Making the Big Money...or Am I?
Whether it's $10 per hour or $55 per hour, you get paid a certain amount of money per hour. It also feels good to receive a specific amount of money for just 1 hour of your time. When I first started tutoring, I loved getting $33.25 for a session that was only 1 hour and 15 minutes long. I was spending my money just as fast as I was making it and it felt good! Occasionally, I would buy materials for tutoring and that started me thinking...Was I really making $33.25 per hour?
The truth, I soon realized, was that I wasn't. You see, every dollar has to be allocated to another purpose. You're only hurting yourself financially when you choose to not acknowledge your expenses.
Let's say that you get paid $100.00.
$16.00 - taxes - yes, you must pay taxes no matter how much you make ($16 is just an estimate)
$20.00 - materials and supplies
$10.00 - transportation costs including oil changes, fuel, and miscellaneous repairs(if you tutor a lot)
$7.50 - marketing costs - website, business cards, etc.
$46.50 - This is your take home pay!
What's that look like with your rates?
$25.00 / hour
$4.00 - taxes - yes, you must pay taxes no matter how much you make ($16 is just an estimate)
$5.00 - materials and supplies
$2.50 - transportation costs including oil changes, fuel, and miscellaneous repairs(if you tutor a lot)
$1.88 - marketing costs - website, business cards, etc.
$11.62 - This is your take home pay!
Still $11.62 is a livable wage.
Here's a calculating formula for you:
Hourly Rate * .16 = Taxes
Hourly Rate * .20 = Materials
Hourly Rate * .10 = Transportation
Hourly Rate * .075 = Marketing Costs
Hourly Rate * .465 = Take Home Pay
Note* These are breakdowns that I use. Feel free to try your own percentages. Drop me a line if you have a question. You may have a different set. For example, you might not have to travel if tutor out of your house. You may not need to buy materials if the student has what they need. However, a good tutor knows that the key to longevity is that every cent of every dollar has a purpose. Even if you don't have to spend money on new pens and paper, it's favorable to allocate some cash aside for that reason. Before you know it, you'll have a good amount of money saved and won't have to worry a client misses a payment (that's another day).
So, to answer my own question: Was I really making $33.25 per session...No, I took home $15.46. Still, pretty good!-RLA