Setting prices

When you quit your job and set up a business deciding how much to charge can be an issue. In my industry as with many others, quite a lot of people don’t start out by finding their own direct clients but work through an agency who will tell them how much they will get. Whether this is a reasonable amount depends on how much is offered.

For years, too many than I like to admit, I accepted those rates and lived month to month always needing more days. By finding clients direct and setting your own rates you will be in control of your business.

How do you set your rate? I advise colleagues who are taking the plunge to calculate how much they need minimum to live on in a month, then decide how many days minimum they want to work. Be realistic. If you need 2,000 a month, you may not want to say your minimum days is 1. Divide the two values. Before you run out and tell everyone that that is your rate, do research. The reason I do not advise you to do this first is because I have known many people who looked at job boards or competitors websites and concentrated on the highest figure.

This gives you a false view. Once you know how much a day minimum you need, look at job boards and competitors websites. When looking at competitors also look at whether they are a direct competitor or in the industry. You need to look at companies or people offering the same service. Look at the price for that service.

When you get figures from every where do several averages. Find out the mean, mode and median. The mean adds up all the valves and divides by the number of values you added. The mode is the middle number within a range of valves, and the median is the most frequently used number.

From these numbers you can compare to the rate you want, if higher, great but if lower then you need to do more research on need within the industry. Can you offer a premium service with added value that makes people want to spend more? If your rate is less, you can decide to raise it. Then you must find clients.

Katherine Davison
Business Software Training Consultant
www.BusinessITTraining.co.uk
www.EpiphanyTraining.co.uk

Written by Katherine Davison

Katherine Davison

Katherine has been a corporate training consultant for over 10 years and had her own business since 2001.

3 Responses to “Setting prices”

  • You are both right, it is hard to do this for yourselves and sometimes having a buddy or 2 to help with a list of benefits can help and ease the pressure.

  • So true. At first we were told that we were underselling ourselves but then we were advised the opposite. I believe it’s about having the confidence in your business to say we can deliver and, as a result, we are worth £X.

  • Katherine,
    I couldn’t agree more with your comments, putting at value on your own work is a hard chore, different markets bear different pricing structures and sometimes we find we under-sell ourselves short. We need to base our pricing on the benefits of our service rather than what our competitors are doing.

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