Guide to Setting Relief Fees

This section includes information about setting hourly and/or daily fees, as well as charging for additional items such as mileage or use of a vehicle or equipment.

Evaluate via Different Methods

You can use several methods to decide what to charge. Work through all these examples so that you can get a good idea of the factors to consider in setting your fees.

Method 1. Daily rate

Some relief veterinarians charge a flat rate for a day of work. Daily rates range from $300 to $800+ per day ($300 for a 10-hr day is only $30.00 per hour, or about $25.00/hour after taxes). It is wise to create a limit on the number of hours to which this applies, or you will be paid the same amount for an 8-hour day as for a 14-hour day.
One typical way of setting fees is to set a daily rate for any work day up to 8 hours, with an additional hourly charge for every hour over that. (For example, $500 / day [=up to 8 hr], plus $70/additional hour). For those interested in preserving their independent contractor status, this method is preferable to a flat hourly rate, since many employees are paid by the hour. (This is just one of many criteria, of course.)
What about the practice that is open for just a half day on certain days of the week? Will you charge the same amount for a full day as for a half day? Half-day rates may range from $300 to a full day charge but should be more than half of the full day rate (e.g., $575/full day, $300/half day). Be sure to define a half day (e.g., up to 4 hours) and a full day (e.g., 4 to 8 hours). Some relief veterinarians (including the authors) don’t offer a lower half-day rate, since the job takes up their whole day either way (that is, they could have worked a full day elsewhere). You sometimes may be asked to work just a few hours (e.g., 8 to 10 a.m.); if so, assume the job will consume at least half a day, and charge adequately.

Method 2. Hourly rate

Most relief veterinarians charge an hourly rate (ranging from $60 to $125/hr). It is wise to also set a minimum fee for the day or half day (as above). Otherwise you will get in a bind with long lunch breaks (basically, split shifts) or short days set up to “save money.”
There is no problem with calculating your fees on an hourly basis, but the best way to word this agreement as an independent contractor is to state your minimum daily (or half day) fee and add an hourly charge for time worked over X hours. (For example, $60/hr with $400/day minimum).
Outline your ideas for your hourly, daily, and half-day fees, then use the alternative methods on the following pages to refine your numbers.

Method 3. What others are earning

3a. Call at least 5 full-time relief veterinarians in your area. Call people who have been in business over two years; the others haven’t yet felt the full impact of quarterly tax payments that will cause them to adjust their fees upward. What do the relief veterinarians in your area charge for their services?
(Don’t let fears of the legal issues of fee-setting prevent you from gathering this information. It is perfectly legal to ask what others are earning. The illegal part is if you all get together and create fees.)
3b. Find the average salary of veterinarians. Get numbers from AAHA’s Financial Pulsepoints or DVM360 / Veterinary Economics; also see the AVMA report on debt and income. Divide that salary by the number of days you work each year to determine a base daily rate, then add in the additional costs that you incur as a self-employed person. (“Costs” include all those in your cost work-sheet earlier in this chapter.)
Now that you have that information, what should you do with it? Do you want to be “average?”

Method 4. Percent of gross

Some veterinarians charge a percent of their daily gross receipts, (usually 20-30%) instead of an hourly or daily rate. Relief veterinarians should charge by the percentage of fees billed, not percentage of fees actually collected, since you have little control over the practice’s collection policies and client selection. Because you also have little control over the way practice fees are set, or over the number of clients seen per day, you can be at a disadvantage in some practices. It is highly recommended that you also set a minimum fee per day.
When you read about associates who are paid a percentage of the gross, remember that their percent is calculated assuming that certain benefits are also given. Since you have no benefits, you will charge a slightly higher percentage than a regular employed veterinarian would.
How much would you have to earn to make this method worthwhile? If you bill this way, will you require a minimum daily gross income, or will you ask for a minimum daily fee? (Best do one of those!)
One example of this setup would be to charge a minimum daily fee of $400, plus 25% of the gross over $1600. (Gross billed, not gross collected.)
Will you place a limit on the number of hours for this arrangement? Think of the “what ifs.” What if the practice is open for 10 hours and you’re busy during the first 7 hours, then sit around?

