I agonized for MONTHS over pricing. I have a staggering number of pricing outlines in my Notes app and as many pricing calculators in excel.

Here are a few pricing methods that could help you avoid some of the pain I went through.

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So, how much should you charge?

Pricing is more art than science. Here are three methods to get you started: Cost+, market rate, and value-based pricing.

Cost+

The first is simple and straightforward.

Cost+ pricing is adding up all of the costs and adding a little extra for profit.

So say your equipment, time, payroll, and software costs $1000 for a project and you want to put $500 in your pocket, your price would be $1500.

Easy peasy, right?

Market Rate Pricing

Market rate is checking out what others are charging for similar services. If other bookkeepers are offering their services for $45 per hour, you charge around the same.

You're joining the club of commoditized services. You're all selling services in the same ballpark, give or take a small amount.

Value-Based Pricing

My favorite. Instead of looking at your costs or what others are doing, value-based pricing focuses on the value you're creating.

Your website building service helps business owners convert web traffic into paying customers. You could charge based on revenue tied to your efforts!

If you and the client believe a new site will increase revenue by $50,000, selling goes something like this: "How much would you pay for a $50,000 winning lottery ticket?... So if it was $5000, it's totally worth it, right?!"

So, think about how much your service will earn your client. How much time it will save them. Or how much of their costs you can save them. Set your price accordingly.

Choosing the Right Method

"Which pricing method is best for me?"

Well, it depends on a few things. If you're getting started, cost+ pricing can be a safe bet to make sure you're covering your expenses.

As you grow and learn more about the market, you can start peeking at market rates and adjust your prices accordingly.

If you're super confident in how awesome your service is, go ahead and give value-based pricing a shot!

Pro Tip

• Know Your Costs: Whether it's paint for your artwork or gas for your car, make sure you know how much things cost you.

• Research the Market: Look around and see what others are charging.

• Show Your Value: Tie your offer to new revenue, saved time, or reduced costs the client will experience. People will see the magic in what you do, and pay you for it.

BUT

Don’t forget your own income goals…

Say you have this amazing vision of earning $300,000!

What would that look like practically?

No one wants to work more than 40 hours per week, and I know you’d love to take 4 weeks of vacation.

You’ll need 10 hours a week for business development, so that leaves 30 hours for work.

Just in case you aren’t fully booked, let’s assume 60%, so that leaves us with 18 hours of billable time.

How to earn $300,000 per year? That means charging at least $347.22 for 18 of your 40 hours each week.

There you have it – a crash course in pricing methods.

Remember, you're not locked into one method forever. Feel free to switch things up as you grow and learn. Your prices can evolve, with you!

Keep working on new hacks for increasing your profit

Thanks for reading the 14th issue of the Profit Hacking newsletter. Past issues will be located on the blog section of profitandgrow.com.

If you need help with anything I talk about, like maximizing your profit, minimizing your taxes, understanding your cash flow, or making the best spending decisions, connect with me on LinkedIn https://www.linkedin.com/in/danielt6/

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By: Daniel Talbott