Good afternoon or evening, whichever. Nice that you are here. We'll start on time, but we still have a bit of time before. If a question comes up, here is a good example: yes, there will be a recording of this webinar and this particular link will remain. That means, you got an e-mail or at least somehow found out about this link and this link will always take you to this webinar. The webinar will last about an hour, I think three quarters of an hour, depending on how many questions you will still have and how much we want to discuss afterwards. But when we are through, the link remains. Sometimes it takes a few minutes, but then it will be available. I will compress and rework it, then upload it again to our Youtube channel. By the way, this is also the first webinar and therefore I would like to encourage you to subscribe to our channel because we will be doing a new webinar every week.
Everyone who hasn’t done it yet, please subscribe right now so we won't lose that much time and you will get notified about new webinars. I've been preparing for this webinar, so I've built two Excel calculation tools, or Google sheets calculation tools to be precise. I'll send them, or best link them in the description so that you know where to find them. But when the time comes I will mention again where you can find it. I'll jump into my presentation at once. As you are used to, I have prepared a few slides.
If you have any questions, you just ask the questions in the chat and I sometimes look over a little, or take breaks in between and then see if there are any questions and then answer the question. Today it's not about, I want to say tough tax issues, but about another important topic that I honestly found very difficult to deal with at the beginning of my self-employment. And that is the hourly rate calculation, at least in how I argue my calculated hourly rate and how I can sell it, because the calculation is one thing, then selling to the customer is another. Exactly, and that's why this webinar is about calculating the hourly rate.
Agenda: I want to go back and forth a little over a few things. Honestly, there’s kind of a bit of self-disclosure in this webinar. First and foremost, I'll tell you what I did, what I did wrong in the beginning, what I keep seeing and what is being done wrong. So I am a co-founder / firm manager of Kontist Steuerberatungsgesellschaft and of course I see it too. I see a lot of our clients, I see what they write on their account and with some new clients I think to myself: that it will be difficult to keep it that way, yes, I will say, to maintain independence. And I just want to show you a little bit, explain how it works and so on and then I would like to make an intro into three possibilities of price calculation, how you work into it and how you get a final price.
And at the very end, I mentioned the calculation is one thing, enforcing your prices and getting paid by the customer is another matter entirely. It would also go beyond the scope if we were to fully expand this now, but without it, this webinar would be incomplete. I will briefly introduce myself again. My name is Melchior Neumann, I come from Berlin, I am a tax clerk and I studied economics with a focus on tax law and auditing. I worked for several years at KPMG, large auditing firms and in an ETL tax consultancy. ETL is one of the largest tax advisory groups in Germany. I gained several years of professional experience in tax consulting and, to be honest, the whole thing was a bit boring for me. That's why I quit and started my own business and have been more or less self-employed for over 14 years.
At the beginning, the first 7 years, actually 7 years now on 25th May. That means pretty much 50/50 part-time self-employment and full-time self-employment and last year, with Kontist, we devoted ourselves to the tax service, i.e. the whole thing focused more on the topic of taxes and founded the Kontist tax consultancy company. In tax consultancy, I am practically a law firm manager. And yes, it's not the first webinar now. You can also find the recordings of the previous webinars on this YouTube channel. It's moving more and more in the direction of taxes and yes, I do something like that, but of course I also have a lot of contact with clients on a day-to-day basis. That’s enough about me, if you have any questions, feel free to chat. I answer all the questions myself, but at the moment I don't see any questions, so I would say let's jump in with the biggest mistake of all: Initially it's been a disaster. Back then, as I said 14 years ago, I was 17/18. I reached the age of 32 yesterday, so a little over 14 years, 14 and a half years. I started googling how much I should or shouldn’t actually charge per hour and so on.
I found some instructions on the Internet and somehow they always said: ok, add up how many costs you actually have and then think about how many hours you can work and use that as a starting point to calculate your hourly rate. I strongly advise against that, for this simple reason. I was in high school at the time and my costs weren't that massive. After all, I already had my own apartment, but if I had lived with my parents, then I would have had costs of 100-200 € per month. My hourly rate would not have been that high. Nevertheless, having my own apartment meant low costs. Somehow I had costs of € 800 a month and if I use that as the basis for my hourly rate calculation, then my hourly rate is not that high and the problem of what then arises cannot be seen immediately, only later.
Namely, if I got along well with 1000 € at the beginning of my self-employment, for example because I came out of university because maybe I founded a business while at university, or maybe because I founded a part-time business and actually didn't start my independence from the financial aspect, but simply because I had fun. Maybe then I can get along with 1000 € quite well and just calculate these costs. But after 5 years, after 10 years, the world may have changed completely, maybe you have a child, you need a car, you need work on a house, whatever. Life has many surprises in store, but it is incredibly difficult to double or triple your own hourly rate and keep the customers. That means, either you have a very clear idea that you say you have certain customers and you will lose them anyway because no customer will pay you 20-25 € an hour and later for the same service that you do for € 60-70 per hour paid.
That won't happen, nor will he pay you 50 € first and then 150 € for the same, because in a certain way you are somehow classified in the price range with the customers. You're within a certain budget and they won't double let alone triple that for you and still get the same afterwards. That's why it won't happen like this and now as an example: For me, I'm married, with children on the way… For example house construction. This example may work for me personally, not yet the main topic or something, but then the thought: ok how do you do that with children, maybe one parent should stay at home or something like that.
And forget about the 1000 € costs that may have become 3000 € per month and I would have to somehow triple my hourly rate. And that's a dead end from which you can't get out. The only thing you can do there is ending all customer relationships, start all over again and you may even have to work on your positioning, because recommendations that you get are just an example. I am now, oh, I don't have to be an example to take, I can talk about myself. I've built online communities. That means, I moderated forum membership areas, I partially worked out e-learnings, and so on. I did things like that for software companies and to be honest, my first hourly rate that I billed was € 13.50 per hour. That is a lot and makes it impossible to increase it later. But they recommended me to others. The problem is, I just recommended them as: "Oh, he does a really good job for good money." And if I suddenly wanted to ask the next customer € 60-70, I would not have acquired the customer. In other words, I should have started almost from scratch in a way.
And if you are at the very beginning, don't make the mistake and yes, you can always make fun of it like ah, I would never work for that little money, but honestly, each of us was somehow at the very beginning and that is one of the most common rookie mistakes I can ever see. Therefore, it is better to take into account right from the start that you are going to climb higher, that you deserve a good “salary”, what you would also deserve if you had a good salaried job. And how you get there, we'll go into that today, because you simply can't double or triple that again later. And before you think about what your price actually is, how you get your price, you should give yourself a moment to think and create a certain clarity and transparency for yourself. Also, and I'm absolutely serious, be honest with yourself whether your business model works at all. I see this especially with so many people who start up out of a strong passion. I often notice that they haven't really thought about the business model and haven't really made a reality check to see whether they will really get the money, what they would like to have for their service.
