Formula for setting fees

Here's a rule of thumb to use primarily for someone starting out as a service provider, such as a consultant.

Let's suppose that you made $32,000 a year as an employee doing much the same work. That means you earn approximately $615 per week; $123 per day; and $15 per hour.

To arrive at a starting figure for your hourly rate once you are self-employed, multiply $15 by 2.5. That brings you to $37.50 per hour for an initial per-hour estimate. Since $37.50 is a rather cumbersome number, you may want to round that up to $40 or down to $35.

Now take your own figures and put them into the following formula:

Hourly Pay x 2.5 = Hourly Rate for the Self employed.

Once you've established a reputation and a group of clients, you can increase your fee rate as demand increases and as you think the market will bear.