IT and Business Insights for SMB Solution Providers

What Do You Need to Charge per Hour?

I've seen a number of posts on social media recently that mention hourly tech support rates well below $75/hr. I find that shocking for a competent technician. Of course no one calls themselves out and says, ". . . I'm a total noob and have no idea what I'm doing."

When I started my first technology consulting business in 1995 I set my rate at $100/hr. The reason for this was very simple. I thought it was large enough to be taken seriously as a professional.

I also thought it would make me a lot of money. After all, billing 40 hours/week at $100 was a very cool $4,000 per week. Times 50 weeks = $200,000! Sign me up! Of course that didn't happen.

Lesson One: If you bring $100 worth of value to a job, no one will bat an eye at paying $100/hr for labor.

Lesson Two: You never bill 40 hours per week. In fact, you're lucky to bill 20, especially when you start out.

Click to Enlarge

You may not charge for travel, so take travel hours out of the possible 40 hours in a week. You certainly don't charge for sales meetings, or for putting together quotes and proposals. So take that out. Meetings, planning, and time spent actually running your own business are all not billable to clients.

A really, really good technician working for someone else and doing most work remotely can often be 80% billable. That's 32 hours per week. 65% is much more common. That's 26 hours per week. Managers are frequently in the 40% billable range. Owners who do sales are frequently 20% billable or less.

The point is: You cannot bill 40 hours a week. Track it. Be rigorous and honest, and you'll see that you're lucky to hit 50%.

Now consider your hourly rate. See the chart.

The average income reported in the U.S. is about $75,000 per year. The green blocks add up to about $75-99,999 per year. As you can see, there are two simple ways to get yourself in a green cell: Bill more hours or charge more per hour.

Plot the number of hours your realistically bill in a week. If you're starting out and you're a sole proprietor, you are probably billing 20 hours or less. As you can see, you'll never reach $75K charging $50 or $60 per hour.

If you're charging less tha $75/hr, I want you spend a lot of time staring at these numbers and being honest with yourself. What do you really, really charge? How many hours do you really bill?

If you use QuickBooks, I encourage you to invoice every hour - even if it's free. You don't have to send zero-dollar invoices to clients, but it's pretty good P.R. if you do. But I want you to do this for yourself: Invoice every single hour. At whatever rate. If you give hours away, write that down as well. QuickBooks will allow you to enter five hours at zero dollars.

When you do this, you'll be able to run report / Sales by Item / Detail (or summary) and see exactly how many hours you invoiced, and the total income. Let's say you work 50 hours per week. You bill 25 at $75/hr. And you don't send bills for another 25 hours at $0/hr. Your effective billing rate is $37.50/hr.

But again, I bet you're not billing that. In fact, many people tell themselves they're doing great - until they run the actual numbers. It's much more likely that you have an occasional great job and a lot of weeks very really bad numbers.

The market is excellent for technicians and everyone in I.T. Services. Be honest: If you can't earn more than $100,000 in taxable income on your 1040 income form, STOP playing around in this industry and go get a job.

When you're ready to commit to a career as an individual consultant, you need to do a few things. First, charge enough to be taken seriously. Second, get yourself enough of an education to be worth at least $100/hr.

I welcome all the new people joining this industry. But please know that there are lots of people who have a lot of experience and charge more like $150-175/hr. Make yourself worth that, and charge those rates.

It's a lot easier than trying to squeeze out impossible hours at almost-impossible rates.

- - - - -

BTW the other colored cells are as follows:
 Yellow = $100K - $124,999
 Blue = $125K - $149,999
 Orange = $150K - $174,999
 Gray = $175K - $199,999


About the Author

Karl W. Palachuk, is a technology consultant, author, speaker, trainer, and coach. He is the author of fifteen books. He has built several successful businesses, including two managed services companies. His books include Managed Services in a Month and The Network Documentation Workbook. Karl is a frequent trainer and speaker in the SMB Community. His popular blog can be found at He has more than twenty years experience as an I.T. professional and serves on advisory panels for several hardware and software companies.

ChannelPro SMB Magazine

Get an edge on the competition

With each issue packed full of powerful news, reviews, analysis and advice targeting IT channel professionals, ChannelPro-SMB will help you cultivate your SMB customers and run your business more profitably.