Real-Life Math
Harry Elver owns a computer consulting company in Arizona. He says
it's important for consultants working for themselves to be comfortable with
numbers. The survival of your business depends on it!
"You do have to
know what your margin is for the stuff that you either sell or the services
that you provide," says Elver.
"Because I think a lot of [consultants],
especially in the beginning, they don't charge enough, and they end up not
really making money on what they're doing... [Y]ou don't want to get in that
situation where you're unaware of your financial situation."
The hourly
rate that they will charge for their services is an important decision that
data retrieval specialists must make if they work for themselves.
Suppose
you hope to have total revenues (earnings) of $80,000 per year. Calculate
how much you should charge per hour, assuming:
You will
take two weeks of holidays each year
You expect to spend 30 hours per
week doing actual client work (i.e. billable hours)
What
hourly rate will give you earnings of $80,000 per year?