Pricing Your Services
Pricing Your Services
Many small business owners offer different services to their customers. They don’t come up with a tangible product per se, but offers solutions or information or to meet the requirements of the customers. These services can be as varied as the tax planning consultants to the interior decorators, from the web developers to the landscape architects, but the conundrum remains that what should you charge to attract more clients and retain clients while still providing an adequate income for yourself?
Cost based pricing
Perhaps the simplest of all pricing structures, you can use the cost based price structure. By using a cost based price model you can add up all of your production or procurement cost associated with the product, average on a the basis of the product basis, and then add an acceptable percentage for profit.
As you are pricing your product you need to keep in mind few major factors:
- As the best small business tips, you need to understand the basic method of set price a product. You should determine the cost of the product first and then you can add the additional charges to get your profit. You need to consider the indirect costs, direct costs and also the fixed cost to determine your price.
- To make profit by making right pricing for your product, you need to know the price offered by your competitors for the same service or product. You can go for a market survey to know the price. You can get such information by visiting the websites, by talking with your friends and the business associates who have experienced the service or have used the product of your competitors. It is important to keep the price right in comparison with them.
- You need to perceive the value of your customers, if you are settling the price of a product; this is the right place where you need to concentrate more. If you have your product, you can use the process of keystone pricing that usually comes with the wholesale cost and you can add value in it to get your own profit. Every customer come with certain budget and the major point of consideration is the perceived value of a product or service and you need to have expertise on it.
Calculate the right price
If you have right strategies you will be able to set up the right price for your product:
The thing is consider the costs of the material as you are fixing the price. Materials should be related to the certain business that you are pursuing. You can make list of the materials and the exact cost of it for each item.
There must be the labor cost that you need to consider. This can be the direct labor or your staffs who design and make a product. This should be a certain part of salary of your mechanics. These are the indirect costs of the product like advertising, utilities, office supplies, insurance, taxes etc.
Having a high-quality product or service goes without saying. If you are unsure of the quality of your product, the one way to determine this is to sell a few units first and ask for feedback and then go for the final pricing.