Hi! And congratulations for starting your marketing agency.
You asked, “I am starting an influencer marketing agency. How much should my hourly rates for my services be?”
First: you’re going about it backwards.
Having an hourly rate is fine for internal purposes, but should not be on any external (client-facing) materials.
To determine what you need to make hourly (again, for internal reasons). Use the following formula:
- Determine the income you want to generate annually
- Determine how many work days you will have annually
- Determine how many hours per day you will work
- Determine your day rate by dividing your annual income by the number of work days
- Determine your hourly rate by dividing your day rate by the number of hours you want to work each day
For example, let’s say you want to make $100,000 (pre-tax) annually.
- Annual desired income: $100,000
- Annual work days: 365 days total, minus 104 weekend days, minus 10 holidays, minus 15 days vacation leaves 236 days for work
- You won’t work 12, 10, or even 8 “billable” hours per day, it will be more like 4 or 6, on average. So we’ll use 5 for simple math.
- Your day rate ($100,000 divided by 236): $425
- Your hourly rate ($425 divided by 5): $85
Of course, this is a broad generalization not factoring taxes and other expenses. But you get the idea.
Your rate of $85 per hour is how you can determine if a job is worth your time and to use in proposals to ensure you are making money.
For the client-side, I would encourage you to focus on value-based rather than an hourly-rate.
For one, when you are hourly-rate focused, you are positioning yourself as a commodity. A hired-hand that can be replaced with ease.
Next, you are competing with everyone who will do your job for $1 less. This results in a race to the bottom of the pricing barrel. Soon, you are justifying why you are worth $85 per hour when the next day will do it for $80. Or $40. Or $15.
Additionally, when pricing per hour, you are effectively limiting yourself to a fixed income. Let’s keep the $85 per hour from above, and let’s say that you magically work 10 hours a day, effectively doubling your annual income to $200,000. To earn more, you either have to raise your rates (again, your competing with the guys who will do it for less) or work more.
I don’t know about you, but I like my vacation days. And going to my kids’ school events. And not being tied to the computer for 10 hours per day, 5 days a week, 48 weeks a year.
Instead, when you price your services for value, you can charge almost anything you want. Let’s say you are THE influence marketer to the stars. Your services are so well respected people will gladly pay $5,000 or $10,000 or $25,000 for the privilege of talking to you about how to gain more brand awareness and influence. And let’s say that you can do this for a client in 10–15 hours of work (not factoring the years and years you’ve spent learning your craft and developing systems). Even at $5,000 for the service, you’ve essentially made $500 per hour.
Could you lead a conversation with your client if you started with $500 per hour? Not likely. Remember, the other guy only charges $40 per hour. But you have sold the client on the value of what you can provide. Not just trading time for money. You’ve traded knowledge for money.
Finally, the more efficiently you can niche yourself, the more of a pricing premium you can demand.
All the best,