That's why you should definitely consider beforehand, do you know your own hourly rate? And not the hourly rate that you charge someone, but your hourly rate. And that has to be factored in, your non-billable time. I call it ineffective time. It always sounds a bit nasty, it’s not an ineffective time at all, but all the time that you cannot account for. As a self-employed person, you have a lot more tasks than just working for the customer.
You have to do your book-keeping, you have to write invoices, you have to do marketing for yourself, you have to do training. All the things, your medical expenses, your vacation, all of that must be included in your hourly rate and you should think about how much you actually have to calculate so that you then have a decent life, so that everything is covered.
That is, do you know your true hourly rate if you work now? How much do you earn on average if you do an hour of accounting now or you are currently in the webinar. Is this free time for you? I hope you enjoy it a little, but it is definitely not free time. We're talking about hourly rate calculation and if that's not your hobby, then that's your working time and how do you manage that – please don't all go immediately – but how do you manage that in your productive billable time you bring in the money to spend an hour looking at how much you actually have to settle.
And that must be taken into account in your calculation. Then you should think about what your fixed costs are. Both your private fixed costs and your professional fixed costs. Incidentally, I made a video about this subject. That means which costs you can deduct where, what operational costs are and what private costs are. I made a video about it and gave a webinar two weeks ago, I think. I don't know, one or the other of you might have been there. It was about business expenses, extraordinary burdens, special expenses, which can be claimed for tax purposes. The recording will be online tomorrow morning, I'm still missing a few little things, but if you subscribe to the channel, you'll be there live. And clear rules are also important for you, I would say.
Ideally, you should pay yourself your own monthly salary. That means from your business account, so that brings up the first rule: have a separate business account and private account and from the business account you should ideally pay yourself something like a monthly salary. It is pratically a private withdrawal, a self-employed person who has set up such a sole proprietorship has no salary, so, yes he has private withdrawals. But you should treat it like a salary. Which means you somehow earn 1500-2000, 2500-5000, or however much you pay yourself monthly into your private account, what you need for your private fixed costs.
But that shouldn't be all, because there are also occasionally times of crisis and you should always be able to pay yourself this salary, even if there is suddenly something like Coronavirus. I mean it's been over a year now, but who thought that a year and a half ago that Corona would suddenly come and drive the world crazy and you need a certain financial reach. This means that you need to have all the costs in your account a few months in advance so that you can really pay off your monthly salary so that you don't fall to your knees after two weeks of crises. All of this has to be taken into account in the calculation and you need transparency about all of this, and then it's really about being 100% honest with yourself, because I know that personally when I love my work and I really want to do a project, I then fall in love with the project.
Then that is very weakly calculated from a business point of view. I lie to myself about how quickly it can be done and that it's okay, that I incur fewer problems because I am also learning from it and I also establish contacts and all that kind of thing. That's all okay, but please don't throw the entire business account overboard. And yes, exactly, basically it is a misconception that you should calculate your prices as low as possible. It is from such fear, from such a fearful attitude I absolutely know it. As I said, only with 13.50 €, that was my first hourly rate. Maybe you just write your first hourly rate, which you wrote on your bill, in the chat, because there are some who have asked for hourly rates that they would never ask today, so I later became self-employed and up to now, last year, in the summer, I had my own agency and my standard rate was 80 €. And yes, I got along well with that, but 13.50 € was a lot different and I could never have had the same clients.
This means that if your situation changes, your life situation changes, it will be difficult to change the prices, so you should consciously think about your price at an early stage. You should consciously think about what your work is worth and should consciously think about how much money you will actually need long-term. Yes, so much for the general introductory words and my appeal at the very beginning. In this webinar I would like to say there are two or three pillars and I would like to go into a pure hourly rate calculation. Then I would like to go into a pure calculation based on the customer and then I would like to introduce you to what you can do when you have a very standardised product and what you can do really well, especially in the service industry. Namely, that you make a calculation based on products.
That means that you offer products, service products and you can calculate a little differently. But then you get hourly rates, possibly, if you do it well, those you would otherwise never get. Otherwise, are there any questions up to this point? Belated all the best. Thank you! If I have different customers who don't know each other, can I redefine that with the price? In any case, you can always do that anyway, but when you have new customers, actually every new customer is a completely new beginning. That's always pretty good.
Do your first hourly rates as 100 €, 80 €, 100 €, 60 € for the hour of the consultation, 125 €, 100 €, but prefer project-based pricing. Very nice, there you are already, I don't want to say better than me, but it always depends a little on something. I've now seen a few IP-based ones, and there’s actually not that much to it: he has more now or who can do more or something. As I said, € 13.50, if you can undercut that, you will win a prize. Yes, I was only 17 at the time, but honestly, 13 €, we can see from the example where we will end up. Pricing based on hourly wages works especially well for the service industry. Most of the people who just wrote what they are doing work somewhere in the service sector. That means it should be interesting for you. And it is important: you, yourself are the product. That means you have nothing else. I think we have a few other things, especially in arts and crafts that partly merge because you have the hour that you settle, plus the material, where you can also buy cheaper and sell for more.
And as a craftsman who has a super good source of purchases and can buy material super cheap, maybe he doesn't have to add that much to the hourly rate because he can earn a lot from the margin of the product. So that's all a mixed calculation. But if you are in the service sector, then one hour is for you. So you sell yourself and you have a very limited offer because you are not unlimited. So your time is not unlimited and that is why you can actually only scale based on the fact that you raise your price or that you work more. However, this is very limited. And you just have to take into account all the other unthinkables. How to do this step by step, I wrote here once on the foil. I would suggest, however, that I switch directly to my Excel sheet and we just do it once together to see what we have to take into account. And let's go for it, now you should see my Excel sheet. No hourly rate yet, as I'm still planning. Excellent time to look into it.
I see that my Excel list can be seen. I would suggest that we just calculate the hourly rate. Let's assume I don't know you personally right now. I'll just take someone out of the chat. Who was the last to write? The last one wrote 60 euros an hour for advice. It doesn't really matter, almost everyone can identify with advice. We take advice once, everyone else has to apply that to your specific case, and so on. And this sheet that I am sharing, I am putting a link to it under the record in the description. There you will find it. Also very important to note is that it’s an Excel sheet, you will only be able to read. Please duplicate that first so you can write your numbers in, otherwise everyone will see your numbers, but I trust you to do that.
The year usually has 365 days. That means, here we go first and say ok this year has 365 days. Of course we don't want to work 365 days, we have weekends and we prefer not to work at the weekend. That means that we have 52 weeks, times two days on the weekend, which is 104 days on which I cannot work due to weekends. Now of course I can also go there and say I'm super motivated, I want to get this going first and so on. I just don't want to work Sunday and I have no problem at all working on Saturday.
Can you do it like that? Yes, you can do it like that. We can also say that I might work on Saturdays and then calculate 26 days for Saturday, always half a day, plus 52 days and then I'm at 78. But I'm staying now because most people prefer not to work on Saturday / Sunday. I'll stay there for a while. Then there are holidays, feel free to go to the calendar. By the way, this year we somehow got a crap year. All holidays, May 1st and all kinds of other holidays somehow fall on a weekend.
