Rule of three
September 17th, 2009What is the rule of three?
Well if you’re ever asking yourself what should I charge for my time? Figure out what you’d like to earn then multiple it by three.
Why? Well it is all too easy to under price yourself (way too easy). We often forget the initial meeting we had, the two hours putting together a proposal, the time cost of getting to and from meetings, not to even mention fuel costs, calling, hardware and our own intellectual property.
This rule helps you avoid falling into the trap of being too cheap, over time you will get a feel of your market rate but use this as a baseline to start from.
Related Posts
Tags: charging, consultants, freelancing
This entry was posted on Thursday, September 17th, 2009 at 9:53 pm. 
September 17th, 2009 at 10:14 pm
Great advice, when I was fencing contracting, it was easy to under quote a job, that hourly rate can shrink really quickly if you don’t allow enough fat in the system. and working for free is pretty discouraging!
September 18th, 2009 at 4:43 am
Yes! Here’s another way to do it:
How much do you want to earn a year? Eg $100,000
Divide that by 48 (working weeks in a year)
Divide that by 20 (number of chargeable hours in a week)
= $104.16/hour. Nice.
September 19th, 2009 at 5:56 pm
Try reading Value Based Fees by Alan Weiss. He dispells the theory that charging based on time is a good idea. It will change your perspective, and perhaps more importantly your income.
September 19th, 2009 at 11:42 pm
Thanks for bringing that up, Value Based Fees are often to be a leap for people in the mindset of undervaluing their time, what I have found that this rule helps bridge the gap. I discuss this further in my pursuing the passion blog series so keep an eye out.
September 21st, 2009 at 7:19 pm
@Carl That’s the key thing, when a project goes over, or you realise you need to work even harder than before it’s quite disheartening. Then when things get tough you’re more likely to quit. It’s in everyones best interests for you to price more accurately.
@Sheldon Also a good one, thanks for sharing, people don’t often realise how little chargeable hours they will have when they start out.