How to raise your hourly rate

How to raise your hourly rate? Start by calculating it properly

As part of my series on simple business metrics, here is an elaboration on metric #2 – which client has the highest hourly rate.  Calculating this seems simple, and for the most part it is.  You just have to make sure to include all time involved with the project.  It’s easy to omit non-billable time, hopefully you are including practicing  time tracking with some automated software.  You can only raise your hourly rate if you know what your rate truly is.  When calculating the rate, make sure to include all of your non-billable tasks.

Over the years, I’ve found non-billable tasks often include:

  1. Meetings
  2. Travel to meetings
  3. Phone calls
  4. Meeting prep (no one ever remembers to account for this)
  5. Pitch rehearsal
  6. Task disruption – on average, I have found it takes 15 minutes minimum to get back into psychological flow after a phone call or “urgent” email.
  7. Project research
  8. Client Research
  9. New software evaluation (ideally this should be spread out over several clients)
  10. Writing contracts and proposals
  11. Negotiating prices and contracts
  12. Consulting with outsiders (lawyers and advisers) about contracts
  13. Status emails

Have I missed anything?

Update: Bill From Coding Out Loud suggested the following points (which I have reworded slightly)

  1. Contract review and legal overhead
  2. Collections
  3. “Goodwill” support, i.e. items outside of the contract but needed to maintain the relationship (like when a client asks for the same file for the third time.).

Editor’s Note

This blog post originally appeared on the Profit Awareness Blog – as that app is up for sale, it has been consolidated into the main Digital Tool Factory blog.


Written By Steve French


6 responses to “How to raise your hourly rate? Start by calculating it properly”

  1. Good points! Also maybe toss in: reviewing NDAs (often before contracts and serious discussions/negotiations can even begin), billing/invoicing (including the “my check still hasn’t come” follow-ups!), and transitioning at the end (writing stuff down, answering questions via email – including after you are “done”). If you are “training” be sure to account for preparation time – which might exceed delivery time (e.g., might take 2 days to prepare a coherent 1/2 day training session).

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