Continues from Are you charging enough money?
When you work a regular job for a company, it’s up to someone else to decide how much your time is worth. This might seem obvious, but when you run your own business, it’s up to you to decide how much you earn.
Not taking the time to work out how much you want to pay yourself can be really dangerous because it’s easy to create a business that pays for itself but doesn’t pay you much at all.
So if you haven’t done this, that’s what we’re going to do today, work out how much you want to get paid.
From there we can work out how many clients you need and what you need to charge your clients to make that happen.
Start off by working out what business you want to create by answering these questions:
- How much do you want to earn per month? Go all out with this, if you want to earn $10k per month, write it down. We’ll call this (I) for Income.
- How many hours per week do you want to work on your business? We’ll call this (H) for Hours.
- What is the ideal number of clients you want to have in a class? We’ll call this (C) for Clients.
After you’ve written down these numbers we’ll use them to work out what you need to be charging.
If you feel like mathematics is not your thing, it’s OK, I’ll break this down step by step. Just write down the answers to each step and you’ll get there.
- Take (H) and divide it by two. That’s the number of classes you can run because for each class you run it takes about an extra hour of admin work between planning, marketing, following up clients, etc. This might be an exaggeration but that’s OK, let’s aim for you earning the most from as few classes as possible.
- Multiply that number by your ideal class size (C).
- Multiply that number by 52 and then divide by 12. This gives you your ideal attendance for the month.
A formula for this looks like (math-phobes look away):
Ideal Monthly Attendance (total number of people in sessions) = (((H)/2)*(C)*52)/12
Now let’s use that to calculate how much each person will need to have paid you to attend.
- Take your ideal income (I) and add to it all of your monthly expenses such as: equipment, rent, hire, business and income taxes, charitable donations. This is the income you business will really need to earn.
- Now simply divide your business income by the Ideal Monthly Attendance we calculated above and that will give what you need to charge per session.
And you’re done.
I’ve put together a Spreadsheet that you can put your figures in above and it will work everything out for you. Just Save A Copy and enter your own figures in the green boxes. Try it here.
Read on in the next post where we look at how sustainable your business is and what to do if you are charging a lot less than you need to be.
Kyle Wood created Bootcamp Ideas in 2010 when he was hunting around on the internet for workout ideas. He ran a successful bootcamp in Victoria, Australia and spends his spare time managing this site, adventuring (or lazying) with his wife and find new ways to make bootcamps even better.