I've recently started my business and have a couple of questions about what things are billable for my first official project. I would really appreciate some expert/professional advice:

1. My new client won't be furnishing the materials he needs (labels, etc.) so I have to buy them and he'll reimburse me. Do I charge him for the time the shopping trip takes? I have to drive to and from the office supply store, search for the right products, and buy them. All of that could take an hour or so. I feel like he should pay for this time. If so, should I charge the same hourly rate? For example, if I'm charging $10 per hour for the typing project, do I add that extra $10 for the hour of shopping? I'm also toying with the idea of giving him a reduced hourly rate for shopping if it's OK to charge for shopping since that's not as complicated as the typing and organizing work required for the project.

2. When I purchase the labels, they only come in a huge quantity for $32. His project will take less than one fifth of the package. So how much should he have to pay for -- the entire $32 and he keeps the tons of extra labels? Doesn't seem fair. But it's less fair for me to have to buy them and only get reimbursed for the number of labels he uses and then I'm stuck with 600 extra labels I'll probably never use again. I can't afford to spend the money on that right now. So who should pay?

3. I have a sweet coupon at the store I'll be buying his supplies at. Because of his purchases, I'll be able to use a $25 coupon the store sent me for being a frequent shopper. Since he's going to reimburse me I guess I have to give him a copy of the store receipt, so he'll see the coupon on there. I don't think I should have to give him that $25 since it's part of my own deal with the store AND because if he bought the materials himself, he would be paying full retail price. Before I remembered this coupon, I told him how much the supplies would cost and he said okay without hesitation. But will it be weird if he sees that I pocketed the extra $25? What can I say to justify it? After all, I could have used that coupon on my own personal purchases but I used it on his. Or is it just totally wrong to expect to keep the coupon savings for myself and I should just be nice and pass the savings on to the client?

4. He wants me to meet him at his location, which is a 30 minute round trip, and then our consultation for him to show me what the job entails and give me the stuff will take about an hour. Then another 30 minute roundtrip to deliver the finished project to him. Do I charge for this time since that's 2 hours out of my day? If so, should I tell him up front or is that unprofessional? And would it be billed at the same rate of $10 per hour? I'm not sure if initial consultations are traditionally free ... I don't think I can afford it!

5. Is mileage a client billable item? If so, how would it appear on the bill ... as a per mile charge or as a gas charge? I'll have mileage for trips to his office and for going to the office supply store, about 35 miles for everything. That's about 2 gallons of gas. Or should I just be happy with taking the mileage deduction allowed on my income tax return and not make the client pay for it?

All of this seems confusing to me because it appears that clients want to pay by the hour. My other services -- such as websites -- are charged by the job. When I design a website for someone, I factor the consultation time into my flat price. I don't see how it would be possible to charge for assorted VA projects by the job since there is no way to estimate how long they will take me.

As it is, I'm only making $12 per hour with this new client and I estimate the job will take 4 hours. He used an introductory offer coupon for one free hour of work when you buy 3 hours. I told him my rate was $16 per hour, so he's getting 4 hours for $48. I'll be spending 1 hour shopping, 2 hours in meetings/discussions, plus the 4 hours for the job. If I don't get paid for the extra 3 hours of non-typing work, this works out to a grand total of $6.86 per hour. By the time I pay for gas and taxes, that's about $5 per hour!!! I can't do any more work for that crazy rate.

So I need some serious advice please! I want to come across in a professional manner. Why my rate is so low is because I really needed to get the job to get started with my business, he said some things that indicate he's got more work from me in the not-too-distant future, and I'm hoping he'll refer me to other people. And maybe I can get a good testimonial from him to start building a portfolio.

Anyone have any suggestions on how much I should charge per hour? And after this project is over, when he hires me again soon, is there any way to professionally raise my hourly rate from $12 to something better? Or am I stuck with that for the rest of forever with this person? Since the introductory offer only involved one free hour, it seems weird to suddenly change my "regular" $12/hr rate to something higher on his next project.

I'm feeling overwhelmed, so thanks in advance for any input!

1. My new client won't be furnishing the materials he needs (labels, etc.) so I have to buy them and he'll reimburse me. Do I charge him for the time the shopping trip takes? I have to drive to and from the office supply store, search for the right products, and buy them. All of that could take an hour or so. I feel like he should pay for this time. If so, should I charge the same hourly rate? For example, if I'm charging $10 per hour for the typing project, do I add that extra $10 for the hour of shopping? I'm also toying with the idea of giving him a reduced hourly rate for shopping if it's OK to charge for shopping since that's not as complicated as the typing and organizing work required for the project.

