4 Must Know Tips for Pricing Your Services
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Title: 4 "Must Know" Tips for Pricing Your Services
Word Count: 626
Author: Sandra P. Martini
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4 "Must Know" Tips for Pricing Your Services
Copyright 2006 Sandra P. Martini
One of the worst moments in a business owner's life is that
silent moment between when you quote your rate to a
potential client and his response. True, that hardly a
second goes by, but it can feel like an eternity.
"Will he hire me?"
"Did I go too high?"
And when he says "YOU'RE HIRED!", a new set of doubts creep
"Should I have gone higher?"
"Did I lowball the price just to get a client?"
You know the feeling. You've got the job, the project, the
new client and it almost always turns out to be more work
than you thought when you signed up for the task. Be sure
that you know your worth and communicate it to the client
1. Know your worth.
If you charge your clients hourly, how do you know what to
charge them? Did you pick a number out of the air? What
was your rationale?
For those who choose to bill hourly, I recommend the
following approach to determining what you charge:
a) Determine what you want your salary to be. How much
will you take out of the company?
b) Add to that any subcontractor expense that you may
have. This is your "labor total".
c) List out and then add all your expenses: advertising,
promotion, rent, self-employment tax, supplies, etc. This
is your "non-labor expense total".
d) Add your labor total to your non-labor expense total.
e) Add in any profit goal you may have for your business.
f) Bullets (d) plus (e) equal your Total Required Revenue.
g) Divide your "Total Required Revenue" by the number of
BILLABLE hours for the year. Remember that you will not be
billing 40 hours/week. The result will be the amount you
need to charge per hour to make your salary goal.
If you bill hourly, take the time to complete the above
exercise and, if necessary, increase your rates accordingly.
2. No haggling.
It can be hard when you have few clients or need more
money, but whatever you do, do not haggle with your
clients/prospective clients over your pricing.
You can haggle at a flea market. You can haggle for the
price of a house. You can negotiate (a.k.a. "haggle") for
a corporate job salary. As a self-employed individual, you
must not haggle over your pricing. To do so immediately
lowers your perceived worth with that person and will set
you up for a relationship of nitpicking over every nickel
3. Provide a "solution" and not a "service."
Insure your clients understand the benefits they will
receive from hiring you. You are not providing them a
service; you are providing them a solution.
The difference being that people value solutions more than
they do services. Whenever discussing price with a
potential client, focus on the benefits, the "solutions"
that she will receive as a result of hiring you.
Will she have more free time? Will her business see an
increase in profits or clients? Know the benefits and
speak to them!
4. Be prepared to say "Goodbye".
Not everyone is going to accept your terms. Deal with it.
They weren't meant to be your clients anyway and would have
just taken up the time that you could use for a better
qualified client. Save your time and energy for those who
recognize your worth – you'll both be happier and more
Pricing your services is one of the most emotional things
you'll do as a business owner. Be sure to take the time to
review the project at hand before just blurting out a price
– doing so will save you a lot of time and frustration down
About the Author:
Online Business Manager & Entrepreneur, Sandra Martini,
publishes the 'Effective Entrepreneur' weekly e-zine. She
also coaches small business owners to more efficiently
manage their businesses while increasing profits and having
fun. Sandra's coaching programs are available via
teleconferencing, emails and telephone calls. For more
information or to sign-up for 'Effective Entrepreneur',
visit www.thebostonvirtualsolution.com today.