How do you set your pricing?
Setting your hourly charge-out rate means comparing apples with apples against competitors, then building from the ground up. A worked example for a personal care service shows exactly how to calculate carer costs, overheads, and margin into one defensible rate.
How do you work out your hourly charge out rate? You definitely need to check out what the competition is charging, however keep in mind that you need to compare apples with apples so if they are charging a separate administration fee, that needs to be taken into account.
Once you have established that, you need to work out your cost base, including:
For example:
ABC Care provides personal care services and calculates their hourly rate as follows:
- Carer hourly rate: $28.00 amount you pay your carers
- Kilometres: $3.75 **based on an average 5 kms per hour @ 0.75c per km
- On-costs (20%): $5.60 covers superannuation, payroll tax, workcover premium
- Overheads (20%): $5.60 covers computer equipment, office space, support staff etc
- Margin (10%): $4.30
Total Hourly charge: $47.25
** Kilometres usually can't be re-charged to clients unless the carer is driving them somewhere which is why I have factored travel between clients into the equation.
You can use this type of calculation to work out all your charges for the different types of services you provide as that will ensure you cover all your costs and include your margin. Keep in mind that if you provide other services to the consumer that you don't charge for, your margin will be reduced. All your costs must be paid by someone, either you or your clients so they need to be factored into your calculations. For example, if you charge out your case managers/care advisors at an hourly rate, you have to ensure that they work within the hours you are charging out. Remember that includes phone conversations and follow up work such as organising referrals etc., not just face to face meetings.
If you are interested in a demonstration of Care Collaborator – specialist cloud based software developed to complete the on-boarding process at the initial consumer visit and reduce your costs – please contact Debra Baxter at Care Collaborator via the web page: www.carecollaborator.com.au, email debra@carecollaborator.com.au or mobile 0438 020 728.