If you’re an educator moving into the realm of teaching online, the prospect of pricing your time or materials appropriately while still bringing in the students can be sweat-inducing.
Profits coach and CFO of Profits Collective, Ben McAdam is well versed in uncovering the hidden profit opportunities through practical strategies and workable tactics.
Recently, Ben spent some time on the Anomalous Educator podcast guiding us through his solid formula that will get you on track to charging your worth without undercutting the market or your personal value.
Research Your Competitors
First things first, when it comes to pricing services you should put out your feelers and research your competitors. These are the people that work within a similar field or are offering services that may mirror your own.
“Having a look at your competitors and seeing the range and picking somewhere in there is a great first starting point,” explains Ben. “You’ll know what’s absolutely, completely out of the ballpark, and you’ll see that all of them are charging different prices.”
If some of the prices are so high that they make you wince, Ben reassuringly points out, “Obviously that’s working for them because otherwise, they would be out of business and gone.”
Look at the varying pricing structures available and pick a logical starting point that reflects your business type and expertise level.
Use a Simple Formula To Work Out Your Hourly Rate
Figuring out what to charge for online tutoring can be daunting. Thankfully, Ben has constructed a workable formula to help any budding online educator work out their ideal hourly rate.
Begin by considering the total amount you would like to earn before taxes over a set period -Ben suggests either weekly or yearly is best. Next, think about the total amount of hours you have available to work, “Whether that’s full time, or whether you’re starting on the side while you’re still working a teaching job,” Ben explains.
Then, take these two numbers and divide them. “That comes out with the amount of money you have to earn for every one of those working hours.”
While that is the simple part, Ben warns you should also contemplate the actual billable hours. “You need to think that every one of those hours you’re not actually going to be earning any money. Even if you’re an online tutor there’s going to be a certain percentage of your own paperwork and organising and backwards and forwards,” says Ben.
The most common percentage that many professional services use is, they assume only 75% to 85% of working time is billable, and the rest is spent within admin, training and marketing.
“You’ve started with how much you want to earn in a period, you’ve divided it into the number of hours you’re going to work during that period, and then you need to divide it by 75%.”
This will leave you with an hourly rate that you can adjust accordingly to meet your personal and professional needs.
Don’t Panic About Your Rates
In using Ben’s formula the result may make you panic. He suggests if it’s too high or too low – try comparing that billable time and hourly rate with your competitors.
“There’s always a premium provider in any kind of a market, and it might as well be you. You don’t have to be somewhere in the middle,” Ben reassuringly states.
Understand your worth. It takes time, training and a whole heap of energy to become an experienced and effective educator. This is where your value lies, and people will gladly pay for it.