Doula Income Series – Looking Beneath the Surface

This is part two of our series on Doula Income. Today we’re getting deeper into the data, looking at aspects of your income that may sometimes be overlooked by doulas. Things like; doula insurance costs, paid prenatal visits and consultations, pension contributions, and taxes. These sometimes seem like SMALL parts of your income pie, can really add up over time.

 

Over the next little while we’ll be sharing blog posts, videos, and social media charts to help you better understand your finances as a doula.

 

For our methodology, we reached out to one doula from each of the three primary career paths 1) agency employee 2)  independent contractor doula 3) independent doula practice owner that just worked for themselves (mostly)  and had them provide information on their income, hourly wage, pension contributions…etc. Using this information, we’re able to compare the pros and cons of each path. Keep in mind that this is only a sample of three different doulas. Long-term, we’d love to complete similar surveys with a larger set of doulas!

 

All financial figures shown are in Canadian dollars (CAD$) and based on Ontario, Canada tax law.

 

Fee for Birth

Birth Doula packages can range in cost from as little as $900, up to over $2000. For the three doulas we talked to all the packages fell into a $1250 to $1560 range. As an employee or contractor who works for an agency, you typically won’t have much control over package rates, as these will be standard across the company (of course this can vary by agency). However, as an independent doula you’ll have more flexibility to set the number how you see fit and raise it based on your own preferences. The key is to ensure your take home rate is commensurate with your experience and skills, and that you’re feeling well valued for the energy expenditure.

 

Liability Insurance

 

We believe it’s a good idea to have liability insurance as a doula! Liability insurance or commercial general insurance exist to protect you, your business and your family’s assets when working in the birth world. It’s something you hope you don’t have to use, and the odds are indeed low, but we ARE seeing an increase in doulas being named in cases. The way medical malpractice lawsuits work in many parts of the world is that anyone who was in the room gets named in the lawsuit. The judge will eventually remove the people who had no part in the unfortunate outcome, however the average cost to represent yourself to get to that point costs on average $20,000. Given the LOW cost of liability insurance for doulas at this time, we believe it’s money well spent for the reassure the most we would pay is a small deductible. Annual insurance for a doula normally costs a few hundred dollars. We see here that the contractor doula and independent doula both paid $200 for their coverage (included with their membership within their provincial association), while the agency employee paid zero. The agency doula DOES in fact have insurance, however it’s paid for by her agency. A benefit of working in an agency environment is that you generally don’t have to worry about managing the insurance or paying fees.

 

Paid Prenatal Visits & Consultations

 

Part of birth work is pitching your services to potential clients. This could be done through phone calls, ZOOM meetings, or physically going over to the client’s home. It’s a great way to meet people and see how you vibe with one another before signing an agreement. However, this can also be a drain on your time as a doula, and it’s generally unpaid. Here we see for the contractor and independent doula these visits are not paid. If the client doesn’t hire you there is no way to recoup that time spent and it becomes a sales expense (note that none of the people in the survey accounted for that in their sales and marketing figures). It also means that if you meet with 2-3 clients for each ONE client that hires you, then you should in theory deduct some of the money you make from the birth you DID get hired for in calculating your actual profit.  For the employee doula, their organization will pay them for these visits and consultations.

 

Sales and Marketing + Admin Costs

 

Here we see that the agency doula had zero admin or marketing costs. This is because those responsibilities fall with their employer, who manages the finding of clients, creation of a website, advertising…etc. Our contractor spent a small amount on marketing (under $300), and over $1200 on admin costs throughout the year. The independent doula had admin costs just under $700 and zero marketing. At this time, she claimed is starting out and hasn’t been able to set aside the time she needs for sales and marketing, including making a website. We considered finding another person to represent the ’independent’ doula because the numbers were SO vastly different. But at the end of the day we wanted to compare 3 people who were all around 2 years out of their training. What we see is when people are working on their own they often don’t commit 40 hours/week because it’s SO easy to be distracted by our daily lives. It’s also hard to know where to start when there is SO much to do! Analysis paralysis!!

 

When looking at sales and marketing costs, these numbers should typically be higher. While the exact marketing spend can vary from business to business, there are some helpful benchmarks online that show companies should spend between 5% and 25% of their revenue on marketing. We see that for many doulas starting out, there is a reluctance to spending money on growing the business, especially if you don’t have many clients. This can sometimes hold them back in the early days from growing and prevent their career from taking off. This is MOST common with people who try to run their own private practice. The lure of the freedom of making all their own decisions is enticing but the reality of needing to KNOW EVERYTHING and BE sales, marketing, IT, finance, operations, HR is just TOO much to learn quickly unless you have prior small business owner experience. When working with an agency, you have someone who can manage this and MORE you. And often has more resources or a dedicated team to lead sales and marketing, client billing, technology, etc, etc.

 

Unemployment Insurance

 

Access to unemployment insurance, commonly called “EI” can be an important part of your financial planning. Employment Insurance is defined as benefits payable to individuals who lose their jobs through no fault of their own (for example, due to shortage of work, or seasonal or mass lay-offs) and are available for and able to work but can’t find a job. In Canada it’s also what we pay into to get our 1-year of maternity leave. As a doula, this can be important if there is a change in your work, which of course we all just saw during the pandemic, or if you’re planning to grow your family.

 

Employees always pay into this and it’s not ‘optional’. The employee and employer BOTH pay a portion. When you are self-employed (as are the contractors and independent doulas) you can CHOOSE to pay into EI, however you’d be responsible for 100% of those payments. It’s also crucial to remember that as a business owner you need to be paying into EI for 12 months before you can start collecting it, in the event you are laid off. Looking at our results, we see the cost of EI for an agency doula is paid by both the doula and her employer. In the case of the contractor and independent doula, they did not contribute to employment insurance this calendar year. This can end up being important for your finances, especially during an unexpected circumstance. For example, during the COVID-19 pandemic, many doulas weren’t eligible to collect EI.

 

Canada Pension Contribution

 

Part of a good personal financial strategy is preparing for your long-term future. This can be done through all kinds of investments. In Canada, one way this is done is through the Canadian Pension Plan, commonly called CPP. Looking at the three doulas we interviewed, there is a wide range of pension contributions. The agency employee contributes $3073.8 over the course of a year, which is almost MATCHED by their employer. For the contractor, they pay $6104 themselves. The amount each person owes is a percentage of their income. With no contribution from an employer anyone who is self-employed must pay their portion AND the employer portion, so double. And for the independent doula, a smaller amount of $1532.54n because she made less in total revenue. We always recommend you talk to a trusted financial advisor to plan your future and eventual retirement.

 

Taxes

 

Looking at taxes we see very similar numbers for both the agency and contractor doula, coming in at around $8000 for the year. Our independent doula paid no taxes. Don’t worry, she wasn’t breaking any laws! In Ontario there is a tax threshold called the Basic Personal Amount credit. If you earned under $14,398 in 2022 you did not have to pay any taxes, so she didn’t qualify.

 

A note on taxes: some doulas will accept client payments in cash to avoid paying taxes. Please know this is tax evasion and can carry significant penalties. If you make money you owe taxes on that money.

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