Method 5. Profit calculation

You may be considering your “worth” in terms of just a daily “fair” rate. However, you need to add your expenses and profit to that before setting your total daily fee.

Method 5a. Labor + cost + profit

• Make a budget and estimate your total expenses (See your cost work sheet and cash flow analysis.) Another online budgeting resource is the wage calculator for relief vets from Relief Rover. https://reliefrover.com/relief-veterinarian-salary-wage-calculator/
• Estimate the number of days per year you will work.
• Divide your yearly expenses by the number of work days. For example: You will work 220 days/year; your yearly business expenses amount to $15,000. 15,000/220 = $68/day.
• Determine what your time is worth for each day of work. (This is typically the “average salary” of employed veterinarians, broken down into a daily rate.) (FT veterinarian median income $90,000 [Bureau of Labor Statistics]; @ 48 weeks per year and a 40 hour week, that equals $47/hr or $376/day

For example: You have decided your labor is worth $376/day.

• Give yourself a profit: for investment, business growth, and the future. A typical profit is 15% of [labor + expenses]]. For example, 0.15 x [350+68] = $66.60 (round up to 67).
• Add your daily expenses, daily labor, and daily profit to get your daily rate

In this example, the daily rate would be 68 + 376 + 67 = 511.00
Divide this by the average number of hours you work each day to get your hourly rate.
Result: $481/ 8 = $64.00/hr.

Method 5b. Labor + cost + profit

Dr. Eric Ratliff, an 18-year relief veterinarian of the Lighthouse Veterinary Consulting Group, suggests this method. Add up these items:

• Prevailing upper end full-time salary of associates in your area
• 15.3% for self-employment taxes
• Cost of fringe benefits (health insurance, retirement, CE, vacation, sick days)
• Business expenses, including mileage costs

Then divide that total by 1600 billed hours per year and multiply that by 1.15.
For example:
$85,000 + 13,005 + $11,000 + $10,000 = 119,005
119,005/1600 = 74.38
74.38 x 1.15 = $85.54/hr
Note that failure to account for mileage costs can eliminate your profit. Dr. Ratliff suggests this formula: IRS reimbursement rate x 220 (workdays) x max travel radius in miles = Total mileage costs. Also see additional discussion of auto / transportation fees on the following pages.
 

Compare Methods

Did you come up with different numbers for each method? Only you can decide which amount is right for you. If there is a large discrepancy between some of the above, analyze why.

How do you know if you’re charging enough?

It is easy to charge too little, and easy to worry about charging “too much,” especially when you’re starting out. If you use “average fees of other relief veterinarians” as your guide, you will probably be charging too little. Assuming that you are filling a need and are doing a good job, then charge a rate that is fair to you as a business owner who is supplying a needed service. If you are fully booked far in advance, then listen to the message: the economics of supply and demand says that you are not charging enough.

Remember that many people complain about fees as a matter of course. It’s just business, and they do so because it often works. A complaint about fees should not lead you to respond with a discount!
 

Additional Fees: Using Your Supplies; On Call

Fee for use of equipment or supplies

Do you have a piece of equipment that you might use on relief jobs (x-ray, dental equipment, ultrasound, etc.)? What will you charge for its use? Will you bring any of your own supplies to the job (suture, drugs)? What will your markup on those items be? (Always charge the practice, not the pet owners. Money should not pass directly from the vet’s clients to you.) For equipment like an ultrasound, charge a daily lease or a per-use rate to the veterinarian. The practice’s clients are charged as they would be charged normally had the practice owned those supplies or equipment.

On call rate

Will you take emergency calls for the veterinarian you replace? If so, will you charge by the hour actually worked, or by the total time on call? Will you charge a minimum fee for any night on call? No minimum fee if you have worked that day at that practice? Will you charge extra if you are the one answering all incoming calls? (If yes, charge for phone consultation time.) Will you keep any extra emergency fee that is collected? (E.g., if you work 1 hour on an emergency, and the practice’s extra charge over the usual day exam is $50, you bill for one hour plus $50).
Our recommendation is that you charge a flat minimum fee for being on call, plus hourly fees for phone time and actual emergency work.