When I have had to purchase items I try to build in that time into a shopping trip that I need to take for my own business or for personal needs. For example, if I am going to the post office to pick up my mail, I will mail whatever the client needs and make that one trip at no charge. It's not worth the time spent (I think) in accounting that out. But if the trip to the store is specific to the client and will take an hour to make the selections, I would charge your regular rate and let the client know upfront. Don't reduce your rates because then they get used to that and your time is still valuable. You could be doing client work at your rate if you weren't going to the store.

2. When I purchase the labels, they only come in a huge quantity for $32. His project will take less than one fifth of the package. So how much should he have to pay for -- the entire $32 and he keeps the tons of extra labels? Doesn't seem fair. But it's less fair for me to have to buy them and only get reimbursed for the number of labels he uses and then I'm stuck with 600 extra labels I'll probably never use again. I can't afford to spend the money on that right now. So who should pay?
I would suggest that you tell the client that the labels he/she wants to use are $32 and that the items need to be reimbursed. If you use products specific to a client's business, I would charge the full amount. I don't charge for printing a few sheets of paper but when I have had to print out half a rheem of paper and envelopes, I charge for the whole thing and then set that to the side to be used only for that client. Perhaps the client has labels he/she can send you so there would be no expense involved. I'm always looking for ways to save the client money (and that makes you look good) so lay out the whole expense issue up front and then see what the client wants to do.

3. I have a sweet coupon at the store I'll be buying his supplies at. Because of his purchases, I'll be able to use a $25 coupon the store sent me for being a frequent shopper. Since he's going to reimburse me I guess I have to give him a copy of the store receipt, so he'll see the coupon on there. I don't think I should have to give him that $25 since it's part of my own deal with the store AND because if he bought the materials himself, he would be paying full retail price. Before I remembered this coupon, I told him how much the supplies would cost and he said okay without hesitation. But will it be weird if he sees that I pocketed the extra $25? What can I say to justify it? After all, I could have used that coupon on my own personal purchases but I used it on his. Or is it just totally wrong to expect to keep the coupon savings for myself and I should just be nice and pass the savings on to the client?

You could pass the savings on if you want to or save the coupon for your own supplies.

4. He wants me to meet him at his location, which is a 30 minute round trip, and then our consultation for him to show me what the job entails and give me the stuff will take about an hour. Then another 30 minute roundtrip to deliver the finished project to him. Do I charge for this time since that's 2 hours out of my day? If so, should I tell him up front or is that unprofessional? And would it be billed at the same rate of $10 per hour? I'm not sure if initial consultations are traditionally free ... I don't think I can afford it!

You should bill the client for whatever time you spend on this project which includes travel time. This should be in your contract that you will bill back whatever you spend on the client's projects.

Some VAs don't charge for a specified time to 'get set up' which could be an hour. After that, all time is billable. You should set your own policy and stick with it. After the initial consultation on the phone to set up the account, I charge the clients for my time to get them set-up but I use my own judgment as to how much time that should be.

5. Is mileage a client billable item? If so, how would it appear on the bill ... as a per mile charge or as a gas charge? I'll have mileage for trips to his office and for going to the office supply store, about 35 miles for everything. That's about 2 gallons of gas. Or should I just be happy with taking the mileage deduction allowed on my income tax return and not make the client pay for it?

I'm not a tax person but I take that deduction on my income tax.

All of this seems confusing to me because it appears that clients want to pay by the hour. My other services -- such as websites -- are charged by the job. When I design a website for someone, I factor the consultation time into my flat price. I don't see how it would be possible to charge for assorted VA projects by the job since there is no way to estimate how long they will take me.

Yes, that is always the problem. What you can do is charge hourly for the 'unknown' aspect of any job and once it becomes more concrete you can requote it as a flat-fee or project job.

As it is, I'm only making $12 per hour with this new client and I estimate the job will take 4 hours. He used an introductory offer coupon for one free hour of work when you buy 3 hours. I told him my rate was $16 per hour, so he's getting 4 hours for $48. I'll be spending 1 hour shopping, 2 hours in meetings/discussions, plus the 4 hours for the job. If I don't get paid for the extra 3 hours of non-typing work, this works out to a grand total of $6.86 per hour. By the time I pay for gas and taxes, that's about $5 per hour!!! I can't do any more work for that crazy rate.

So I need some serious advice please! I want to come across in a professional manner. Why my rate is so low is because I really needed to get the job to get started with my business, he said some things that indicate he's got more work from me in the not-too-distant future, and I'm hoping he'll refer me to other people. And maybe I can get a good testimonial from him to start building a portfolio.

