Not too cheap. Not too expensive. It’s tough to be just right. What to charge for
services you provide is an incredibly difficult task. It is one that us business owner’s wrestle with when we open our doors and every time we are asked for a quote thereafter. I have seen advice that ranges from “test different prices” to “survey friends and family” to “pick a number.” However, there is a logical process for setting your fees.Step 1 – List all services you provide or intend to provide. This can be time consuming but it is well worth effort. Be as detailed as possible. The list may be long or it may be short. The only requirement is that you list them all.
Step 2 – List how long it takes you to complete each task. “But it depends . . .” Depends upon what? Are there parameters you need to establish such as number of miles you can travel, number of transactions you can do or number of revisions you can accomplish? If so, split your tasks even further to take these parameters into consideration. For example, you can run three errands within 5 miles of your business within an hour. Or you can create a logo in 20 hours and allow for two revisions.
Step 3 – Detail your target client. Who is your target, male/female, age, on-line, off-line, businessperson, business owner, middle-class, large corporations, etc. Provide as much detail as you possibly can. Keep in mind that no one can have entire pie. It’s too large. Instead aim for a piece and go for it.
Step 4 – The easy part is over. Research other businesses in your area providing same services targeting same clients you detailed in Step 3. What do they charge? Now research similar businesses on Internet. Again, look for businesses targeting same clients. What do they charge? Compile a list of businesses, services they provide and prices they charge.
Step 5 – Perform a salary survey. There are several web sites such as http://www.salary.com/ where you can find out how much someone in a corporation with your job, in your area makes each year. Divide that number by 1080 (40 hours per week times 52 weeks) to get an hourly wage.
Step 6 – What is your time worth? Of course, no one is really paid what they are worth, right? I would like to command $200 an hour for my time. However, I’m not a lawyer and my expertise doesn’t warrant that kind of fee. Realistically, what would you like to be paid an hour for what you do? $25 per hour, $15 per hour, $75 per hour?
Step 7 – Compare prices from Steps 3, 4 and 5. I’m sure you will find a large range of prices. Over pricing your services and you will not have any clients. A larger issue is under pricing your services. Bargain hunters will always want to negotiate and obtain a lower rate. Once you lower your rate you will always have to deal to get what you are worth. Your value to clients will be diminished, as they will see you as a bargain provider and, perhaps more importantly, you will feel like a bargain. Under pricing will lose you clients as well. After all, you get what you pay for.