It's great that it's not like this this week. Ascension Day is a public holiday and always on Thursday, but we can plus or minus about 10 public holidays per year because I also don't want to work on the holidays and I would like to take a vacation. 20 days, 30 days, 40 days it’s up to us. I think about 25 days since I am just starting. I am currently planning to work as a consultant and become self-employed so I think to myself that I would like to take 25, generally 25, vacation days per year.
Then I will probably be sick too – of course you can also say I have a good immune system now and so on and yes, all those things. I am also very rarely sick, but when I am sick I usually take a little longer to recover. I am not sick very often either, but to believe that I can calculate everything in such a way that you never get sick and everything has to run to perfection so that I can manage financially is always unfavourable. Better to plan a safety buffer here and I just say I plan to be sick for 10 days and if I am not sick then I'll take a longer vacation or whatever. Or am happy about the additional sales that I have made. This leaves 216 net working days in the year. That means I can work and earn money 216 days a year. And now it's a little bit about the number of hours worked per day.
That is, how many hours a day do I actually want to work? Opinions differ widely. I have to say, honestly, a friend of mine recently took on the challenge of only working 4 hours a day, in that case you are welcome to enter 4. I myself am more of a person who prefers to take a day off, but then work 10, 12, 14 hours on working days, because when I'm in the zone and the work is flowing , then I don't have any problems. I would have a problem stopping work after 4 hours though, that's why I'm more of a person who works a lot when they work and then prefers to take a day off another time. Therefore, I just write 10 hours a day, though you can stay with 8. Now, a very important point: what is your loss of time due to non-billable hours or insufficient utilisation? And this is sometimes extreme. There are so many different rules of thumb, I don't know if you know your number and what it looks like for you, but I can tell you a little something.
My wife, for example, is a nutritionist. She gives lectures on nutritional behavior, in some cases for corporate health management in larger companies, and she tells them that that's part of such a package. Package includes lectures and training. She is preparing a lot there. If you have one day of training at the company, prepare 2 or 3 days before and another 1 or 2 days after. That means, in addition to all of her own administrative work, she works 1 day a week, that is, she is in a company for 8 hours, but definitely has another 4 or 5 days of preparation and follow-up. In other words, it actually adds up to 20 hours due to non-billable hours. This means that 80% of the time she is active, the work is not directly related to the customer. If a customer were to ask you how expensive an hour of yours is in the company, you would have to say that you have to write it because you lose 80% through preparation and following-up and you have to spend a lot more money in the process hour in which she is then in the office, so to speak. It's quite common, with speakers it's sometimes even more blatant when there is a stage show and stuff like that.
They prepare 90-95% of the time and of course lose time. This makes such an appearance extremely expensive because it has so much preparation and follow-up time. With me as a service provider, I said I was a community manager and I had an agency, the billable time has always been about two-thirds of the time. That means I've always lost about 33%, well let's say 35, then hopefully we'll have smoother amounts. That means, I lost one third of my time through internal organisation, through marketing, through sales, through my own book-keeping, through idle times that I simply couldn't sell. So, of course, what I saw with a lot of people last year with Corona was, a lot of people would have liked to work, but no one booked.
That means if you have your own organisation to run, your time remains idle. My goal in the agency was 35% self-employment, last year it was more like 50%, to be honest, because Corona has helped out a bit there too. But that means, based on this calculation, I can now say that on these working days, I have working hours per employee per year of 1,404. If I am self-employed, then I can calculate these hours exactly. And that might be very exciting for you too, if things are already running successfully for you and you are thinking about what salaries you could pay and you are planning to hire an employee at some point, then you can simply write two in this calculation and can of course deliver twice. Since we are now assuming that you are solo self-employed, we will stick with one. And with that we roughly know that you have to earn your income in 1404 hours. And then, do the hours increase a bit depending on how much salary you want? So, compare yourself to employees. Like, if you are a web designer, search for a web designer salary, then you will know the benchmark.
Why on earth should you earn less as a self-employed person than as an employee. I think more like that. All the security surcharges and so on, we come even further down. But I think I would like, for example, as a community manager, to earn around € 42,000 a year. That is € 3,500 gross per month. That suggests that, as an employee, I always pay my social security so € 3,500 is roughly € 2,000 net. Maybe that's what I wanted. Admittedly, it is actually a bit of fantasy. I wanted a little more. But for me in the beginning, € 3,500 was pretty good, it was about what I earned as an employee so I wanted to make € 3,500.
What you never see as an employee is the social security that the employer pays. As an employee you can see your gross salary, you have a lot of deductions on your pay slip, but you don't see that the employer is always paying the same thing over and over again. That is taken into account practically here. Additional personnel costs 25% on top.
In other words, in order to earn roughly € 42,000 gross, you have to have an extra € 10,500 per year for social security. This is a prerequisite, so that virtually everything, statutory pension included, is covered. Here there would be, for example, the statutory pension insurance also included with it. If you take private provisions somewhere else among other things, that is of course still included and then the calculation would be different. But you can change the percentages here or you can change them again if there is no handicaps, but then leave it that way. Another important point: these are the private costs and here you can see how many costs this generates per hour based on the hours that you have calculated here above. That means 1404 €. That means you have to calculate 29.91 € for your gross salary. Another 7.48 € for your social security and now it's about the company. That is, how much rent do you have for the company? For example if I have a coworking space for which I pay 250 € a month, then I calculate 250 € times 12, which is 3,000 €.
It would be another 2.14 € per hour, which I have to reckon with again. Then there’s advertising costs. Maybe I'm new to the market right now and I need 500 € advertising costs per month. 500 € is extrapolated to 6,000 € over a year. That means I have to budget another 6,000 €, that is, my hourly rate has to be another 4.27 € higher. Other costs, IT and office supplies. Incidentally, I am the world champion in making software tools that cost all the time and at some point I am shocked to find that I have 2,000 €, 3,000 € in software costs a month.
Then once a year I put the red pencil on and I'm happy that I suddenly have 1,000 € more a month. That means, if you want to save, be sure to check your software tools are what you regularly pay for. Here I am now simply assuming software costs of 2,000 € per year. Depreciation is your biggest cost in the year if you have purchases. 1,000 € per year is somehow not that much. Here I am assuming 3,000 €. Whichever insurance you have is now 50 € a month, or whatever. As I said regarding all company insurance, this is about public liability and such stories and bank costs.
The Kontist account costs 9 € a month and that means I'm at around 120 €. That means, I have costs per year of around 67,000 € and costs of 47.88 € per hour and here come, try it and try to get a minimum wage here. Try 9 €, what is the minimum wage? 9.88 €. Promise to get 10 € out of it, or in my case, here I can try to cut everything down and get 13.50 € just to cover my costs. It's going to be very difficult. As I said, I'll gladly share that with you afterwards and then you can do the math. That means you have a cost of 47.88 €, if that looks like it, and the cost per qualifying hour is 47.88 €. In all honesty, you have to make a profit. Especially now with Corona, if Corona has shown us one thing, is that the self-employed have to take care of themselves, the self-employed have to bear their own risk, that they have to make provisions and that they have to build up reserves and so on.
