7 Key Numbers
The numbers you need to set realistic, sustainable prices. Adapted from work by Austin L. Church.
This exercise highlights the difference between your rates and your prices. By working out what your rates need to be, you can confidently set prices for your work that will sustain you, your business, and your lifestyle.
This exercise has 7 sections:
1. Survival Number
You’re going to find out your average monthly business and personal expenses.
You are going to miss something, so this is an estimate for us to work with. Don’t worry about absolute accuracy, focus on making it through well enough to move onto step 2!
1.1. Estimate average monthly personal expenses
Export your bank and credit card statements for the last three months.
Add up 90 days’ worth of transactions.
Divide this number by 3.
Record your real monthly expenses.
1.2. Estimate average monthly business expenses
If you have separate business accounts, repeat the above process for them as follows:
Download statements.
Add up 90 days’ of business transactions.
Divide by 3.
Record your real monthly business expenses.
If you don’t have separate business accounts yet, you’ll need to revisit your personal statements:
Create a business expenses tab in your spreadsheet.
Paste in your expenses and delete the non-business ones.
Divide your 90 day total by 3.
An incomplete list of business expenses to consider:
Administrative / Office Supplies
Office Space / Overhead
Internet
Phone / Mobile Service
Tools (e.g., laptop)
Software & Subscriptions
Local Licenses & Taxes
Marketing
Meals & Entertainment (e.g., coffee with clients)
Business Travel & Conferences
Education, Professional Development, Memberships
Professional Services (e.g., bookkeeping, attorney fees)
1.3. Figure out your tax percentage
To find your tax percentage, your have three options, with the first being the most reliable:
Look at your last tax return, or ask your accountant.
Ask two business owners with comparable income what their tax rate was and average their percentages.
Make a conservative guess, such as 25-30% of your gross income.
1.4. Calculate your Survival Number
Add up your personal and business expenses. This represents your after-tax income needed to cover your bills.
Multiply your after tax income by 100 (it makes the next bit of maths easier).
Subtract your tax rate percentage from 100. If your tax rate is 20%, then 100 minus 20 gives you 80.
Divide your number from 2 (your after tax income x 100) by your number from 3 (100 - your tax percentage). This number is the amount you need before tax to cover your costs each month.
Multiply this number by 12 and you have your annual survival number!
If you earn less than your annual survival number you are not covering your costs and are risking debt and financial trouble. If this is you - let me know and we’ll focus on bringing your income up ASAP.
2. True Availability
This step helps you account for how many hours you can actually bill in a week.
It’s easy to overestimate how many hours you can work, and even easier not to account for the difference in billable and non-billable hours. Making either of these mistakes can mean we set rates that cannot cover our costs without us risking overwork!
2.1. Estimate your available work weeks
Estimate the days in the next 12 months you will not work - include holidays, sick days, and personal days.
Divide that number by 7 and round up to the nearest whole.
Subtract that number from 52 to get your available work weeks.
For me, this number has varied from 40 to 46 at various points in my burnout recovery - it’s OK if it looks low!
2.2. Estimate available work hours each week
When do you start and stop working?
How long do you take for lunch?
Do you work weekends?
Is your current pace healthy, sustainable and enjoyable?
Use that information to add up your available work hours each week.
This tells you how many weeks you’ll work in the next 12 months.
2.3. Estimate available work hours each year
Multiply your number of available weeks by your available work hours.
That is the number of hours available across the year. Take a moment to sigh as needed!
This tells you how many hours you’ll work each week, on average.
2.4. Account for non-billable hours
None of us spend 100% of our time billing when we run our own business, that’s why we need to account for our non-paid times.
Estimate the percentage of hours you can effectively bill for each week.
Turn that percentage into a decimal (e.g. 55% is 0.55).
Multiply your work hours each year by the decimal from above.
This tells you how many of the available hours you will realistically be billing for.
3. Survival Rate
Time to work out how much you need to charge in your available, billable hours to cover your costs.
3.1. Calculate your survival rate
Pop your numbers from steps 1 and 2 into the following equation:
annual survival number / true availability = survival rate
This is how much you need to earn from each of your billable hours to cover your costs. How do those numbers look?
4. Dream Number
You’re not in business just to survive, so it’s time to think big about what you want your business to do for you.
Go as big as you like - no one is going to judge you for dreaming to big, or flying to high here!
4.1. Inventory your dreams
Set a timer for 15 minutes and write down how much money you’d need each month in each of these areas to make meaningful progress:
Clearing debts - e.g. credit cards, student loans.
Short term savings - e.g. building a bills buffer and rainy day fund.
Long term savings - e.g. house deposits, new cars
Investments - e.g. pensions, stocks
Giving and donations - e.g. caring for family, charitable donations and causes
Lifestyle goals - e.g. van life, hobbies, going back to university
Bucket list activities - e.g. restoring a vintage car, travelling for 6 months
Passion projects - e.g. writing a book, learning a language
Don’t worry about creating a complete list, this is an estimate.
4.2. Calculate your dream number
When your 15 minute timer is up, add up all of the numbers from each area listed.
Multiply this number by 12.
Add this number to your survival number (the minimum you need to earn each year).
This is your Dream Number - the amount you need to earn to live your biggest, boldest dreams and cover all of your costs.
5. Dream Rate
Now you’ll use the same maths as you did for your survival rate to work out your dream rate - the amount you really want to be charging!
5.1. Calculate your survival rate
Pop your numbers from steps 2 and 4 into the following equation:
dream number / true availability = dream rate
This is how much you need to earn from each of your billable hours to cover your costs and live your dream life. How does that feel?
6. Pessimistic Pricing
This is how we make sure you’re not undercharging for your work and can give accurate package prices to your clients.
Charging correctly means your clients get everything they need and your business is more sustainable.
6.1. List your project tasks
Pick a project or service you offer, and list the tasks associated with it. Include things like:
Scheduling, set up, and project management
Client communications, including answering WhatsApp messages!
Research and preparation
Creative work and deliverables
Presentations, feedback, making changes
Admin like invoicing, offboarding, and client admin
6.2. Add up the total time
If you have tracked your time on a project, use that for this exercise. Otherwise…
Write down your best guess for the time needed for each task you’ve listed - round up to 15 minute increments.
Add the cumulative time for each task - this is your total time.
6.3. Calculate your price
Multiply the total time needed for your project by your dream rate.
Multiply this number by 1.2 to add a 20% buffer to your price (adjust this buffer to suit your industry - some need more contingency than others, but I’d always recommend adding some!).
The number you have now is your price. Ask yourself the following questions:
Would you be happy to make that amount of money for that work?
Does that price feel high enough to feel exciting?
Does this price feel like a step forward?
Is there anything that would stop you setting that price? Let me know so we can work through it together!
7. Weirdly Specific
Human brains like certainty. An oddly specific price feels more certain to your clients than a rounded up number.
By making your prices oddly specific, it feels like your clients are paying for exactly what they are getting. It’s a number that sounds like you’ve worked it out, not pulled it out of thin air.
7.1. Make your package prices weirdly specific
£1,725 sounds more specific than £1,700. The extra, slightly higher amounts won’t be enough to break a sale with a client and cost you the work, but those same amounts accumulate into a meaningful difference in your earning (and financial stability) over a year.
Using these Numbers
Your dream rate and survival rate give you a spectrum of prices that will cover your costs (and more). As you grow your business, you may want to give yourself permission to work within a range and negotiate pricing where you need it.
The most important thing is to stay above your survival rate - anything less and you are not covering your costs!