How much does an Online Business Manager charge?

How much does an Online Business Manager charge? A question I get asked all the time.

I know, it’s all scary sounding. Mostly, because every time you ask someone that question. They don’t answer you. They give you a whole bunch of mumbo jumbo, or, there’s so many variables, but you never get a clear answer.

This means our industry suffers because a lot of us start with guessing and we guess too low. Then our clients or audience start to assume Online Business Managers should be cheap or cheaper than what we should be charging.

Let me give you my thoughts on how much an Online Business Manager can charge. This is my perspective. I know that people will charge more. I know that people will charge less. But I’m going to explain what my reasoning is and hopefully it will give you a solid starting point, and it will boost your pricing confidence, which really is the secret to good pricing.

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This episode shares:  

• How much should you charge as an Online Business Manager: The right value for an OBM
• Figuring out what feels right for you: The sweet spot where you’re not undervaluing yourself but you’re also competitive.
• The cold hard facts: The expenses faced by the business.
• Sneak peek: You’re worth more than you think
• The magic of packages: Showcase the full range of value you bring.
• The damage undercharging does: Charging what you’re worth, you’re not just helping yourself, you’re helping the whole OBM game level up.

How much should you charge as an Online Business Manager?

When we are talking about our price and what we can charge, there are two core questions, the first one is:

1. How much do you want to charge?

It sounds a little bit like, I want to know how much I should charge, but you’re asking me how much I want to. That’s not exactly what I came for. But it’s important because you need to know what feels good for you. Otherwise, you’ll eventually close your business. Doesn’t matter how good you are. If you feel like you’re working hard for nothing, that’s not a very good business model. So my question is, based on what you do now, what feels like you’re taking advantage of yourself? What feels like a good rate? What feels like it would be intimidating or too much? Just get a gauge on where you are right now and then do the same thing, but think about it in two years.

Tip💡: You need to know what feels good for your business to make sure you’re charging the right fee.

Figuring out what feels right for you 

This is the second core question:

2. What do you need to charge?

Your business has expenses, your brain has expenses, your life has expenses. All of these things factor into how much you charge. You need to understand what those factors are and consider them when setting your price, especially because it will change how you answer question one.

If all of a sudden you knew that it costs you 476 an hour to run your business and you’re charging a $100 an hour, it’s not feasible from the get-go. Every single second you spend working, you’re going to feel like I am losing money, this is not good. But without any context, it makes it harder for you. You have no baseline, not even at the bare minimum.

Now I know you’re not going to have costs of 476 an hour. You get what I mean. You need to at least know  because it helps us rationalise.

I want to give you some perspective. So before I go through and I give you another figure, I want to give you something to hold on to. I did a super quick Google to my friend Glassdoor, and I looked up how much an operations manager earns a year in Australia. The answer is on average, so this wasn’t the lowest amount. It wasn’t the biggest amount, it was the average amount, $144,000 a year for ops. Now that’s for a full-time person. When we’re looking at pricing, we’re not looking at how much we’re putting into our pocket.

So this number is that pocket number, but it also is the amount that your clients or potential clients could go and pay for someone like you in an employed role. Now let’s break that down a little bit so it’s more tangible.

If we were to say work part-time, it was, one and a bit days a week. When we break that 144k down, that works out to be about $3,000 a month for one and a bit days a week. If you’re an operations manager, if you’re an Online Business Manager doing operations, that one and a bit days is going to give you the ability to do that job successfully, dependent on the client.

At bare minimum, an employee is getting paid $3,000 to do that and they’re an employee. The reason I keep saying that is because it is easier to be an employee than it is to be a business owner. There are fewer factors to consider. When looking at wages and how much you’re willing to work for, the price you give a client to say, this is how much it will cost to work with me is not the money that goes into your pocket.

It is the amount that all of the expenses and the money that’s meant to go into your pocket come from. So in this scenario, the $3,000 a month is already too cheap because of business, but also. It doesn’t factor in how much we get paid. How much do you want to get paid? So there’s just some perspective for you, it can help too if you’re, willing yourself to talk to someone about pricing or tell a potential lead how much it is to work with you. You’ve got an anchor. Use it as an anchor. Well, that’s okay. If you think that it is too expensive to work with me right now, it’s not in your budget, that’s totally fine.

You have other options. You can go and hire a full-time Ops Manager for $144,000 a year if that works better for you. Or, you can pay me a fraction of that because I’m not going to be full-time. Plus, I have the benefit of having more experience and more versatility. You don’t have to pay me super or tax. The list goes on. So now you’ve got a baseline.

When we are setting our price, these are the things that we then have to add on top. So let’s say, as an online business manager, you wanted to earn $144,000 a year. You have to work out your rate based of $144,000 plus insurance, now this can be a big one.