Sundays/holidays on call

What will you charge to take emergency calls for a full day? For any full day on call, you should consider yourself to be working all day. After all, you are making yourself available, and thus not available to others. Charge your minimum daily rate, or the hourly rate for time actually worked, whichever is greater. Will you charge extra on holidays? How much? (Some relief veterinarians charge 1.5x or 2x the usual rate).

Emergency/night work

If you work at emergency practices, will you charge more for those night shifts than you would charge for a day shift? You might say “No” if you love the work and lots of other relievers also want the job; “Yes” if it’s a bit of a pain for you, or other relievers aren’t interested.
 

Transportation and Mileage Fees

If you are working out of state or a long distance away, you will, of course, have the client pay for your airfare and arrange for your local transportation.
If you drive to work outside of your immediate area, you will need to charge a mileage fee to cover fuel and vehicle maintenance costs.
At what distance from your home will these fees be charged? Consider the average commute of full-timers in your area for the distance within which you will not charge mileage. Charge a fee for any distance longer than that average.
What if you live in a rural area and are concerned about getting work in the city if you charge mileage? The author did so for many years and had plenty of work (driving 150 to 300 miles). If you do not charge for mileage then you have a large added cost of fuel (not to mention your time) that you still must pay.
Charge for mileage as $/mile round trip from your home to the job and back. How much should the charge be? What is the current federal minimum for mileage reimbursement? (See IRS Pub#463 and IRS standard mileage rates. Ask your accountant what it costs to run your vehicle. You might decide to charge more than the IRS minimum; see tax deductions for more.
Will you charge for your time while driving? One idea is that drives under x hours or x miles are charged a vehicle rate of $.xx/mile, round trip; drives over that amount are charged the vehicle rate plus an hourly charge for the veterinarian’s time (perhaps half the usual hourly charge?).
Caution: I’ve encountered resistance to the idea of an hourly fee for driving. You might be more successful by simply raising your per-mile driving fee. For example, $.76/mile is the same as $.56/mile + $10/hr for a 100-mile, 2-hour drive.)
Another approach is to charge a flat “trip fee” based on the city or county to which you travel.
Will you have a minimum or maximum transportation charge per day of travel? Will you set a limit on how far you will drive in any one day? Will you waive the driving time charge for work of a week or more?
 

Using a Vehicle for Work

Relief veterinarians may go on house calls or farm calls during their work. If you use your own vehicle, you should charge a higher rate for working mileage than you did for the driving mileage to get to and from the practice.
You are being paid for the day’s work, which includes the time you spend driving to farm calls; yet, you are giving the employer the use of your vehicle. The cost of maintaining a vehicle is more than the cost of gas. It includes insurance, repairs, and so on. In addition to those costs, the employer is essentially “leasing” the vehicle from you.
Ideas: Charge a per-mile fee plus gas; or, charge a daily fee, plus a per mile fee, plus gas. (For example, $20-30/day for vehicle use, plus $.56/mile, plus gas.) Perhaps the mileage fee charged to the practice’s clients will be split between the employer and the relief veterinarian. If that doesn’t seem to be enough, then maybe the practice needs to raise the mileage fee charged to their clients, since that tells you that they aren’t charging enough for their own vehicle, either.
The working mileage fee must consider the following:

• Vehicle wear and tear, i.e., basic mileage;
• Vehicle use (essentially a lease of the vehicle);
• Use of equipment (consider a daily lease fee for all the equipment); and
• Use of medicines. This applies with large animal veterinarians who use their own vehicle. If your truck is stocked with inventory, bill the practice, not the animal owner, for the use of medications. Then the animal owners are billed as they normally would be by the practice. Relief veterinarians can either keep a percentage of the markup, or, keep the entire markup for yourself. Make sure to keep meticulous records.
   

