Q: “Denise, I just tried to do your gross hourly rate exercise and I am all over the map! In January I worked about 250 hours but only brought in $4,000 giving me a gross hourly rate of $16 per hour. But in April, I brought in $30,000 and worked a little less – only 200 hours (because I took spring break off with the kids) giving me a gross hourly rate of $150 per hour. Where should I go from here?”
A: I applaud you for doing this exercise but I don’t want you to look at this monthly. I want you to keep a running tally per year. The reason for this is when you did the work isn’t necessarily when you got paid. For example, in January when you got paid $4,000, that is likely work you did in November and December during the holidays. However, in January, it looks like you were ramping up for a great April. Does that make sense? You need to average it over a longer period of time. But calculating monthly so you don’t have as much work to do isn’t a bad plan at all. And you can keep a running year-to-date total if you want to keep score throughout the year. Good work!