Setting Your Rate as a Direct School Contractor

"What should I charge???"  This is HANDS DOWN the NUMBER ONE question that I get in my coaching calls. 

So I thought we could use this opportunity to chat through some considerations to make when setting your rate as an SLP/OT/PT or other related services direct school contractor. 

Note: I'm going to discuss hourly rate here as that's the most common way to charge when starting out.  As you expand OR depending on the type of contract, such as evaluation only contracts, you may consider a flat-rate pricing structure.  I discuss this further in my trainings but you can use this hourly guide to support you with calculating your flat rate. 

Consideration #1:  The Formula

Before you start looking at your hourly rate, it's important to know that most school contracts will allow for 36-38 weeks worth of billing due to the school calendar. Another thing to note, due to the school schedule, a "full-time" contract is usually 35-38 hours per week. 

 As a starting formula, I encourage providers take ⬇️

(weeks per school year) X (anticipated hours per week) X (hourly rate) = GROSS pay 

Consideration #2:  Anticipated Business Expenses

DON'T STOP WITH GROSS RATE as that's misleadingly high.  Next you'll want to deduct your anticipated expenses so you can estimate your TAKE-HOME (i.e. net rate) and see if that's enough for you to thrive on! 

Your business expenses will vary as you grow in your contractor journey, BUT here are a few that you can guarantee on and deduct when determining if your rate is sufficient. 

Some business expenses include TAXES (most likely the biggest business expense you'll experience annually),  business license costs, professional license costs, liability insurance, professional certifications (if applicable), and continuing education. 

As a rough calculation, expenses often add up to 40% of the owner's gross.  That's why it's so very crucial to calculate your anticipated net earnings BEFORE you throw a rate out there to the school. 

 Consideration #3: Market Analysis
"Elise, shouldn't this be the #1 consideration??" Nope!! The reason that I don't prioritize this as the main way to find rate is because some staffing companies are able to charge less due to the fact that they have so many contracts and can afford tighter profit margins.

If you use what other companies are charging to guide you, you run the risk of underpaying yourself. In addition, we do want to avoid the sticky space of "price fixing" that comes from using solely your competitors rate to create your own. 

However, it is a good idea to know your state to help you determine A RANGE. 

Ways to complete a market analysis include locating past board meeting minutes and won RFPs in your state to see what schools have paid, as this is public knowledge. 

Note: rural schools tend to compensate contractors MORE than highly populated schools, so if you only look up ONLY large district minutes, you may have skewed market results. 

Another note: Time of year  (aka urgency) can also impact rate.

I actually skip this step now when evaluating my rate, BUT it can help a contractor with a general rate range to build on.

Consideration #4: Five-Year Contracting Plan

Let me tell you a story about an SLP contractor (ME) that picked a low rate because she "didn't need much".  Guess what happened?  A few months into contracting I desperately needed to hire.  However, my rate was SO LOW that I couldn't justify the time of hiring someone under me.  I couldn't pay providers a decent hourly rate and experience the passive income that comes from hiring because my rate was too low.

If you plan on hiring one day, which usually comes pretty quickly in the contracting world, ensure that your rate gives you enough wiggle room to hire out and pay fairly.

Consideration #5: What the School Says
Regardless of how much you plan, you won't really know if your rate is competitive until you actually speak to schools. 
You can unapologetically present your rate and wait for a school willing to pay that.  You can also present it in a way that is flexible, if that feels natural to you. Here's a sample of what I say when I present rate.
"I typically charge _____/hr for my school contract services.  Is that aligned with your budget and in the range you typically pay for contract services?"   If they say "no", they'll often give you room to negotiate and discuss.

One other thing worth noting, most contracts are annual contracts. This gives you time as a contractor to adjust the following year if the rate didn't meet your business needs. 

If you need additional support, I have rate trainings in ALL of my packets!  The School Contractor Packet supports with setting rate as an independent contractor engaging in that first contract and The School Staffing Packet for setting rate when hiring out.  

Go get 'em! 

❤️ Elise