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As an independent consultant you have a business to run and knowing how much to bill is a really big deal. This webinar focuses on the cost-based method....Visit www.mbopartners.com for more details after the presentation!
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HOW TO CALCULATE YOUR BILL RATEEXPERT TIPS FOR INDEPENDENT CONSULTANTS
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YOUR HOSTS TODAY
STEVE ARHANCETDirector of Consultant Services
GENE ZAINOPresident & CEO
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SPECIAL GUEST PANELIST
GARRY RICHEYOwner, Richey Leadership Group & Successful Independent Consultant
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WEBINAR CONTROLS
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MBO PARTNERS MAKES IT EASY FOR INDEPENDENT CONSULTANTS AND THEIR CLIENTS TO WORK TOGETHER
ABOUT MBO PARTNERS
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➤ SIGN-UP FOR THE SERIES!• Email webinar@mbopartners.com to be informed of the entire
series or to provide topic suggestions.
THE MBO WEBINAR SERIES
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➤ ASPIRING INDEPENDENT CONSULTANTS
➤ CURRENT INDEPENDENT CONSULTANTS
WHO ARE WE TALKING TO?
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➤ THERE ARE MANY WAYS TO ARRIVE AT YOUR FINAL BILL RATE• Value-based method• Market-based method• Cost-based method
➤ TODAY WE WILL FOCUS ON THE COST-BASED METHOD
BILL RATE CALCULATION METHODS
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STEP #1: CALCULATE YOUR COSTS➤ LABOR COSTS➤ TAXES & BENEFITS➤ OVERHEAD
Labor costs Taxes & Benefits Overhead
Total Cost
Variable Costs Fixed Costs
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➤ KEY QUESTION:• How much would you have to pay to hire an employee(s) to
deliver this service?
➤ FACTORS TO CONSIDER• Experience, length of project, specific services being delivered • Where you are providing your services
• Price yourself based on where the project is being delivered, not where you live
LABOR COSTSVARIABLE COST
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➤ TOTAL TO CONSIDER: ADD 25-30% OF LABOR COST
• Payroll taxes• When you hire someone, you are required to pay employer side payroll taxes,
includingo Matching the employee share of Social Security and Medicareo Workers comp, Unemployment
• Employer share of Benefits• Healthcare premium subsidy• Contributions to retirement (matching, etc)
TAXES & BENEFITSVARIABLE COST
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➤ DEFINITION• Costs incurred to run, maintain & grow your business
➤ EXAMPLES• Office supplies• Rent/Mortgage• Marketing • Technology
OVERHEADFIXED COST
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➤ DEFINITION• Percentage of hours you spend doing actual billable work • Standard hours are 40 x 52 = 2080• A good utilization is 75% (1560 hours actually billed)
➤ THINGS TO CONSIDER• How much you can realistically work
• Business development• Administrative responsibilities• Training • Personal time off
➤ HOW YOUR BILLABLE HOURS AFFECT YOUR BILL RATE• The less billable hours you have, the higher your rate to cover
costs
UTILIZATION
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BREAKEVEN: MARK-UP VS. PROFIT
$
Utilization Rate (Actual hours billed)
Fixed Cost
Variable Cost
Mark-up
Breakeven
Total CostProfitBillin
gs
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NOW LET’S HEAR FROM GARRY
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➤ CONTACT STEVE ARHANCETsarhancet@mbopartners.com
➤ VISIT OUR WEBSITEwww.mbopartners.com
➤ FOLLOW US ON TWITTER@mbopartners
➤ SIGN-UP FOR ADDITIONAL INFORMATION• Full length article & bill rate resources provided to webinar
registrants• Receive updates for upcoming webinars- email
webinar@mbopartners.com
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