Pricing Your Work: How Much Should I Charge?
Find Your Strategy
If you’re a small business owner establishing a pricing strategy is likely one of the most significant issues that you face. Set your prices too high and potential customers could laugh in your face. Set your prices too low and people could think that you're desperate for work and treat you as such by trying to negotiate your prices even lower. Either way, you lose.
Pricing your services shouldn’t be scary, it’s a part of your success story, your livelihood. Whether you are selling a product or providing a service, it’s essential you have an understanding of how to establish your rates to keep your business for years to come.
So, where do you start? Recently, Xero published a quick reference guide on what small business owners need to consider when it comes to establishing their price points.
Where to Start
Do Your Research - Many entrepreneurs have failed because they didn’t do their due diligence before launch. Failing to research other businesses in your market who offer similar services can tip the scales in favor of failure. If you don’t have a clear understanding of what your competitors are charging, how will you be able to price your services competitively? A quick Google search and you should be able to build a competitors list in less than an hour.
Review Your Finances - It's crucial you have an understanding of your business finances. If you aren’t bringing in enough to cover the bills, your doors will close in a blink of an eye. Ask yourself “Am I thriving or is there something I can do differently?” “Am I sliding into debt?” Answering these questions will help you determine whether or not you're in a good place.
Find a Strategic Partner - Hire an accountant or bookkeeper, but not just any accountant or bookkeeper, find one that can hold you accountable. A strategic partner can help you focus on your value and keep you working towards set objectives. Hiring the right accountant can provide you with the best of both worlds - a person who understands your books and has your goals in mind.
Remember, your pricing isn’t set in stone. You will need to continually monitor the operational aspects of your business, profitability and your competitors. Spend some time testing different pricing strategies and review your finances with your accountant on a quarterly basis, by consistently staying on top of your costs and demands you will have the tools for long-term success.