How do i determine what to charge for my services

How Do I Determine What to Charge for My Services?

This is the most asked question people have when starting a service business. Pricing is always a tricky art. It requires research and experimentation. The wrong price could drive your customers away, or it could even break your bank. The right price could draw a ton of money and make some you very happy clients.

My own rates vary depending on the type of service I’m supplying, the location my customer lives in and the size of my customer’s business. My price always increases as my knowledge increases.

Some of my services are in high demand, so I can charge more. Some of my other services I am one in many that customers can choose from, so my rate needs to be more competitive. If I work for a larger company, they tend to be able to afford more. Individuals have smaller budgets.

What you charge is dependent on the market, as well as your own unique marketing and business angles. The best way to determine what price is right for your business is to do some research. The following suggestions should help you with your research:

1. How much is your service worth to your client?

Ask around. Ask your customers what they would be willing to pay for a particular service. Just come right out and ask or conduct a survey. Ask other businesses what they are charging for their services. Call and pretend to be a potential client. Find out how much they would charge you. Look for articles and forums in your field where you can ask other consultants what they are charging. Many will just come out and tell you or give you a price range.

2. How much is your client base willing to pay?

Price is generally based off of perceived value. If your customer is going to be saving money or making money from your product or service, then depending on how much they will make or save can determine how much they are willing to pay. In some areas of service, charging too much can cause your customer to go to someone cheaper. In other fields, not charging enough can cause your customer to think your quality isn’t what they are looking for. You need to remain competitive and stay within the normal range of your services.

3. Are you charging enough to make it worth your while?

The important part of owning a service business is to make a profit. You need to take a look at your expenses. Make sure that what you charge is more than what you are bringing in. A good formula to follow is:

Expenses + Time + Knowledge = Price

Expenses: Your price should take into consideration any expenses you will incur. Time: The time you plan to spend on the project should be taken into consideration.

Knowledge: Your price should be commensurate with your knowledge. If you are bringing years of experience to the table, your price should reflect that.

When deciding how much to charge do your research first, then experiment. Test out different prices and rates to see what types of reactions you get from your clients. You can always adjust accordingly with your next client.