Why do YOU need pricing services right from the start of your small business?
When you start your own business you want to obtain customers. You may be afraid of pricing services too high and so you lowball them. Or you may not have the confidence to ask for higher rates.
You begin to generate work from clients. Then you work, and you work.
You begin to realize you may have been better off pricing services a bit higher. After all, who wants to slave for peanuts or have no profit after the hours spent?
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Don’t Slave – Pricing Services Higher!
You may want to start pricing services higher as you can always drop them. It is much easier to drop them than to increase them. (Though it can be done!)
You could calculate your hourly rate. Business schools teach a standard formula for determining an hourly rate: Add up your labor and overhead costs, add the profit you want to earn, then divide the total by your hours worked.
This is the minimum you must charge to pay your expenses, pay yourself a salary, and earn a profit so keep it in mind when pricing services for your small business.
Realize Your Worth – Time is Money
After doing the calculation above to learn how to price your services just right think about your worth. How much time are you spending on each of the services you are providing? Is it worth it?
Keep track of your time. You must be organized and consistent to figure out exactly how much time you are spending on each project.
You may be surprised to find you are spending more time than you were charging for the services. If so you may want to consider raising your rates.
Charging more as you start your new business can be scary but it will help you later on. You won’t come to resent those low-paying clients or the work you put in for it.
Upsell Other Services to Make Up For Lower Rates
Another option I had learned back in the newspaper business was to upsell clients. The same can be applied to services and products in your own business today.
If there is a service that was a low rate service, upsell your other services to make up the difference. This will take time but it does work out nicely for all. It’s a WIN-WIN situation.
You will be helping your client grow and they will be paying a large amount for your services. OVERALL this will increase your hourly rate.
Add Fees For Pricing Services
Start adding some fees for your products or services to increase revenue. However, be careful how you do it as you probably want the fees to stay and not only be temporary.
For products, maybe a shipping fee or handling fee. For services, maybe a fee for producing an invoice or report.
Do be sure NOT to hide the fees from your customers. That would surely anger some and I would not blame them.
Increase Value of Your Services
Another way to increase your prices is to add value to them. If you provide consultations maybe add a report to send out after the consultation. Or a follow-up phone call to go over the results and the next steps to set pricing up.
Of course, if it’s products you could add quicker shipping or an extra accessory for the item.
Offer Tiered Pricing Services
Give your clients options when pricing services. Of course, don’t offer too many or they will quickly become overwhelmed. No more than 3 options for anyone is plenty.
Give them the most for your highest price package. Include some added value along with it.
My favorite tool for social media management does this well as you can see in the example below:
Conclusion: Offer More Products or Services
Are you pricing services right today? Are you happy with the way your price structure is going for your business? Are you making more money than you are spending for your business?
I believe if you start with higher pricing you will be happier. It’s not a bad thing to have a few fewer clients that pay more for your services. Otherwise, you’ll be working around the clock for peanuts!
I’d love to know more in the comments below on how you are doing with pricing and increasing them along the way.
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