pricing (compared to productized services) is that your client will outline the deliverables. There might be some general negotiation back and forth but it’s generally your client who defines and outlines the project.
I wouldn’t recommend starting with this type of pricing for the simple reason that it’s too easy to under-price a project. Most of the time, you’ll end up being too generous with your estimate and charge too little.
However, once you’re experienced with a specific task (such as email, social media or blog management), project-based pricing can be a great way to boost profitability. If you’re a new VA who is providing social media management services, you’re probably still learning about the different platforms and discovering new ways of becoming more efficient.
But there comes a time where your efficiency will overtake the value that you’re providing. If you’re at the stage where your rate is reasonable and you’re getting work done extremely quickly, you might consider charging a fixed rate for specific projects and then specifying an hourly rate for overages or out of scope work. In doing so, your client knows their fixed cost up front and you are rewarded for completing the job more efficiently by earning a higher average hourly rate.
Retainers are a great way to improve cash flow.
A retainer is basically a pre-arranged arrangement of trading specific tasks for an agreed upon weekly, biweekly or monthly rate. While Gina started by charging an hourly rate to get a feel for the workload, she quickly moved to a weekly (and then monthly) retainer with her VA clients.
Retainer might include certain tasks that are repeating (such as inbox management), but can also include one-off tasks. Like project-based pricing, it’s your client who is generally responsible for specifying the deliverable.
The upside is that you walk into each month knowing exactly how much you’ll get paid. You can charge it in advance (our recommendation) or in arrears (after the month has ended).
The downside is that scope creep (more work for the same pay) can easily come into play. The way to hedge your bets is to keep that line of communication open between you and your client at all times.
Also make sure to have pre-planned check-ins (30 days, 90 days, six months and one year in are great time frames to start with) when you can touch base with your client to make sure things are still fair on both sides. If the workload has gone down and doesn’t look like it’ll go back up, you might agree to a smaller retainer. Or if the workload has increased and it’s anticipated that it’ll stay at that level, then your pay should be adjusted accordingly.
In our opinion, the best way to figure out a retainer rate is to start off charging hourly, so you can figure out how long a given task will take you for a given client. Once you have a better picture, you can begin work on transitioning clients to retainers.
The final method of pricing your services is using a productized model. Once you’re extremely familiar with a specific task it might make sense to productize your service. This model closely resembles project-based VA work with one important distinction: You define the deliverables or services to be provided. Productized services can be repeating as well (similar to a retainer) but the actual work to be completed is still determined by you in advance.
A great example of this is how we recommend pitching VA services in our course, Become a Pinterest VA Today! Create an outline that describes exactly what services you’ll provide and the price you’ll change.
Invoice your client up front and then deliver your service as expected. This model also presents an opportunity to contract out a portion of your services.
For example, you might provide a social media management package that includes five Facebook posts per week including images. But if graphics aren’t your thing, you could contract that portion of the work out to another freelancer. Just be careful that you keep your margins intact and that contracting out a piece of the work allows you to leverage your time.
Set Your Goals High and Your Rates to Match
This is a challenge/mistake that virtual assistants face time and time again: Don’t underestimate your abilities or the value that you are providing.
When you first make the decision to venture in virtual assistant work, it’s 100% normal to experience some self-doubt.
After 5+ years of working with small business owners, I still have periods of time where I’m unsure of how to handle a new situation or a particular client. Sometimes, I even question whether I’m providing enough value. Are my rates too high or too low in a given situation?
These thoughts are a normal part of the process. And truthfully, it’s something that every entrepreneur deals with. If you’re not at least a little uncomfortable, you’re probably not growing as a business owner.
But you just need to pick a starting point. And odds are (in the early stages), your rates will be on the low side. But as your experience and confidence grows and you become more efficient, you need to adjust your rates appropriately.
As your rates increase, it’s only natural that some clients may not be able to afford your services any longer. You’ll move on from some of your original clients and land new ones at a higher rate.
You’ll also find that some clients stick with you even though your rates are increasing. That’s because they value your work and understand that you’re not easily replaced. Those clients are like gold and should be treated as such.
Don’t settle for long-term for rates that are below average or even just average. Set a goal that seems uncomfortable … maybe even unreachable.
The secret to earning an above average income as a virtual assistant is very simple:
- Focus on providing maximum value to your clients.
- Take pride in what you do.
- Under promise and over deliver.
If you do those things first, you should have no problem setting rates that are well above average.
I’ve tried to cover all the major points related to setting rates in this post but if you’re left with any questions fire away in the comments below!