How much am I worth - how to calculate your hourly rate.
I often get asked ‘how much should I be charging for my time’?
If you were looking to become a hairdresser, lawyer, plumber or florist, I could probably tell you roughly what you could expect to earn or at least point you towards internet guides that gives this type of information. Unfortunately the job title Balloon Artist is not listed on any of these guides.
I would imagine that if you are reading this blog, you are self-employed or considering becoming self-employed. Working out what we should charge for our time is very much our own decision but having a guide to help us especially when we first start out would be helpful.
So what is our job? Knowing what our job is and entails will help us to determine what we are worth. Are we an event decorator, party planner, retailer, entertainer or all of these? Questions such as “are we qualified, have we invested in our art”, will also help to determine how much we can charge. Can someone just starting out without any experience or training expect to earn the same as someone who has many years of experience and is very well trained?
We are certainly worth more than the national minimum wage. I mention this as I know that there are people who work in our industry that do not include the cost of their time when calculating their selling prices and therefore are not earning the minimum wage rate. In fact they are working for nothing and even worse they are not covering their business overheads or generating any profits, which are both essential to the growth and success of any business.
To understand pay scales and worth, we could start by looking at a variety of other creative job types such as floristry, visual display merchandisers, and even artists, we should also look at party planners, and event decorators too. All these jobs are creative and require skills and knowledge.
I would recommend visiting a variety of salary comparison websites for your country; some of these sites are quite specific and you can search by state. This will certainly give you an idea of the wage/salary someone could expect to earn working in a range of creative industries, which will give you a good starting point to help you set your own payment scale. I Googled “pay rates florist United States” and got a good selection of results from Google. The best site was www.payscale.com. Or you could try ‘googling’ salary comparison sites and once again you will get a good selection of sites to choose from.
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| Tim Vlamis CBA |
To help me on my quest to discover how much someone should charge for their time I turned to Tim Vlamis, CBA. Tim is the managing director of business development for Pioneer Balloon Company and has worked with independent retailers all over the world for more than 25 years. It was Tim who developed the Qualatex Balloon Network® that has helped many thousands of balloon businesses grow and develop over the past 20 years.
“The simplest way to think of “what do I charge for doing ‘x’?” is to use replacement cost as the best guideline. That is, a business owner should charge whatever it would cost to hire talent on the open market to fill that job function.
Using a “replacement cost” model has several advantages. It works not only for owners, but also for relatives, friends or other unpaid/lower paid volunteers. That is, it answers the question “what do I charge for my husband’s time when he helps me?” We don’t want to report and pay taxes that are unnecessary.” Simply always include the expense of what it would cost to hire someone on the open market.
- It enables the business to scale naturally to a larger size. If a lower cost is used, the business gets “trapped” into selling at lower prices. Sufficient margin isn’t generated to allow for reinvestment and growth and the business is trapped into giving away time for less than market compensation. A bad deal all the way around.
- It offers an independent and objective “reality check” on pricing and management.
- It helps maintain consistency between different job bids. Just because a spouse can work on one job and not on another, there shouldn’t be a difference in what is charged to the two different clients.
- It’s (relatively) easy to check. Market prices can be discovered fairly easily on salary and compensation websites.
My only other advice is that people should always use a proxy of themselves for estimating purposes. That is, you should think of hiring someone that knows as much as you know, works as hard as you work, and cares as much as you care. *Everyone* is replaceable. We replace the President of the United States at least every eight years, so there is someone out there who could replace your spouse, yourself, your daughter, whomever. You just need to realistic about the market rate for that function.
A “fully loaded” rate should also be used. That is, it’s the full cost to the business for filling that job function or role, not just the compensation that the hired person would receive.
So for example, if you pay a member of staff $14 per hour to work in reality that person would cost you closer to $20 per hour. This will cover costs such as uniform, training, fixed expenses, and insurance such as workers compensation.
Summary
If you were hoping that I would be able to give you an instant solution as to how much you should charge per hour then I apologise. Unfortunately there are too many variables, such as worldwide location and local pay rates.
But with a little investigation on your part, you should be able to work out approximately what would be a fair rate of pay for the type of work that you are doing by comparing a selection of like creative businesses.
Remember to think in terms of how much it would cost you to employ someone to do your job.
Don’t be tempted to undercharge because you are using friends and family to help you out. Ensure that you charge the market rate in your calculations to make sure that you generate enough income to reinvest and grow your business.
Ensure that the rate that you use is the ‘fully loaded” rate and not the base rate that you would pay an employee. There are many different costs involved with employing someone other than the amount of money that you actually pay them.
The work that balloon artists perform is unique as each artist. Like any artist, you deserve to be paid for your artistic presentation as well as your professionalism.
I hope this helps you to value your time?
Happy Ballooning!
Sue
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