8. How to price your services

pip tip 8 how to price your servicesPricing products is relatively easy as it is closely dependent on unit cost.

Pricing a service, however, can be tricky. How do you put a value on your time and expertise?

Market Research
This should be your first step. What are your competitors charging? It is vital to know who else is offering a similar service and for how much. If you are charging much more then you risk losing customers. However, if you charge too little potential clients may think you are going to provide shoddy work.

Calculate Costs
You need to have a firm grasp of what it costs you to provide your service to customers. This requires you to calculate your direct and indirect costs, including training, labour, transport and marketing. You then need to decide on your price using one of two pricing models. Cost-plus pricing is established by adding a mark up to your break even costs. Value-based pricing takes into account the value of your service to your clients.

Feedback on Pricing
Talk to your customers. Find out what they think of your pricing and how you compare to your competitors. Get feedback on your service standards too, how they thought you carried out the service. The best time to get feedback is immediately after the job has been done. A simple anonymous questionnaire is a good way to gain independent feedback.

Set Your Price
Based on the value you offer, fix your price. You can always review it every six months or so to reflect market trends or changes in your costs. Make sure your clients are aware of any changes, however.

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