5 Ways to Determine Pricing Your Services

mackeyadvisors.com

One of the most difficult things for me as an entrepreneur has been deciding what my time and services are worth. It took me about a year of discomfort, poor decisions and many underpaid hours of work to realize the error of my ways. When you hear the common entrepreneurial advice of “fail fast and fail often”, this is one of those areas where I recommend you take heed.

As you start to bring on clients, they will want to know what you do and understand what it will cost them. Some will even try to deter you from charging the prices that you do for a variety of reasons. Having the following considerations in mind is my attempt to save you (if even slightly) from making some of the mistakes I did:

1. Do your research and set a price for your services.
When I say do your research, don’t just run a Google search, crowd source information from other business owners about how they valuate their services. Will you lag the market, lead the market or be on par with the market? These are just some of the questions you will have to ask yourself and answer to have a clear understanding of the value of your business. Service alone is like dollar bills without gold to back it. The only time your services mean anything is when you back it with a pre-determined attribution of time and effort. Of course, this may vary from client to client because of their individual needs. However, if you have a solid baseline price for your services you will rarely feel like you are underpaid for your work.

2. Minimize the costs you incur for delivered services.
If the project or service you are working on requires additional costs; don’t be a martyr and incur those costs. The danger in doing this is you can exhaust your own profits trying to fund a project or campaign; when in reality the cost needs to be absorbed by the customer. Part of owning your worth is being able to communicate these additions, changes or increases in cost without feeling guilty about it.

3. Be confident in the pricing framework you have set.
You will get the occasional client that wants to nickel and dime you for your services. As a business owner, I encourage flexibility at times-but by and large you need to be confident and steadfast about your prices. Only you can determine what your time and effort is worth. If they can’t afford you, you have to be comfortable with walking away from work in an effort to defend your worth and prices. Early on, this can be a difficult thing to swallow-as you are trying to establish yourself; but it is a necessary skill.

4. Keep accurate records of the time you spend on delivering services.
The only way to monitor the relationship between what you are charging and the actual labor is to keep timely and accurate records. Reviewing time and labor for each project and looking for trends over time can provide important data that should inform any price increases or adjustments needed.

5. Don’t be afraid to fire clients.
Yes, owning your own business is about helping people and passion and all of those virtuous things. However, you are also in business to make money. If you operate your business from a place of fear where you are unable to have frank conversations with clients about your rates and/or their inability to afford you- you will be broke and unhappy. Be transparent and upfront about what it costs to do business with you. If you get the hint that the client has quirks around paying on time or paying you at all- politely thank them for their interest and part ways quickly.

Having a pricing framework and realizing that you will be learning about the worth of your business throughout your time as a business owner is paramount. If you provide a value, the right client will pay you what you ask with no questions ask. The key is to put your ducks in a row and then go out and acquire the right clients for your business.[/vc_column_text][/vc_column][/vc_row]