There are so many different types of insurance now such as public liability, professional indemnity and cyber insurance. Everyone needs insurance, particularly because a lot of subcontractors if you want to work as a subcontractor, the people that you are working for will ask you for your insurance details. And that is because insurance companies, more often than not, have a little thing on their form.

So that when the business goes there and says, yes, I want insurance. They have, do you use subcontractors? Do you require them to have their own insurance? It’s a factor that matters. So even if you’re subbing, you still need insurance. It’s a cost. Then there’s marketing. Well, if you’re going to run a business, you have to be able to promote it.

Whether that’s in time or money or learning how to market, there’s skill development. You cannot stay stagnant with what you know. We are online business managers and the land of online evolves too quickly. If you stop learning, you will stay stuck. Tech upgrades are a big one that I just want to cement in because we don’t have a ton of overheads as OBMs

Tip💡: Set your baseline to define your fees.

 

The cold hard facts

 

We don’t have to pay rent. We don’t have to pay for electricity. We don’t have to pay for building insurance. A lot of these things we don’t experience as OBMs and other businesses do, but we also seem to get very shocked when we need to consistently upgrade our computers and our laptops and our webcams.

That baffles me a bit because it is our overhead. Your tech is the biggest thing that you use to actually connect with your clients and do your job. So build in the fact that you’re going to need to upgrade it regularly. That should be considered in your price. So it’s not a sting or a shock when then you go, Oh no, now I’ve got to come up with a few thousand dollars to do this.

If it’s built into your price already, you’ll have the money. There’s registrations, business registrations and certifications. Then there’s other fun things like super, tax. The uh-oh factor. So what if the economy takes a dive? If the economy dives tomorrow, you want to make sure you have the ability to survive that.

That only comes with building a buffer and a buffer only comes if your price is higher. What if the cost of living rises? You have to factor that into your price. What if you want to grow your business? You have to factor that into your price. All these things cost money. So when you are saying this is how much it costs to work with me, remember that here’s a big list of things that go into that cost.

It is not how much money goes into your pocket and the reason I keep saying that is because as OBMs we tend to struggle with that difference.

We feel like we’re telling people you’re paying this much just for me to sit and type and do my brain thinking behind this computer. It’s not true. So we need to cut that tie or we will forever undercharge.

Another thing that matters is location. Everything I am talking about today is based on Australia. I live in Australia, I understand the Australian market, and I know that it’s different in other places in the world. A lot of these principles you’ll still be able to apply, but the figures might not quite be there.

 

Tip💡: Build in the fact that you’re going to need to upgrade your tech, which is the biggest thing that you use to connect with your clients and do your job.

Sneak peek

More perspective. How much can an Online Business Manager charge?

Five years ago I decided to put my Online Business Manager cap on and offer that as a service. I charged $70 an hour. That was five years ago. That was when I started. So I had been in the VA industry for a few years. I knew what I was doing. Highly skilled person.

I knew how to run a business. When I started offering online business management services, I charged $70 an hour. We’re five years ahead now. So now in that same circumstance, I would want to be charging $90 an hour, $100 an hour. Five years is a long time, and that was without the experience I now have.

So I want to give you that context. That’s the number I’m giving you to hold on to. If you’re charging $50 an hour in Australia and you’re an OBM, it’s too cheap. If you’re charging $100 an hour in Australia, calling yourself an online business manager, but not doing that role, you shouldn’t be charging anything.

Go and work out how much it is to charge for your role. But as that starting point, if you’ve got some experience. You know what you’re doing, you are capable, then 90 to 100 dollars an hour is not a lot. If you know that right now you’re not charging that much, and you should be, or you could be, it’s okay.

Do what you need to do to take steps to increase your price. You don’t have to do it overnight. You can. I know I did at one point in my business. I went from charging two grand a month to four grand a month to people, but I understand that pricing can be scary. So if you’re in the under charging bucket, which generally the majority of us are, put some steps in place to increase your price, knowing that five years ago it was $70 an hour.

Tip💡: Do what you need to do to take steps to increase your price.

 

The magic of packages

 

If you’re an OBM and you package your services, you will earn more and I’m going to explain why.

As Online Business Managers, we squirm when it comes to talking about money. I have worked with a lot of OBMs now and in OBM Academy with my clients in there and it’s the same thing. We all struggle with the money conversation. We all struggle with splitting out our worth from the amount we charge and that’s okay.

But, if that’s you, let’s stop working against that and start working with it. If you know that when it comes to saying your price or your hourly rate, your belly does flip flops and you don’t want to or you have a panic attack, stop saying it. To make hourly pricing work as an OBM, where you actually get the balanced value, you need a massive hourly rate.

It needs to be high. To be able to pull that off, you got to be able to confidently say what that hourly rate is. Confidently enough to be able to sell it and explain it. Now my gut feel is you probably don’t want to do that. If we’re working with the fact that yeah, we wobble a little bit around price and money, we’re working on it, we’re getting better, move away from the hourly rate.