Of course, that doesn't work if you only bill the cost structure for 47.88 €, because there's nothing left. That means, you should really add a premium here. Here I have now calculated 25%, so 25% would be the cost again, I'll just look again, yes, so 25% on it, that is 125%. But that's again important, here you can say also 40%, if you say you just want to be safe, you put 40% on it again. If you wanted to make it a profit or 50% because you say these are uncertain times, you don't know whether you can sell everything and so on, you might end up with a net offer price of 71.82 € per hour. I'm not even looking at your comments right now, but the question: where are the taxes? always comes up. They are not included in the calculation up here, because these are costs and taxes, i.e. income tax and possibly also the trade tax you pay from the profit and if you only bill that per hour, you are plus-minus-zero. That means you only pay profit on this difference. Talking about this 23 €: of course you would have to consider that here, it depends on what your tax rate is.
That is now excluded from the calculation and you take into account here that this amount must of course be taxed again. And then of course you will still have to add VAT to your bill. That depends on whether you are B2B or B2C, so if you have business customers, it is actually irrelevant whether you are there or not. If you are also a small business owner, for example, you just enter 0 here; gross equals net, but most of the people who are self-employed full-time will sooner or later not be small businesses. For corporate customers the net price is always relevant and for end customers, i.e. if you have customers who are not entitled to input tax deduction, these are especially private individuals, but also, for example doctors or landlords, or whatever you do, the gross amount is always decisive for them.
And down here you can also see the imputed profit, so to speak. This is made up of the hourly rate, i.e. the surcharge that you plan as profit. You see this changes a lot here. That helps a lot when you play through different scenarios, especially for those who are doing it from scratch and I really recommend that you do that. I don't want to say do a time recording, but even if I've been self-employed for a long time, just guess that. In particular loss of time due to non-billable hours, we're now at 71 € and then all of a sudden Corona comes and you are not so busy and you suddenly lose 60% of your effectiveness, of your effective working hours and then you have to suddenly start not billing 72 €, but 116 €. And of course that fluctuates again and again and quite honestly, one of the biggest game changers for me in my self-employment was at some point when I saw myself as a cost item and started seeing my salary as a fixed cost.
I always do this, I have to, because it makes you wonder whether every activity that I have to do makes sense at all and whether I am really acting in an entrepreneurial manner, or whether I am working my way into the abyss. So for me personally it is now very difficult to have any flat-rate agreements and hourly contingents, where I practically perform and have packed an hourly contingent, but then the hourly quota was full and then you have to rework and query everything. That simply was not there yet and I can only strongly advise you to check it regularly yourself once a year.
But really to be absolutely honest with you and possibly to consider a plan on how you can do it successively has increased, because if it's the same for you as me, then you don't have the same hourly rate for every customer, so you have a certain mixed calculation. A few customers there, they want a lot of hours, you bill a little less, or some are maybe longer, or there was a price increase that has not yet been implemented and all those stories. And because of that, it fluctuates extremely. Something like that first on the subject of hourly rate calculation. As I said, I'll send the link to this doc around. If you have any questions, please ask now, so I can answer a few questions before I move on to the next point. How do I ideally set my customers, or how do I proceed from my customers, do I calculate my prices? "Could you go into the differences in the calculation if you are a small business owner and then have to pay VAT?" I think you asked that before I mentioned it.
With small businesses the main thing is that you simply don't have VAT here, plus you don't have any input tax deduction on your costs because if you are subject to VAT, i.e. not a small business owner, then you only have to work with the net costs. If you are a small business owner, but you do not have the opportunity to deduct input tax, then you pay for a laptop that costs 1,000 € + VAT. Small business owners pay 1,190 € and not small business owners, but large business owners, only pay that net amount because input tax could be claimed. This is a transitory item, which means that, as a laptop, you would only have to issue 1,000 € as depreciation, while small businesses would have to issue 1,190 €. And the second difference is then just on your own account. “Work on performance-based pay. It often doesn't make it easy to calculate. " Absolutely true. I want to say that there are always two ways of calculating and that you have to calculate for yourself, so to speak, when you write an invoice, especially when you have a variable pay.
Do it regularly, do it quarterly, or retrospectively for the last quarter, because that gives you a certain clarity and it is incredibly helpful for you to know, even per hour, what goal you may have to achieve, or whatever kind of goal success-based component is linked to so that you end up somewhere; so that you get your costs back and also make the profit that you would like to make. “Unfortunately, that is no longer true with regard to the craft.
The prices on the Internet are usually below that. " Too bad, then that was a theoretical example, which unfortunately is not in practice. I don't have much to do with arts and crafts, but always what I would like to allude to is a product you calculate differently because you naturally have a certain margin on a product. As a dealer you buy things, so you are a really bad dealer if you don’t.
A craftsman is not a dealer, but a dealer buys his things cheaper than he sells them and earns on the margin. He doesn't sell his working time as a product. Manuel Will writes @Hannah: "Usually you communicate your hourly net rate and simply add the VAT to it when you switch." Correct, that only applies to B2B, as a small business owner you only have one price, gross equals net. Yes,yes, yes. "I'm not going to be sick." In principle, I think Corona has a better attitude. It’s better to not get sick, but honestly, write yourself 10 sick days and be healthy then. It's okay. Employees sometimes make people sick, but that doesn't work as self-employed, so just add a few sick days to the calculation. "Can you just share the link to the sheet in the channel's Community tab?"Tobi, I can do it. "4 hours a day of real work is realistic." Exactly. That's a good point. You can also calculate that if you say you are now going through the calculation and only type 4 hours per day, but really 80% billable time.
For many, this may be better than sitting around for 8 hours and really doing nothing. So that is quite possible and the sheet helps you to simply do a few scenarios. "How do you get the document?" I'll share that afterwards. Tobi, since you're listening now, maybe you would like to share that too? I'll try, I'll definitely send it around 100% afterwards.
Everyone who is there will find it, everyone who has subscribed to the channel, you can find the Community tab on the YouTube channel, I will just post it there immediately after the seminar and you can basically download it there. But I'll also upload it under this link in the video description. If you don't find it then, just write us an email at Kontist. "The pre-tax profit is miscalculated." Very good, I have to go in there and look. I'll look at it again later. So before I send it around, I'll check it out.
I actually went over it, and I believe that it should actually be true, but when the situation is 70 people watching my fingers, I'll have to look at it again before sending it around. “I am exempt from VAT as a small business. Then the last one just falls away, doesn't it? " Correct. “So far I've just been working with my small business”. Important note: there is a difference between small business and small business regulation. You are a small business owner. Small business is a term from another law and such small business regulation. You are a small business owner. "Until then, I always worked as a small business owner, because I don't have that much time besides my studies." It's perfectly fine, then you just don't bill anything. “Can you please explain in more detail what is wrongly calculated about it? Sole proprietorship is also a withdrawal of profit. " Yes, you're right about tax law. So the comment is, with sole proprietorships, the withdrawal is also the profit.
