How to Price Your Services
Pricing out services you sell can be tricky. You want to be high enough to cover your time and all of your costs, but you don’t want to be so low that people think you must be terrible at your craft, or your business isn’t totally legit. So how do you find that sweet spot? Start out with the following activities:
1. Do The Research
Look online and call around to local competitors and find out what they charge. This might involve a little bit of acting on your part, but seeing what the market will bear is your first job. If these other companies are able to stay in business charging what they do for services like you will be offering, chances are you will want to stay in that range to be competitive.
2. Look At Your Costs
Pull a report showing your overhead, time investment, and cost of any goods or supplies that go into providing your services. Do you need to belong to any professional organizations with annual dues? How often do you need to buy new hardware or software to run your tech systems? How much on average do you spend on rent, utilities, and insurance each month? All of these items need to be accounted for in your rate. If your competitors are charging ‘x’ but you can’t make any money with your expenses if you do the same, make sure whatever you charge will cover your costs and has a profit margin built in, even if it means you need to charge more.
3. Value Your Time
This is especially true if you are a freelancer or a business that relies on consulting or giving advice. If you don’t have a lot of overhead, you shouldn’t be asking for significantly less. If you have had to do a lot of training and education, get certifications and designations, and invest a lot of time preparing to offer your services, all of that can be built into your pricing. Don’t count out all of your time and experience preparing for the ability to charge for your services. If you don’t value your time, customers won’t either.
4. Re-Evaluate Annually
Especially if you are just starting out, you may need to pick a price point and feel it out, adjusting it over the first few months to find your sweet spot. Even if you’ve been in business for a while, it is important to set aside some time each year to look at reports for your sales and expenses and make sure that your profitability is steady. You’ll probably need to up your prices a bit each year to match inflation and some of your costs may change, forcing you to move the price of something. Don’t be afraid to analyze and adjust your pricing. It won’t be able to stay the same forever!
Good pricing is key to making sure your business gets a good enough return to keep operating and to be able to service more customers. Don’t cheat yourself, your business, or your clientele by under (or over) valuing your services!
Abby Yetter is the CEO and Chief Consultant of Bright Ideas Small Business Solutions, LLC. She is a driven, enthusiastic businesswoman, with a talent for organizing the chaotic, and branding the unfamed. Abby strives to use her creativity, and experience, to solve the many problems of small businesses. With a background based in customer service management, social media, technological organization, sales, marketing, and customer experience specialties, she enjoys taking everyday complications, and finding the newest, most productive ways to execute the tasks.All stories by: Abby Yetter