Pricing for your service
Are you struggling to come up with a pricing structure that works?
If you are in a business that provides a service working out, your prices can be very difficult. How do you know if you are too high or too low or meeting your market or even going to get any business at the price you want to charge?
It is not about the $$$$$$$ it is about the value you deliver.
How do you charge for that value?
There will always be people who do not want to pay your going rate, and you need to remember that this is fine. These are not the people you want to spend your time talking to.
It is vital that you have some sort of pricing system so that you are consistent in your offer to both new and existing clients. You do not, however, want this system just to be a simple hourly rate. Ideally, you want to charge on a per-project basis or a per-service basis.
What services do you provide?
How can they be bundled and priced?
When you understand your services and packages on offer, you can price them accordingly. Only you know how long a project or service should take and sometimes providing a quote is just an educated guess. It is this educated guess that sometimes means you win and sometimes you lose but over time you should be winning.
How to work out a project cost?
Scope of work
Materials if required
Will there be ongoing work?
Does the client have a budget?
(Estimate of hours) x (your preferred hourly rate) = Base Rate
(Materials) x (percentage for sourcing) = Materials Cost
Unforeseen % = 20% or more additional to cover
Project Quote = Base rate + Materials + Unforeseen
Submission of Price
You must now clearly communicate your price all the while managing your clients’ expectations and selling the value of your offer. Be precise in what is included and what is excluded from your price so nothing is left to chance.
Perceived value must exceed actual cost
If the client goes ahead, you must track your project and ensure that your pricing structure works. By following your projects closely, you can see if you consistently overestimate or underestimate and then you can adjust accordingly.
Finally, be confident of your price, don’t second-guess yourself and always work on delivering more value than your actual cost. Don’t discount just to get a client or you will be discounting for the life of your business, and this may cost you your business.
How do you currently work out your prices?
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