Posted: Mon 27th Jul 2015
When running a service, setting prices can be a difficult task. Michael Bernstein from Advantage Business Partnerships explains how to get it right.
1. Do you homework. What are your competitors charging and what service are they providing? Are they charging less for an inferior service? Do not undervalue yourself. Consider your skill, invention and expertise. Explain your added value
2. Fixed fee or hourly rate? Clients like to know what they are paying . They are not interested in how long you take. If you provide a fixed fee be very specific on the service you are providing. It is all about perceived value.
3. Know your hourly cost. You will not work seven hours a day, 365 days a year. You will probably charge for no more than 1,000-1,200 hours per year. How much do you want and think you should earn every year? Divide this by say 1,000 to determine you hourly cost. Add to this your direct and indirect costs to get your final rate
4. Presentation of the quote to the client. Give them the option to allow you to provide more by bundling up several services. When you quote, start at the top and work down.
5. Be willing to say no. If the client is buying purely on on price they probably do not value your service and are not worth having. Do not undervalue yourself. A high price point can cultivate a prestige service and high value.
Michael will offer advice on how to price products and services and care for your cashflow in our member-only video masterclass at 12.30pm on 28 July. To register and take part, log in to your Enterprise Nation account and go to this page.
If you're not a member and you'd like to watch the masterclass, click here to join. Fortnightly business masterclasses are one of many membership benefits.