That's right, you are one hundred percent right and, by the way, social security is also a profit. For the tax calculation, yes, it's really important to me and it's not so much about the right tax calculation and tax return. I would recommend using Kontist anyway, then Kontist will calculate it correctly, but it's really important to me that you see your own salary as a cost item.
I'm more concerned, I want to say about such an entrepreneurial mindset, than about tax calculation. This sheet calculates the correct hourly rate for you and not your perfect tax reserve. There are tools for that, especially at Kontist, which is what all the other webinars and the next ones are about. Well, then I will continue. I didn't feel like taking screenshots, so I showed the sheet directly. This whole calculation method has a couple of advantages and disadvantages. Advantages are, it is very accurate. So you can calculate all the scenarios in, you can bill your sick days, half days, whole days exactly, everything by the hour. In particular, sickness and vacation and so on, which is always difficult overall for new founders, are taken into account, as well as the ineffective time. And that's the huge game changer. I briefly showed you the example earlier. That is a huge difference, especially when a job suddenly comes up in Corona and suddenly there are fewer hours to be billed, it can possibly become really critical.
And the profit, i.e. your profit for this or next year, is very easy to plan and the whole calculation can be adjusted very easily. So you can play around with it a bit. It's actually like a business plan lite. Of course there are also a few disadvantages, because the sick times and effective time and also the workload, are of course 100% to be guessed and estimated beforehand. That is why there can and will always be deviations, which is why you have to carry out this calculation regularly. And the prices, what you calculate there, do not always have to be marketable.
That's the problem because if you now calculate that you should be earning 620 € per hour, that's all well and good but not everyone can bill 620 € per hour and not everyone can pay their customers. You have to be a very specialised lawyer in some special cases, then maybe that's possible. And there are also other areas, such as advice, where 600 € an hour is also possible. But if I am now self-employed as a virtual assistant or copywriter for websites, then 600 € per hour is rather unusual, to put it that way. And that's why there is this second pillar that I would like to deal with and the second pillar is more or less a price calculation for your customers, i.e.
Based on certain market research. It is important that you simply keep an eye on the market. That means, look at what your customers are paying for a similar service elsewhere, look at what your competition is taking for prices and, quite honestly, this sounds very trivial and incredibly few people do it but it’s imperative: ask yours customers what they are willing to pay, ideally when you have a conversation, just let them make the first offer.
You know roughly what you earn, or you’ve made your calculation sheet beforehand and know what you can roughly earn so first let the customer come and make an offer. Assuming, of course, that it will stand a bit lower than what they will actually pay, but ask them. You can of course, if you are online and sell your lessons online, use tools and do some tests and so on. But to be honest, I have had very good experiences when a customer comes to me and he wants to implement a certain project, by asking right at the very beginning what is the budget for you, the overall budget for this project. I know, of course, that there are a few more costs that don't end up with me and then we have to talk a lot about what I can do for this price. We are not discussing my hourly rate, we are discussing what I can do for this budget. That means, we're talking about the number of hours, for example, and if it's a package, a quota of 100 hours and there is only a budget for 80 hours, then I'll just talk about how we set the priorities so that these 80 hours can be used sensibly.
But we never talk about whether it might not be better to make 100 out of the 80. That’s, I’ll go into it again later, the normal question and I know that when you’re self-employed, it sometimes seems super strange and people are super scrupulous when they ask their customers how much their budget is because that's what it’s there for. But that's completely normal and now I'm on the client side more often and I don't think the question is funny at all when a freelancer asks me how much the budget is.
Then he can think about how much he is ready to do it and whether I am perfectly fine with it, since professionals are usually faster in what they do and in talking about what the scope is and they never really talk about the hourly rate. This is extremely helpful and then there is never such an argument against each other as to why something is worth something or not. The steps for such a customer-based calculation are: 1. Research and market analysis, but be sure to connect with other people who are doing exactly the same thing. That kind of means meet-ups, social media groups and so on. There are also LinkedIn groups, as well as on Facebook, and so forth. Freelancer portals are also extremely helpful. Although admittedly regarding international prices, they are always significantly lower. But at the beginning I always have Upwork. I'll post that in. Upwork is always very good for internationals, and one other very good platform is Malt. Malt is a French freelance platform, so you can simply register as a client and just see what other people are doing in your industry.
Upwork is important, these are international prices. International can often mean that you may compete with Filipinos and Indians and so on. It doesn't always have to work well. Well, the price is unbelievably low, but I also freelanced and was able to charge $ 70 an hour there. That too was feasible. But to be honest, you have to offer more. Malt is European and you get absolutely fair prices, so look at that, then you get market fair prices, so to speak, for what is required in your industry and for the activities you want to offer. Important note: talk to your customer, that means go into communication with your customers. Get direct, real, feedback from your customers. Sometimes it is really bad, so if you are bored a lot, then go to a few. There are a few toxic Facebook groups that always deal with hourly rates and just google a few freelance groups according to price or hourly rate or something like that. There is so much abuse that clients have to appreciate the work and then complain about what everyone is not willing to pay.
But these are all just theoretical discussions. There is exactly one person you have to talk to about your price and that is your customer. The other is just for you to get a feeling for what the market situation and the mood are like. But there are an incredible number of people who ask their competitors what to ask of their customers. This is completely stupid. So that's completely fake. Ask your customers what they are willing to pay and agree with them on a price. The only opinion that matters is your customer’s. And exactly, what is very important, do the first form of calculation, I want to say your own cost-based calculation and your customer research and try to find the balanced means. That means, analyse if that will work. You can, if you hear from your customer, put it in the other sheet. I just saw that Tobi posted that – thank you very much. Put that in the sheet and do the maths, you can do the maths backwards and then think about how long do I have to work per day? How many vacation days can I still take? What should my workload be? and so on.
And that's why these two options, one from the customer and one from your cost calculation, are an excellent addition. The advantages of calculating prices based on your customer feedback are: even if you actually ask at the beginning, you have first access to the community. I actually did at the very beginning when I was self-employed, when I then noticed 13.50 € is kind of bad, I asked around from entrepreneurs who are in the field in which I wanted to put forward my offer and just asked what do I want to do? What would you pay for it? I went in from the start and said, I don't want to sell anything, I just need a couple, 2, 3, 4 answers. The nice thing was, I already had contacts there, no job came out of it, but you have been in contact before and they knew what I was doing and one of them actually approached me a year later and asked if I would like his support. It's the fastest, most efficient way to find out the price.
Ask your customer what they want to pay. It's just super fast. That means sometimes there is also time pressure. I actually did that earlier this year. We should have had an offer for my agency, I have to say. I currently have three companies, Kontist is one, but we should have made an offer for the agency. What a super tight deadline, we had to start in the past and get the time in and something like that. Budgets were running, big company, everything took forever. Then I said: “Honestly guys, tell me what your budget is and all that. I'll try to adapt to the offer and so on. " And then we were through within half a day with signature and budget approval and everything. It’s the most efficient way and if you are already in conversation, your customers already know about your product and might even become customers if you just ask directly. The disadvantages: this price is of course not in line with, or related to your costs. This means that your costs may not be considered or you may have to screw something up on your costs.
