Consulting Income Report: December 2012
As many of you know, I share my consulting income details for a few reasons:
- To keep me motivated. 🙂
- To be transparent, and show you both what’s possible as well as mistakes made.
- To inspire you to take action and start or grow your business.
If you’re just starting out, building a business will take hard work, patience, and persistence. But the rewards can be far beyond what being an employee can provide.
Lastly, yes, this report is a bit late. Like most people, December tends to be a crazy month for me. Add to that, all the time I’ve been spending creating Breakthrough Consulting, and it’s been an incredibly busy month.
This month’s consulting income numbers
You’ll notice that my consulting income was significantly lower compared to prior months, primarily due to the great deal of time I’ve spent building Breakthrough Consulting–including the video lessons, homework, 1-on-1 calls with students, etc. Creating Breakthrough Consulting has taken a significant amount of time, but has been well worth it, since gives participants a complete foundation to launch a profitable consulting business.
As some of you might remember, Breakthrough Consulting started last month, and it’s been really exciting to see the students’ incredible progress.
Anyway, here are the numbers:
- Total worked: $11,152.50
- Average hourly rate: $178.44
- Number of clients billed: 9
- Average days to bill (this is the average number of days between when I actually do the work and when I bill the client): 11
With the exception of the total worked amount, those numbers have been pretty similar over the past several months.
Why is my average rate for the month HIGHER than my hourly rate?
Currently, my hourly rate is $165 for existing clients and $175 for new clients. However, this month’s average hourly rate was $178.44.
Well, a couple of interesting things happened this month:
- As I mentioned, I launched Breakthrough Consulting here on the blog–which took a heap of time.
- The time spent on Breakthrough Consulting here on the blog meant I spent less time my hourly consulting.
- BUT, even though I spent LESS time consulting, my average consulting rate INCREASED.
What’s up with that? I:
- worked less (well, technically, I BILLED fewer hours–I was still working, but working much more on blog-related stuff),
- earned roughly the same, and
- boosted my rate?
Here’s what happened. I have 2 products I created for clients a couple years ago that could be used by other clients. This past month, I ended up selling those pre-created products to a few clients, and that’s what boosted my rate for the month.
Pretty cool. Like I mentioned last month, it’s not quite passive income, but I’ll take it.
What are my expenses?
Like I mentioned in last month’s income report, some of you have asked what my expenses are, and to include them in the monthly income reports. I’m happy to do that. A couple things to keep in mind:
- Some of my expenses are only paid annually; I’ll report those as they come up. But in the meantime, you can get a sense of how much I pay in expenses each month.
- I pay myself a salary as an employee (and take distributions from my s-corp). For now, I’m omitting how much in taxes I pay (federal withholding, state withholding, Social Security, and Medicare), since depending on your situation, where you live, how many exemptions you claim, etc., your taxes are virtually guaranteed to vary wildly from mine. One thing I find helpful is claim 0 exemptions and also withhold extra federal and state income taxes; that way, I don’t have a huge tax bill come April when I file my personal income taxes. So far, I’ve been pretty accurate at estimating how much I’ll need to pay, and then pro-rate how much I need to withhold each month.
- Likewise, I haven’t included health insurance premiums in the total. I currently pay $1,207 each month in health insurance premiums (which covers myself plus my family). However, depending on your circumstances, what you pay for health insurance may vary wildly from what I pay.
Anywho, here’s the expense total for the prior month: $1,114.34. This was a few hundred dollars higher than last month, mainly due to some additional business books I purchased, a state tax payment, etc.
That expense total includes things like:
- accountant fees
- Skype service renewal
- subcontractor payments (for services which I billed and was paid by clients)
- business-related books, and
- business coaching.
Keep in mind though, when I first started my consulting business, my expenses were MUCH lower–probably in the range of under $100 per month.