How Should I Price My Services? 5 Winning Strategies
Do you find yourself asking, "How should I price my services appropriately to keep my business afloat?" Find the answers here.
If you are one of the 30.2 million small businesses in the United States you more than likely want to make sure you stay in business. No matter how good we know we are at something sometimes setting prices for our services becomes an obstacle. Have you been questioning "How should I price my services appropriately to keep my business afloat?"
If this sounds like you then you are in the right place!
Keep reading to learn more about how to price your services to make sure that you are charging your worth and still staying competitive.
Figure Out Your Hourly Rate
Doing some research will help you figure out what your hourly rate should be. When you are aware of how much your hourly should be then you can charge per project according to how much time it will take you to complete the project.
Keep in mind the hourly rate you come up with is not for your clients to know, this is for your own calculations when you come up with what to charge for each service.
Once you have your hourly rate figured out you want to understand what the client wants and have a crystal clear understanding to make sure you are both on the same page. This is where you make sure that you can indeed help them meet their goals.
You also want to figure out if this project is going to be a one time service or an ongoing project. Last but not least, ask the client what their budget is for the project. Not everyone will have a number in mind but those that do will make it easier for you to weed out anyone who is not willing to pay you what you are worth.
If this sounds like you then you are in the right place!
Keep reading to learn more about how to price your services to make sure that you are charging your worth and still staying competitive.
Figure Out Your Hourly Rate
Doing some research will help you figure out what your hourly rate should be. When you are aware of how much your hourly should be then you can charge per project according to how much time it will take you to complete the project.
Keep in mind the hourly rate you come up with is not for your clients to know, this is for your own calculations when you come up with what to charge for each service.
Once you have your hourly rate figured out you want to understand what the client wants and have a crystal clear understanding to make sure you are both on the same page. This is where you make sure that you can indeed help them meet their goals.
You also want to figure out if this project is going to be a one time service or an ongoing project. Last but not least, ask the client what their budget is for the project. Not everyone will have a number in mind but those that do will make it easier for you to weed out anyone who is not willing to pay you what you are worth.
Always Add Padding
When you have your hourly rate and know how many hours you will spend on a certain service multiply your rate by the hours to get your service rate. Do not stop here and charge the client this total, you want to ALWAYS add padding to the total rate. Add a markup anywhere between 25-50% extra.
This padding is going to save you plenty of headaches and ensure you are paid what you deserve even when additional expenses or any unexpected extra overhead comes up. It is common to underestimate your services because you are worried that your clients will say no to your price.
Adding this padding will ensure that even if you are underestimating you are still paid what you deserve. The padding is going to cover any time you spend on revisions or any time that you take to give your client the best customer service by answering questions. You would be surprised at how quickly this time adds up.
This padding is going to save you plenty of headaches and ensure you are paid what you deserve even when additional expenses or any unexpected extra overhead comes up. It is common to underestimate your services because you are worried that your clients will say no to your price.
Adding this padding will ensure that even if you are underestimating you are still paid what you deserve. The padding is going to cover any time you spend on revisions or any time that you take to give your client the best customer service by answering questions. You would be surprised at how quickly this time adds up.
Research the Market
You want to take the time to study the market and your competition. Only use this number as a guide to make sure your numbers are not way off compared to what the competition is charging. If you are way undercharging or way overcharging then you might find yourself with either, way more work than you can handle and not getting paid appropriately or you might find yourself with barely any clients to keep your business afloat.
If you are charging more than your competitors make sure that you show why you are unique. If you do your research you will know the difference of what your competition is doing vs what you are planning on doing.
If you are charging more than your competitors make sure that you show why you are unique. If you do your research you will know the difference of what your competition is doing vs what you are planning on doing.
Know Your Customers
If you do not know your customers then you won't have any idea what they are willing to pay. It does not matter what you charge if your customers or your target market is not willing to pay past a certain amount.
Do a study to collect information about your customers such as their income, their family status, their occupation, and what they need. Another way to gather data about your customers is to conduct focus groups and have surveys distributed.
Once you are familiar with your customers and what they are willing to pay you can set up ways to ensure that you are getting paid monthly if your services require a month to month contract. Make sure to do your homework on the best recurring payment system and choose the best system for your business needs.
Do a study to collect information about your customers such as their income, their family status, their occupation, and what they need. Another way to gather data about your customers is to conduct focus groups and have surveys distributed.
Once you are familiar with your customers and what they are willing to pay you can set up ways to ensure that you are getting paid monthly if your services require a month to month contract. Make sure to do your homework on the best recurring payment system and choose the best system for your business needs.
Track Hours
Once you have your rates figured out and begin working and growing your clientele, keep track of how many hours you are spending on each project. This will ensure that you are indeed charging the right amount. If you notice that you are spending more time than you thought it will help you adjust your price with the next project.
Finding out how long something really takes you is key to adjusting future prices as needed. Closely monitor your time in order to avoid undercharging every time.
Finding out how long something really takes you is key to adjusting future prices as needed. Closely monitor your time in order to avoid undercharging every time.
What Are My Services Worth?
This is the final question at the end of the day - "what are my services worth?" There is no one way to approach pricing your services. The best you can do is make sure that you do not undervalue your worth and price your services with confidence.
You know what your services and what you are worth, make sure to charge accordingly to also make sure you are in the green. There is no reason to be in business if you are going to make less than minimum wage just to say you are in business. It would not make any sense.
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You know what your services and what you are worth, make sure to charge accordingly to also make sure you are in the green. There is no reason to be in business if you are going to make less than minimum wage just to say you are in business. It would not make any sense.
Did you find this post helpful? Make sure you bookmark our site to never miss our latest posts - all things business-related!