Anyone have any suggestions on how much I should charge per hour? And after this project is over, when he hires me again soon, is there any way to professionally raise my hourly rate from $12 to something better? Or am I stuck with that for the rest of forever with this person? Since the introductory offer only involved one free hour, it seems weird to suddenly change my "regular" $12/hr rate to something higher on his next project.

We don't really discuss rates here on VAF however, I would suggest that you revisit your rate package because it appears to me that you are undercharging. You are the business owner and you need to set rate policies. Yes, you can change your rate for the next project but I would suggest giving 30 days notice so he has time to digest this.

I'm feeling overwhelmed, so thanks in advance for any input![/QUOTE]

I know that this is overwhelming. Let me ask you...Do you have a business plan in place? Does your contract spell out your policies including your fees? You don't want someone to take advantage of you either. Having a contract spelling out what you will charge and what is not billable will make your life easier and make you look confident as a business owner.

Janine

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Wow...I like the thoroughness of your contemplation and I think I will go item by item and offer you my 2 cent worth.

1. Time is money! As a VA, your time is what you are being paid for, so the hour that you spend on this shopping trip is 1 hour you are taking away from something else you can be doing. Keep that in mind when determining whether you should charge him for the trip to the store or not. I'm no accountant (and you may want to check with one) but I do know that the government has a mileage allowance that is set by the IRS so you can check and see how much the mileage rate is for your state. At one point in Texas it was about 0.55/mile - this can help in your charge for going to the store or you can go with a flat rate option. Do what is fair to you as a business-owner. If you had a local store deliver the item to your home, they will charge you for that. The flipside here is, does your contract specify that you will NOT charge for costs associated with leaving your house to complete a task or that you will absorb any costs for materials? If not, then it is fair to charge for both.

2. If you are purchasing an item that you feel you may never use again, then you would count this as a pass-through charge and pass on whatever you paid for the item to the client and you can send him any leftover labels or you can be transparent with the client - Dear John, I found the labels required to do your project at XYZ store and they run $32. I don't forsee that I will use the whole package and would like to know if you would like me to return the remaining labels to you for your own future use. This also gives the client the option to say $32 dollars...that's too much, don't buy them.

3. I'm a little on the fence about the coupon. That is YOUR coupon for you to use for your own office supplies, so unless it's about to expire soon, I don't know that I would use it to buy supplies for a client when we already have an agreement that they will reimburse you for your costs associated with completing their project. Add to that, part of being trustworthy as a Virtual Assistant is your ability to be transparent. I have read some VAs welcome packets that outline that they refuse to submit receipts to the client for any charges they have. I don't know that I think that is fair...I mean, as a consumer myself if you are telling me that I am reimbursing you for something, I need to know that you actually spent that. (Plus I watch a lot of court-tv and it wouldn't hold up in court...lol)

4. Wow! This sounds like it's taking the "Virtual" part out of being a virtual assistant. Again for this one, I say that it's a big part of your up-front rules. A great deal of us do offer a free consultation, but that's a PHONE consultation, not anything that requires us to travel or meet in person. But, again, it's all about telling the client/potential client everything up-front. This gives you both an "out" where he can say "I don't want to pay for that" or "I don't want to do that" and you can say "These are my rules that you need to know/understand before we get started." The unprofessionalism comes in not being forward and up-front and/or hitting clients with a bunch of "hidden fees." A phone initial consultation that most of us do for free is anywhere from 30 minutes to 1 hour. That is up to your discretion.

5. You really want to consult an accountant/tax professional, but as I said in #1, you MAY be able to charge the government standard per mile rate - but you cannot use it as a mileage deduction on your taxes if the client reimburses you for it. I am not an accountant and don't claim to be, so please do check with a professional on this one also because this varies from place to place.

Do you normally charge $12 per hour? Or $16? You want to make sure that you explain to him that his rate is what it is because of the coupon and you may want to include that breakdown in your invoice that you submit to him once the project is complete. Your rate seems low to me, when I first started talking with other VAs I was told that $20/hr is low. You want to make your hourly rate something that is fair but also discretionary. Charging a rate that is too low can lead clients to have questions about your performance. I think it boils down to this - if you were applying for a job as an Executive Assistant, would you accept an offer that paid $12 per hour? The other part to that is the hourly rate for VAs is slightly higher than an in-office assistant because the employer would have to pay social security, unemployment insurance, and a host of other over-head costs associated with having a physical body in the office...but since we are saving him those extra costs on the back-end, it's easier to charge more on the front-end.

