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Monday, July 15, 2013

Pricing Services for Profit

Here are some things to take into consideration when setting the price of your service:

  1. What is the competition charging? Check trade publications and competitive quotations. Others offering a similar service perhaps in a nearby location may be helpful, but take this with information a grain of salt. If you have worked for others in the industry, you may have an idea.
  2. Set a start point that is attractive to your customers and leaves room for negotiation.
  3. Remember to include all of the items that contribute to your cost such as benefits, insurance, Social Security, taxes, supplies, space, transportation, marketing, etc. Don’t forget the profit element and the cost of money if payout is extended. Consider payment terms and progress payments as well.
  4. Communicate your charges to your customer clearly in advance. Use a written quotation and get the customer to sign off before and after the work is done.
  5. Don’t let your pricing get stale. Keep it current and keep your customers up to date. They may need more work or refer a friend, in which case you may want to consider paying a referral fee.

How do you set your prices?

Steve Koenig, SCORE Counselor



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