October 5, 2024

How do people set their hourly rates?

Have you ever wondered how people come up with their hourly rate when they first go solo?

In my experience, they either:

1. Reverse engineer an hourly rate based on wanting to work X hours per week to make Y dollars per year, or
2. Make an ego-based determination based on their competitors - e.g., “Bob charges X per hour, and I’m better than him, but Alice charges Y per hour, and she’s better than me, so I’ll charge (X+Y)/2!”

Notice anything odd about these two approaches?

They’re both totally self-centered.

By which I mean...

Neither considers the client at all.

It’s nuts.

Yours,

—J

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