How Sarah worked out her hourly rate


This is an example of a sole trader who worked with a colleague of mine on


This is an example of a sole trader who worked with a colleague of mine on

By planning out Sarah’s life, they were able to work out what her minimum hourly rate needed to be.

Now, the first thing to mention is that Sarah doesn’t charge an hourly rate for what she does; she offers fixed packages. But, at the end of the day, the work takes a certain amount of time and that’s where the hourly rate is calculated.

Before doing this work she didn’t actually know what her hourly rate was for the different packages she offered. All she knew was that she worked very hard, long hours and made a certain about of profit at the end of the year.

So, one of the first things Sarah did was to start recording time on clients and packages; using the Xero projects feature. It took her a bit of time to get into the habit of doing this but not long because she realised how important it was to know how much she was making.

Now, Sarah business is doing better than ever and she thinks they will continue to increase over the coming years. And, Sarah is not materialistic so her required expenditure is not as much as some other people, however, she doesn’t own a house and doesn’t have a pension.

So, the plan is to move into a retirement home when she stops working and to build up enough money to pay for this for 15 years; this is how long she thinks she will live after retiring. Up until she retires she will rent her own place.

In doing this work Sarah realised she needed to achieve an 80% higher hourly rate. She’s on the way to doing this by:

  • Putting her fixed price packages up
  • Focusing on the most profitable package
  • Charging for work which is out of the scope of the package
  • Selling profitable add-ons

Each year, Sarah will review her plan and (if necessary) make the necessary corrections to keep her on track.

If you would like to check your hourly rate or profit margins, get in touch.

Image from Flickr by Scott Wilson.


Book a meeting and receive a copy at the meeting