Because that’s just going to bring more wobbles. When we come to packaging, it gives us different options. If I say to someone, my hourly rate is $100 an hour, and I’ll be your OBM. And they take that, and they compare me with somebody else, who charges $70 an hour to be an OBM. All they have to compare in these two cases is that dollar figure.

$70 an hour, $90 an hour. Well, let’s go with the $70 one and see how that goes. That’s all we’re giving them to compare us with. And if you’re like me, you do not like getting compared based on price alone. Especially when they don’t have a full picture. 

If we put the effort into creating packages, all of a sudden, we have more pieces to play with when it comes to comparison.

In a package, you will have all of the inclusions, and you have to spend time thinking about those inclusions, coming up with them, and listing them out in a way that makes sense. Now when you quote how much it’s going to cost to work with you, you have a list of things to give that person. It’s going to cost you a thousand dollars to do this.

Here’s why. Here are the ten things that are included in that and then you add in the conversations around your experience. You add in things like turnaround time. In phase one and phase two, you give more context and packages need that. So they take more work upfront and we invest more work upfront.

We put a bigger dollar figure on it, but it’s easier to anchor that price because it’s easier to explain what someone’s getting for it. Whereas when we just say an hourly rate. We can’t really explain, that means I’m going to do these four things. It makes it harder to compare things when you do packages, because majority of people don’t have packages that are exactly the same.

Therefore, clients start looking at other things, like what is it that they actually need? Does this person have that included in a package, or does this person? Cost is one thing, but they start to rationalise a little bit more. That might seem a bit cheaper, but this one has twice as many things, so maybe I’ll do that.

This person seems to have really good knowledge around the area, they’re including strategy, I’m happy to pay a higher price for that package. We’re not just looking at dollar for dollar without any context.

So that’s why I always encourage my OBM clients to move with packaging. I think that you’ll end up with more value once you get into the groove of doing it.

What’s fair and what’s not

I was chatting with one of my clients in OBM Academy this week, and they were talking about this epic client journey that they created for one of their customers.

They were telling me what was involved. When they said it, they said, I created a client journey. We went through the client journey. When I listened, they didn’t just go through the client journey. There was like 10 different services involved in going through that client journey. This is this big, big piece of work.

My client had thought about things that other people wouldn’t have thought about. This was an incredible job, an incredible effort, and well considered. And then I told my client how much I would have charged if I was doing that service for someone and I watched their face change. Then I told them how much a marketing consultant would have charged to do what they had just done and more face changes, because my client had charged such a tiny fraction of that because they didn’t see what they’d done. Getting that level of knowledge, experience and understanding at a low hourly rate that customer got a huge bargain, and my OBM client had no idea. This is the pattern that we want to stop.

When you package things properly, you can stop this, because then, at the beginning, you start thinking about the scope. You start thinking about what’s included. You start communicating that. When you go with Ali, you just go, oh yeah, I’ll try this and I’ll try that, and maybe we’ll do this. And this is one example of how that can eventuate.

You would have just lost out on thousands and thousands of dollars. That’s the level we’re talking about. So you have choices either up that hourly rate or get some packages happening.

Tip💡:  Package things properly and start thinking about the scope.

The damage undercharging does

 

What happens when we undercharge? Lots of businesses don’t survive, purely because people undercharge. And when you’re an online business manager, and you undercharge, even by $10 an hour, $20 an hour, you ruin the whole industry. And it is because of that, that each time I’ve increased my prices, I’ve had a little bit more confidence.

Because I know it’s the right thing to do for everybody else that’s in my boat. 

Sometimes I can’t do things for me, but I can do them for other people. And I know that when we undercharge, we reinforce this idea that all of our work experience isn’t that valuable. All of our life experience isn’t that valuable.

Tip💡:  Charge accordingly and make the life experience valuable.

And… that’s a wrap!

Our unique ability and skill aren’t that valuable. Our capability and our way of being when under pressure isn’t valuable. Because if you have all those things and you’re charging less, and then someone next to you also has those things and is charging far more, someone’s going to start looking for why.

The only why is they were brave enough to charge that much and you weren’t yet. You didn’t know yet. You hadn’t taken the steps you needed to take yet, or you hadn’t factored in all the things that really come with a price. If you are going to be an OBM or continue being an OBM first, you need to have the skill and confidence to own the role, and you need to charge the price to back it up.

That is what I’m going to leave you with. If pricing is something that you struggle with or you’re trying to get your head around or you’re trying to find just the next step with, check out OBM Academy. We focus a lot on pricing and I walk you through profitable pricing strategies so that you don’t stay in this cycle of working too hard and getting underpaid.

Or if you want to dip your toe in packaging, I have a masterclass that is for sale it comes with a template and I walk you through how to create powerful packages so you can move away from hourly if that’s what you’re interested in.

Send me a DM to start a conversation. Tell me what your biggest pricing struggle is. I want to hear from you. 

 

 

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Links you’ll love:

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