Fee or No Fee: Do you understand what they are worth?

Fees and Hourly rates - I love the discussion.

The other day Laurie Anderson noted her rate for an hours work - I was surprised at the number of people who were surprised at this. To help some of you I thought I would throw a few ideas out and let you work through them. I should note - I have had lots of “off FACE BOOK” discussion over the phone with many brokers on here about this topic, and often to some of their surprise they find I am far more friendly than my Short Sharp "do a Search" or "Charge a fee" comments come across on this platform. I actually don’t care if you don’t charge a fee, just don’t whinge on FB when your client moves on for what ever reason and you don’t “get Paid”.

Firstly I will make my disclosures – I charge Fees, I am very flexible on my charging of fees, I don’t charge everyone a fee.

BUT I hate working for Free – so with experience TARGET MY FEES.

So have a think about this as a start point. If you weren't a broker - what would you be doing?

What hourly rate would you be on as PAYG? That is your start point, for an hourly rate - the Opportunity cost (for all the economists in the group) of not working PAYG and doing this job – you should be covering this rate. It is a guide to your base rate, I know all the arguments about Experience Knowledge etc etc but it’s start point.

OR think of it this way……. if you were a PAYG broker somewhere – what would you be earning an hour?

OR another way to think about it….. do you have staff – how much do you pay them, and how much time do they spend on putting a deal in – there is a base cost you should be covering to enter that deal – eg as a non-proceed fee.

So do y ourself a favour if you haven’t and work out a rate – not that you will charge everyone, but so you start to value your work.

That is the key to the confidence in charging Fees – WHAT AM I WORTH! (gees I am starting to sound like a self-help guru.)

There are other quick ways (and more complex ones) – I used to work in HR – not sure if anyone has worked this out before – but if you are on $40 an hour working 38 hour week – you earn near enough to $80k. a year - so as a guide the hourly rate, times 2, then take it out as Thousands – BAM your annual income, or we’ll do it another way.

Scale it up! What is your annual turnover – (depends how tricky you want to get – but for me Trail is deferred upfront so I count it.) lets use some round numbers to make it easy, if you want to make $100k (your net Taxable income) and you have an idea of you margin (for ease we will say 50% Net Profit Margin.) you would need to be turning over $200k.  are you with me so far?

Or another way - $200k in revenue – less costs of $100k -= NP of $100k (paid to you)

So you would be working for a PAYG rate of about $50 an hour on $100k NP. (as per above $80k example)

But you would need to charge $100 an hour to make this profit of $50an hour – to be on track if that was your PAYG hourly rate at another job. Based on 50% margin.

NOTE the above is a very simple round number example – you need to know your profit margin and costs base etc to profit. THEN work your numbers out.

All good? You with me?????

SO you have options – but it’s not hard to work out  your hourly rate