The most important things here are to calm down and don't let it overwhelm you. As long as you keep the lines of communication open and honest with your clients they will respect you for it. Put yourself in the clients shoes and if anything you may want to do would be possibly considered devious or deceitful in anyway to you as a client...don't do it to them. And last but not least, it's all a learning experience. You do what you think will work until you find out that it doesn't. You tweak your process for the next client, but you don't want to steamroll someone that is faithful to you either...so should this client come back to you, you really don't want to stick it to him. Maybe you can find other ways to benefit him such as referral offers, etc. and once he doesn't have any coupons/special offers available to him and you charge your normal cost, you just explain that it was discounted before because of "x y z" and move forward.

I hope this helps.

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Nikki Johnson
The Millionaire's Assistant™

I co-sign with most everything the ladies have said.

I would add some info about the mileage:

Though deducting mileage as an expense at the end of the year saves you on taxes, it doesn't cover your immediate gas expense (costs), which is not the same thing. You want to be careful not to lose money or pay more expenses out of pocket just to save on taxes at the end of the year. The accounting goal should be to collect income for as many job-related expenses as possible.

Therefore, I usually cover my immediate mileage costs by billing for the drive time. It always amounts to more than the gas many times over. At the end of the year, I still get to expense mileage.

So, as Nikki and Janine stated, you should reconsider the $12/hour rate that you charge, because it has to cover so many other overhead expenses you now have as a business owner.

If you feel bad raising your rate, consider this. Your client is paying for the benefit of NOT having to hire an employee or pay employment taxes. So, just like a temporary staffing company, he/she will pay more for the convenience.

Hope this helps.

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www.lloydbusinesssolutions.com
"Getting you back to what you do best"

Here is my two cents, I do agree with all the advice given so far. Being in a remote area I have found this works best for me. Order the items that the clients needs based on their specs. If they specify a store, say such as Staples, then purchase from there. Pass the shipping charges along and only place an order for the clients needs so that you have one neat and tidy bill to give him. You save on travel time and get the items brought right to your front door. If there are extras and he/she has paid for the item(s) ask if they would like the returned or held onto for future use.

As for the coupon, unless you want to give your client a $25 bonus, save it for your own supplies. If it is set to expire soon, then buy some items that will be needed such as paper, ink, etc.

This should be part of your contract. I have an ancillary fees section and it outlines that any items such as paper, postage, etc. are billed at cost. Meaning if I use a coupon they get the benefit.

As for meeting him, charge him either mileage or travel time and let him know that you are virtual and if he cannot ship the items then he will be charged a consultation fee including travel time.

I am not going to comment on your rate as I feel that is your business, however if you feel that you are loosing money you may need to revisit this item.

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Lee Drozak
My Office Assistant

WOW, I am soooooooooo glad I found this place!! Thank you guys so much for all the great advice. I'm digesting each and every suggestion.

A mistake I made is not having a contract. Fortunately, this client is pretty easygoing but I need to write up a contract for future clients. I started looking around the forum for ideas and read that some VA's call it a Letter of Agreement so it doesn't seem like a big deal and isn't too wordy. I think I might try that. I was hoping to get into the "Free VA Contracts and Forms" section of this site but because I don't yet have the minimum post count of 25, I can't view the forms. So I guess I'd better get busy and do some more posting.

Anyway, I appreciate the expert advice and hope to be able to contribute some tidbits of information too.

Zippy,

I agree mostly with what everyone above me has said, but I want to remind you that you are now a Business Owner. You are being paid for your time and your expertise. I know it's hard in the beginning, when you aren't fully believing it yourself, but you call the shots, and you set the standard.

Be honest and fair, but remember that your time is worth every penny that you charge, even when you only have one client.

Question: Since you don't have a contract yet, has this client paid up front, or are you billing him later? Please think about protecting yourself and your business!

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April Sullivan
The REVA Academy

Hi April and thanks for the reassurance. In answer to your question, I've already told the client that payment is due right when the finished project is delivered (it's also going to be on the invoice) ... so I'll be getting paid before I walk out of his door.

Hi, I am a newbie too. Perhaps you need to do more research of what a typist is paid. Remember that it costs 2 to 2.5 times more for an employee because of all the taxes, benefits, vacations, etc.

You must charge him for your time or you would be cheating yourself.

Hope it worked out.

Penelope

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Penelope Myer
Penelope and Partners

Hi:

I would charge for consultations and shopping for specific materials for client.

Good luck.

Penelope

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Penelope Myer
Penelope and Partners