Six steps to pricing your services well
Are your prices too high? Too low? Do you know? You want pricing to be competitive so clients will use your service, but you don't want to leave money on the table. Here's how:
- Have a good timekeeping system. A good time tracking system will inform future estimates.
- Ask the client about their budget. More sophisticated clients gladly reveal this information, knowing that they can only get the most for their money if you know how much there is.
- Ask those who will be doing the work how long they think it will take. Then multiply the total by 1.2 or 1.5, depending on the makeup of your staff If the total time might add up to 400 hours at $100 per hour, or $40,000, we'll multiply by 1.2 and assume $48,000.
- Estimate the total days that one person would require to get the entire project done. We'll estimate that it would take one person, working 40-hour weeks, about 16 weeks to do this project. At the same hourly rate, that's $64,000.
- Pick a number between the two. In this case, $57,000 will be pretty close. Round up to $60,000 and you probably have a pretty accurate number. Look at similar projects (hours spent, not just hours billed) and see how your estimate compares.
- Debrief everybody when the project is complete. If hours expended exceed hours estimate, determine why so that you can learn from your mistakes.
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