Payment Policies and Fee Increases

When (this is not an “if” question) will you raise your rates? How will you determine how much to raise them? At a minimum: Yearly cost-of-living increases (Over time, on average, the cost-of living index is about 5%; inflation is about 3%; or use the consumer price index of 3- 4%). Also, give yourself a raise when work picks up to x amount; give yourself a raise as your skills improve.

• If you’ve been practicing relief work for more than a year, calculate what your raise(s) should have been and what your current fees should be, based on an increase of 3-5% per year.
• Raise your mileage rate if the price of gas goes up.
• Raise your fees if you are fully booked far in advance.
• If you aren’t comfortable raising your daily rate, increase fees by increasing your transportation fee, increasing your half-day rate, or increasing your hourly rate without increasing your minimum daily rate.

How will you tell your clients about the increase in fees? One way to let them know that fees are subject to change is to phrase your letters and contracts as “my fees for (current year) are…” Any fee increase should apply to future bookings only, not to those already scheduled at your old rates.

Deposits

Will you ever require an advance, nonrefundable deposit to secure work? Times you might consider asking for a deposit include popular meetings (where, if you get a late cancellation and you had turned down other jobs, you are left with no work at all); out of state jobs (why can’t they find a good relief veterinarian nearby?); and any too-good-to-be-true jobs. Of course, anyone who has had slow payment in the past must be asked for an advance deposit.

When is payment due?

Decide and be clear about when payment is due. Is it at the end of your work period, or at the end of the week or month? Decline to have payment on the veterinarian’s staff pay date (see IC criteria). If the owner or manager will be gone when you are finished, ask ahead of time if you will be left a check. Leave a self-addressed, stamped envelope with your invoice. You can also use services for online payments.
Although the author has never had problems collecting, this can be an issue in some places. If it is, you could consider adding a late payment fee or interest fees. This information and your terms must be described in your contract.

Cancellation policy

Will you charge a fee for last-minute cancellations? Will you have a mutual cancellation penalty? For example, if either party cancels within 1 (or 2 or 3) weeks of the reserved dates, that party pays X amount. I don’t recommend this unless you have chronic problems with cancellations. Usually a milder statement in your contract prevents this (see Contracts section).
Some relievers create a specific fee for cancellation by either party if it is done within 2 weeks of the scheduled dates.
 

Your Attitude about Fees

Creating set policies and fees seems to be too “hard-nosed” to some people. After all, if you are nice and they are nice, everything should be fine, right?
Wrong. This is a business, not a family picnic. Of course you don’t want to be paranoid or act like a jerk. You can be professionally cautious, though. This book is not written for those jobs where everything goes fine, but is meant to help you prevent problems so your business life can run smoothly.
You can be nice, accommodating, empathetic, and professional while still sticking to your decisions. Being firm does not mean you are being nasty. You are (most likely) in this business for two reasons: you love it, and you must earn income to support yourself and to reflect your professional services. It is easy to forget the latter when other people’s problems are presented as something that you should solve. Keep your professional distance, stay courteous and helpful, and decide on your policies and fees ahead of time. Of course, no rules are set in stone, and there are probably rare times when you feel you must change some aspect of your business to accommodate a particular situation. That’s fine, but keep those times as an exception to the rule.
Don’t wait for problems to arise to start using a contract or setting policies. By setting up your business plan, using a contract, and deciding your policies ahead of time, problems will be rare. Then you can concentrate on doing a good job and keeping your clients satisfied.
Remain positive that you will have plenty of work. Everyone in business has learned that there will always be people who gripe about cost, even employers who hate it when their own clients (pet owners) complain about cost! One business consultant says that your rates are too low if you don’t have roughly 20% of your clients complaining. We don’t have that many complain, but we have lost a few jobs because we’re “too expensive” or because of one of our policies about work or housing. There has always been plenty of other work. You will be respected for having a business plan and policies rather than wavering or acting uncertain every time you are questioned. For some people, this is scary at first, but try it. You will find that the results are positive.