And yes, that's just a problem, that is, there must definitely be both. The whole thing becomes difficult when you are completely new to the market and have no idea where you get customers from. That means, if you still have zero customer contact, that's relatively difficult. I had the great advantage that I had a certain network and could ask questions there. And even now, when I go out now, I have no idea how many former customers I can write to every now and then and ask them what it is like and always ask again about certain new offers.
It is also relatively time-consuming because you just have to talk first. So now I look at the clock. I somehow always can't get it to deliver it in time. I am looking again to see if there are any new questions. "Apropos price calculation, what do you have for neon?" I bought something similar once, it was about a thousand. I have absolutely no idea, I think “neonbär”. I'll concentrate on the next section, but look for neonbär.de or something. I think it's in Berlin and it's half handmade. If it isn’t and you have to google yourself, then look for something else. Whatever. I'll jump over again now. I would like to go into the small business regulation again later, what is a little different about it and so on. That is very different, depending on who your target group is now. What are the perspectives of your company and such stories? That's why I'm going to go into the third pillar first, so as not to overshadow the time so insanely, and go to the price calculation based on products.
That is also possible as a service provider and it’s more of a mindset thing, I would say. At the very beginning, someone wrote that he doesn't really like hourly rates, so he prefers project prices. That is to say, it is in the direction of such a product. It's about understanding your service, turning your service into a package that always helps by default. This is very entrepreneurial thinking in a way that you can scale it up. This means all fixed costs and variable costs are added together and product costing works very differently. That means you think about what you can bill for a certain service package and then think about what you would like to earn for each service package and how you can add that. Here, too, I have a kind of calculation sheet and will go through it again in a similar way. It's a little faster. Let's take one, I briefly mentioned my wife.
Let's take my wife as an example, because it is relatively easy to make such a transition. I now have my wife who does occupational health care, which means she is always with the company for one day. This day can be very systematic; it is almost always exactly the same. That means, she goes in, has a certain preparation before the day, no idea, asks the employees, then there is a content-related part, then there is an interactive part and whatever else. I have no idea, I haven't been there yet, but it basically has a workshop day as a product. And if she goes over and says “I'm calculating this product “workshop day” then the preliminary calculation works a little differently. She can now think about it, I also now have about 200, 220 or so days a year that I want to work. I would like to give 80 workshop days during these days, for example. Now she can think about how much material costs, procurement costs, personnel costs and so on. Material costs, which is nice when she has a workshop day, can include everything else possible.
She has a very standardised product, customers come and she can say: "Hey, I even did workbooks there." There are a few videos that accompany you, no idea of videos that have to be watched before, then we have the workshop day, then there are another 10 videos afterwards, then there are exercises to do at home and all such things can expand the service and expand the advice and thus it becomes more and more a product and little “I give an hour and get paid for an hour”, but I can present a lot of additional things. For example, I can now go there and say I'm producing videos and workbooks and things like that worth 10,000 € for 80 €, 100 € , yes, I can come there. 10,000 € per workshop are roughly my material costs. Now, 10,000 € per piece, per workshop 125 € are the total costs. Honestly, that's not that much. I'll give you 250 €, material costs are basically there for that.
Then there are certain purchase costs. Purchase costs for the company are what my wife would charge and what they would have to pay. If I say now, for example, that I would always like to have my travel expenses reimbursed, then I can go here and say, I have no idea, there are 25,000 € per year in travel expenses. My wife can just go there and say, last year, what travel expenses she had and so on, no idea 312 € is about 150 €, 160 € per trip, it's quite a lot. Are we at € 20,000? Then she has her staff costs. Here too, I was counting on 42,000 € earlier. Now I'm also counting on 42,000 € a year. That said, that's their own salary. Of course she has to put that into it in order to deliver. Personnel costs are the same as before, this is the employer's share that the self-employed also have to bear. Rent is now 500 € per month. That is maybe a bit much.
I have 400 € a month for a coworking space. Then there are certain advertising costs. It places advertisements worth 1000 € per year. That is quite a lot. Let's say she's been doing this for a while now, with 500 € a month in advertising costs to sell her workshop days. Then there are other costs, IT and so on, which I also think is a bit high. 2400 €, it has a certain amount of depreciation and so on, that fits.
Insurance: we were earlier at 1200 €. We don't have to do that anymore and we have banking costs. These are practically her costs and now it is not like before with the whole calculation of what is that per hour, but she now has costs per piece. In your case, a piece is a workshop day. What a piece can also be, for example, is making a good acquaintance, she does it very well. Lisa Koch is a designer who creates a logo for you within a day. You can go there too, it really is a common working day, but she bills the logo piece by piece and has thought carefully about it. She has templates, she has all sorts of things, whatever she actually needs to create a logo and it calculates the price of a logo in the same way and the nice thing for the end customer is that it has extremely calculable prices. That means I could go there and say a piece is a workshop day, a piece is a, no idea, yes a logo, but a piece could also be a website and all those kinds of things. That is to say, it is something that is relatively standardised.
In other words, my wife now costs 1362 € per workshop day. So it cost more than me, with my hours that I sold and so on. Here, too, she can think about how much she would like, and also crucially, just like before, how much would she like to build up in addition to her salary in addition to profit, for such a buffer.
I was at 50% earlier, it's relatively decent, but why not? Why else are you self-employed? And it is better to start a little higher and then have a buffer downwards than to calculate super tightly and then have no more leeway. In other words, it then has a minimum sale price in the end. That means she has 2044 € per piece, per workshop day, for company health management. And exactly, then she adds the VAT here as well and then has a gross sales price for a workplace health management workshop day of 2,432 €. How does this work? You have a completely different possibility of scaling because you can price completely different things into it. If she goes there now and says she has this year, because everything is always the same, she can do a lot more because the videos at the beginning and the workbooks etc.
Are always the same. Maybe it is no longer individually prepared for each one, but is very standardised and can use many templates and has created its systems. It may not make 80, but maybe 120 and we can then think about it either considerably going down in price or can actually just turning the profit screw and simply making significantly more profit. And the really exciting thing is, when I think about it now, we are at 2044 € and to be at that price and really manage to increase efficiency and actually manage to sell 120, how much more could I put in in profits? That means I could more than double my profit, i.e.
More than double my surplus, in order to get the same in the end. And if you were to calculate that back on the hourly rate, it's a lot of fun. I hope that is reasonably understandable, the more standards you have, the more standardised problem solutions you sell, that can be a website, that can be a workshop day, that can be a consultation day or that can be a logo. That can be anything. That can be where customers come with a very homogeneous problem, you sell your solution and calculate in products. And then you have a scaling option that is very attractive. Why? Because then you can also give things to others under certain circumstances, because you can use things again, like templates. So all these things are possible if you calculate it as a product. And then, as a designer, hourly rates of 400-500 € and so on are really possible. For me, Lisa Koch is actually very good when it comes to that. Google Lisa Koch, give it up, let it go, you can find her on Instagram, she is a designer, she has a good podcast and so on.
