(Photo by Franck BLAIS)

I got to a point where my business was humming along pretty well – except I was stressed all the time, had no idea how to expand, and wasn’t happy with our bottom line.

We weren’t losing money. In fact, we had operated with zero debt since the business opened, a particular point of pride for me. It sure would’ve been nice to make more, though. I’d earned less that year than when I was working as a newspaper reporter.* I had no idea how to get there, though.

My state provides free small business advisors, so I took them up on the offer. I ended up sitting down with one of my wife’s old college buddies, and he laid it all out for me – not necessarily how to make more money, but how much to charge for video services, based on how much I wanted to make over the next year.

And once you know exactly what your fee should be, and why it should be that amount, it’s easier to tell clients that’s what you charge. So, assuming you’re a more-of-a-creative-than-a-business-type like me, I’m going to save you a trip and share the secret.

This gets math-heavy, but bear with me. I’ll try and make the numbers easy.

My advisor started out by asking me how much I’d made the previous year, how many commercials I’d made, and the average of how many hours each took to produce. He started scribbling away, doing math. Previous year’s gross ÷ number of spots ÷ average number of hours per spot=my effective hourly rate.

You can do it yourself. Hopefully it won’t be all that traumatic for you. In my case, it wasn’t a big number. Definitely lower than what my hourly had been as a bottom-rung reporter. With a wife, kid and mortgage, this just wouldn’t do.

Seeing the look on my face, my advisor pulled out another sheet of paper for more math fun. We were on our way to the promised land – I had a hunch that the secret to making more money might lie in raising my prices, but I didn’t know how much they were going to have to go up.

He asked me how much I wanted to make over the next year.  He took that number, then divided it by 2000. Why 2000? That’s assuming 50 work weeks of 40 hours, with two weeks off. A little optimistic for a small business owner, but we went with it. The number he got – and the number you’ll get – is the absolute minimum you should be charging per hour.

But in my case, most of my work isn’t hourly. So we used our average on how many hours I put into a spot. That became my new baseline charge – we’d only go up from there, never lower.

I’d never visualized the dollars and cents that way before. At one point, my advisor point-blank threw out a number and said “This is the absolute maximum amount of money you can make next year at your current effective hourly rate.” That ceiling was low enough to be uncomfortable, so we set to work on ways to bust through it.

Now I’m busier, in a better financial situation (but always on that razor’s edge, because, y’know small business owner). So if you need some help, be realistic and run the numbers. Find out if your state has free advisory services for small business, and get some qualified help!

*People who have worked in journalism (not ad sales) will understand. It wasn’t much, but it was kinda satisfying.