Pricing Your Services

I find that many business startups have a problem pricing their services.  This could be because they do not know their worth, they want to compete in the marketplace, or because they are scared that someone will not buy their services.  Either way, a business owner has to price services in order to make a profit.

If you have a tangible product then you should look at the costs of your materials, how long it takes you to make, and how much you want to earn per hour.  To reduce your costs you may want to buy some items wholesale, bulk, or purchase a lot when materials go on sale.  You must equate your product to what the marketplace is and examine your clientele.  Demand is what drives the prices up and down.  Regardless of what another business is doing you have your own bills and responsibilities.  If your product is worth $100 then charge that, but if its only worth $25 make sure that you are not gouging your customers on your mark up.

Prices can also be dissected based on location.  If you are in a rural community then you may want to charge less, but if you are in a mainstream city your prices on the same merchandise may need to increase.  You never want to short change yourself, because there is always a minimum to recoup your costs. If you are a vendor you need to add in the costs of your booth, gas, travel, etc. when pricing your items.  Most people forget about all those costs, but they are important to bringing you a realistic profit over what the booth fee is.

Service oriented businesses seem to have the hardest time pricing services.  We are worth so much because we tend to do the jobs that others don’t want to do.  For instance, marketing is something that can easily be measured in hours, contacts, emails, and reach of audience.  One way to price your services when you are in a service business is again to assess how much you want to make per hour and then see how much work you are actually doing for a client during that time frame.  This way you can have billable hours and if you charge $40 per hour, worked 15 minutes, then your client owes you $10.

Here are a couple of online tools that you can use to aid you in pricing your services and keep track of what profit you really made.

Check these services out and see if they will work for your business. If you have tried another solution, let us know what works for you. Share this post with your groups, friends, and on your personal page if you like.

Show Up & Show Out with your Social Media Concierge

Chisa D. Pennix-Brown, MBA

CEO Lady Bizness, Inc.

Info@LadyBizness.com

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One thought on “Pricing Your Services

  1. Chisa,

    Great Post! This is very necessary and right on time for those who have “Start my own business” on their list of New Years Resolutions. To support what you have shared, I’d like to add that it is wise to take the time to ask yourself and comprehensively answer (with pen and pad on paper), “What does it take to run my business for a year?” to support the process of valuating your individual compensation. Keep in mind that it will change. You just have to come up with a realistic starting point.

    Gauge your level of knowledge in your industry based on your experience and the value of the service that you are able to deliver with excellence! Research the going rate of ALL of the market(s) that you serve and consider tiered pricing (different rates for different levels of service).

    Don’t be scared, be prepared! Take advantage of the agility of being a small business owner. Resourcefulness, active listening, and resiliency are critical skills to have in order to be successful in the service based market. So, if you don’t get your pricing perfectly right the first time, listen to your market, make the adjustment and keep it moving… FORWARD!

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