She does it in an exemplary manner that she has put logo creation and website creation into such a productised service and I don't know her exact hourly rate, but I would bet that she earns quite good because she has a very systematic approach. And I was a customer myself, the product is excellent. So the end result, the result of what I get as a customer, is being really happy. I didn't really pay more than I would have paid elsewhere, but because it is very systematic and standardised, I felt very professionally looked after as a customer and not milked or something, which many think would happen. What are the advantages of such a price calculation? Clearly scalability. That means if you are independent now and you want to go and say you want to build up 1, 2, 3, 4, 5 employees. Then try, try to work like that, try to develop productised services and really calculate your service like such a product.
I know roughly what I'm talking about. I have an agency, I was a community manager, I started my own business as a freelancer, I built the agency up to 8 employees. Then there was Corona and all that kind of stuff and I joined Kontist and now we have said tax advice so can continue. Now we are where we are right now, that's why we are down to 5 employees, but the key to success is how to get out of a solo or sole proprietorship. We are now more or less an agency and we are selling more or less standardised problem solving. You can play with the amount very well and not only make small changes immediately, I mean an hourly rate calculation, i.e. an hourly rate increase of 10% – 20%, has a very significant effect on the customer.
But if you sell standardised solutions, there are 10 or 20% more, if you give me any templates or a workbook like that at the same time. I saw that with my wife, as soon as workbooks plus videos were included, there was suddenly 50% more to pay. The nice thing about it is that it only has to be produced once and not every time. And you can play a lot with the profit, that is, you also have a lot of room for negotiation and under certain circumstances, with my wife now, when there are large corporations, you can simply sell higher numbers. That means, yes, very easily scalable. The disadvantage is that the price can possibly be too high if the fixed costs are generally high, so in a way you have to be established. This is an area now where I would say, if you are self-employed, solo self-employed, you have a well-functioning self-employment and you are thinking about how you can still grow now, how can you build up employees 1, 2, 3, 4, 5? How can you really go from being a solo self-employed person to becoming an entrepreneur? That is the point.
If you are about to restart now, you can also mentally play it through, but I would always recommend first: go in first, don't try to do too much in packages, because that's where you calculate, so you need an empirical value for how long and what you need, because otherwise you will miscalculate very quickly and then the fixed costs are significantly higher than what you actually billed. Exactly the willing, well, that, yes, that means, you also have to see what the customers are willing to pay and so on.
And unfortunately that is not taken into account in the calculation. So much for that. I’m looking at the clock, we’re a little over, I'm sorry too. The next time I'll hold onto the one hour again. If you have now added it all up, I would say that we have now gone through three pillars of how you should calculate such a price and I hope you have had a few suggestions. That goes for both those who are a bit advanced. Calculate it back, especially if you have variable pay, but the big problem is always how it actually works.
And my experience now really is always: talk openly with customers. Even if you can't do that for a certain price, tell them: "Hey, look, I have similar projects, exactly, I paid for this and that." If your fixed costs don't work, say exactly that: “I can't handle the costs. So and so should be looked at. Where do we agree? " And don't let yourself be put under too much pressure, but rather openly communicate your concerns to your customers. I sometimes see that self-employed people, especially those who are new, somehow put on a poker face and thereby make life extremely difficult for themselves. Communicate openly. This has nothing to do with unprofessionalism or frivolity or anything else. Your customer knows that he has to deal with freelancers and you are not the only freelancer and I also notice that now that we have up to ten freelancers practically in parallel. A lot of people do it too, but a lot of those who are new to it don't do it, those who somehow always try to turn to some kind of negotiation strategy or something else.
As a freelancer, I would always play with open cards, but don't let yourself be undersold. It is also important never to calculate too tightly. That means all these calculations that we have now made. First try to determine your price for yourself, not to accept the case where everything goes super well, but always calculate a little more passively and a little bit like, what if it goes a little bit wrong. As I said, it is better to expect that you will be sick for 10 days, even if you have not been sick for over 3 years or something like that. In the end, this is your buffer that you can have which you can also build up, but in a certain way it’s also your room for negotiation. Now, for example, when a big customer comes and says: I want you full-time for the next 6 months, you know, you have almost 100% effective hours. That means you don't earn anything from it. And yet, if you have included 20-30%, these 20-30% mean no room for negotiation in the end.
And what comes with that is, as I mentioned earlier I'm incredibly good at reducing fixed costs, definitely more than raising prices. How many software tools I pay monthly are there that I haven't used in months? Go through this regularly, ideally every quarter, at least once a year, and then it is actually enough to scroll through such an account statement and go through and ask each position: Do I need it right now? Always go before the price increases, because it is simply much easier to cancel some great thing that you have not used for over 18 months, or to cancel a coworking space that you have not used in the whole of the Corona pandemic, than to raise the price with the customer now. If you are able, stop doing both. Increase the prices and reduce your costs and enjoy the additional result. So much for me today, for the time being. If you have any questions, we'd love to chat now. It’s nice that you're still here, nice that some are still here.
I have already promised a question and I have to look for it again first, namely on the subject of small business regulation. Before I answer, to all of you who are still there, before you miss it, you should definitely subscribe to this channel. Please, you would do me a huge favour personally. But most of all, we do a live webinar every week and you also get all the recordings we all upload from the webinars.
That means, if you are not there or something, you will get them all completely free of charge, completely without sales pitch and so on, unless you are looking for a tax advisor, then you should definitely take a look at the link under this video and have a free interview, like to book with me personally and then we can see if we can help you with tax. Otherwise, it's now about the small business regulation. "I am exempt from VAT as a small business owner, then will that just go away?" So yes, as a small business owner, you do your calculations, this is very important, and VAT is completely eliminated, both for your costs (you always pay the gross amount) as well as to your end customers. If you do not charge VAT then the box is good. Whether the small business regulation really makes sense is a completely different matter. And if you do, why? Customers, i.e. companies that work as B2B, I read that somewhere as B2B it doesn't matter anyway, for the very simple reason that the VAT that you would bill your customers, it can be claimed for them too as input tax.
That means, just as an example: if you bill 1000 € to a customer (or if you are billed 1000 € by a customer, then as a small business owner you are going to invoice 1000 €. As a normal taxable entrepreneur you charge 1000 € + 190 € VAT, that means gross amount = 1190 € and you get 1190 € in your bank account. You have to pay this 190 € to the tax office and your customer can repeat the 190 € at the tax office.
That means for the customer the effective debit is only the net amount anyway. In fact, the question is, if you, as a small business owner, have business customers, I would recommend in the vast majority of cases, do without the small business regulation. It is not at all compulsory, you can do without it right now. Just know the VAT, because then you have the advantage that there is no difference at all for the customer. For you, however, it has the great advantage that you can claim input tax, that also means the costs that you have, you only pay the net amount and a laptop like this quickly costs 200-300 € less because you can claim input tax.
If you have end customers, it behaves a little differently, because end customers, that is, we private individuals, do not have the opportunity to repeat the idea to us. That means for example, what am I thinking of now, is it’s pretty warm today, if I go to have an ice cream now, it is admittedly a stupid example, but if I go to ice cream for 1000 € now, then I do not claim input tax and then it is always cheaper for me if the ice cream seller is a small business owner and immediately sells me the 1000 € gross net.
If it's an entrepreneur, then the entrepreneur earns less from it because he still has to pay the VAT, but I can't do anything with it because I buy it as a private person. This means that if you have private customers, the small business regulation usually makes sense for you. If you have business customers, I would almost always recommend you to stop doing it. Voluntarily renounce small business regulation and so on. We can also go over this one-to-one in your specific case. Under this video, you should actually find a link where you can book such a consultation. Or another idea: write an e-mail and then please contact Melchior directly, I'll write that in to [email protected] and write: “Hello Melchior, as discussed in the webinar” and so on.
You can do the same for other tax issues as well. Then do that, because that ends up going straight to me and exactly, then let's just talk one-to-one, then you can give me a little more context and so on. But as a general rule, as a small business owner, regulation actually rarely makes sense for corporate customers. So, a question: “What are the disadvantages of daily rates? I like to charge daily rates of 6 or 8 hours including travel. I am sometimes unsure when there are significantly more or fewer hours per day. How do you communicate? " That's kind of the topic. Daily rates are either the hourly rate x 8 or x 6 or you just try for fun, you have the sheets now, just try to calculate for fun, once as a product, try to sell your day as a product.
And yes it’s true, you might not be super happy every day because sometimes it's 12 hours and sometimes it's only 5 hours and so on, but you want to have an average value like that. And from this wealth of experience, ideally you also document it. It was a huge game changer for me when I started to write down my own time. I once did that for a year, so that I really do my own work for just fifteen minutes, even if I've read a book, if I've done a webinar, and stories like that.
I wrote everything down to get a feel for it. And also in your case, average values are absolutely nothing against it. I have now taken out the daily rate calculation because it is actually exactly the same as the hourly rate calculation, just 6, 7, 8. But just try to calculate that like a similar product. Then your product is just a consultation day or a programming day or whatever. Answer: “The logo is extremely complex. Sorry, that's not a standard, at least if you don't work for a chip shop. " Solano, google Lisa Koch, she does it super well and it is definitely not cheap. It's not a great discount either, there has been a lot of experience in it for years, but that's exactly what she did.
She made a logo like a product. Admittedly, flat-rate prices are always more expensive for people who are maybe super simple, who have made a lot of preliminary thoughts and things like that. It's always like that, when you have a flat rate, it's always the ones, the customers, who have simple requests, who are always the more expensive ones. I can also have a hands-on chat for tax advisors. We make a fixed price. So the Kontist tax advice services are fixed price and if I do it once a year, we have an annual tax return price of 1200-1800 €. That means 100-250 € per month, that's a flat rate. There are of course the customers who are super tidy and things like that and there are the customers who are super time-consuming and have 1000 questions and stories like that. But we are there every year, too. Sometimes there are those, sometimes someone has a lot of questions and then the other, sometimes someone is a little tidier than the other.
In the end, that's a mixed calculation and we don't go in and say we have to have the same margin every hour we work, but it is a certain mixed calculation. Of course you can also offer a logo at a flat rate, but then of course you need the experience that you know how time-consuming it is and how many steps go into the work, how much time you have to put into it and all these things. You have to, you know, but when you've done that a hundred times, you have an average value and then you can set a price based on this average value in which you earn quite well on average, so that in between you have a customer where you say that is difficult, yes, but in the end this is the entrepreneurial risk that you actually bear.
You don't have to do it like that, but it can work and is especially recommended if you want to scale. Next question: “Mega great contribution and thanks for the examples and the involvement of the audience. Especially for taking the example of my job as a consultant." Gladly, that was a coincidence in your case. I hope for the others. "Even better, rough delivery, really cool. I like it too, thank you, it was nice and informative, very nice, there was a lot of good stuff." Very nice, if it helped you, I am very happy about it. "So far I only have private customers." Then stick to your small business regulation. I mean it completely seriously, because private customers cannot claim input tax and if you start with taxes now, your service will end up being more expensive or less deserving of it. So stick to the small business regulation. Manuel writes: “From my own experience in web design, an incredible number of customers want to know the hourly rate, even if you might want to offer daily rates or project prices. Therefore also ask for the budget for the first time.
" Exactly! Exactly! That is general, that also applies to the negotiation at the end, what comes out in the end, whatever I did. Even after many years and 1000 new things, people always want to know an hourly rate, they always have a certain idea, but don't even know how many hours they actually need for what. That's why it's such an alibi of security that they somehow want to get into.
The easiest thing is really: ask! Honestly, I swear down, ask how much budget they have and then talk about what we can do for that budget. And then you no longer discuss hourly rates at all, instead you talk about what is feasible for this budget. And that's excellent and you've got yourself out of this annoying hourly rate calculation in the sense of: “We don't pay more than 70 € for something or not more than 100 € for something” and stories like that. "For the sake of simplicity, could travel costs also be specified as flat rates?" Definitely! Absolutely.
Stop billing with this one and that, I would always do a flat rate. Very importantly, when it is the travel costs, many people do something wrong and that is when they pass on travel costs, always calculate, very simple example, short digression, all the people who are bored, they can also remember that I made a video about this that has already been uploaded on this channel. What is important, however, is that there is regulation in the VAT law, you can read about it in this beautiful book, because it says, if I read aloud: "The ancillary service shares the fate of the main service." That means, if you have a consultation day, for example and you drive to the customer and have travel expenses and a train ticket is charged with 7% VAT and your consultation services with 19%, a lot of people make the mistake of passing on the consultation with 19% + travel expenses with 7%, then you have both tax rates on your invoice.
Unfortunately, this is wrong because in this beautiful book it says: the ancillary service shares the fate of the main service. That means, if you pass on travel costs one-to-one, then you have to tax the travel costs at 19%. Why is that? There is another separate video on this channel, you have to scroll down. Calculate travel expenses and that's what it means. Next question: “When would you recommend a GmbH? Is it possible to found a GmbH in two business areas? " Second question. First: yes it is possible to set up a GmbH with several business areas, no problem at all. When that makes sense, I can't tell you in such a general way. That has a lot of influencing factors; there is the limitation of liability and on the other hand there is possibly how you are scalable and how you want to be. Also there are tax aspects and all that sort of thing. From a tax point of view between 60,000 € and 100,000 € annual profit, this can also make sense, on the other hand you have a lot more bureaucracy and so on. It's not such a simple yes-no question now, I would need more context for that.
So, "Thank you very much, thank you for the webinar, thank you very much, thank you." Wonderful, now there are no more questions, I thank you very much. Nice that you were there, enjoy the nice weather if you have nice weather. It's absurdly warm in Berlin and yes, I'm also glad that I can now open the window after this webinar. I wish you a nice evening, until then, ciao!.