If you are self employed or a small business owner, you may be wondering how to price your services. Obviously you want to make a profit, but it can be difficult to choose the best pricing option for your business.
Ultimately there are lots of different ways to price services, and some are better suited to certain roles. For instance, by commission is a good idea for an artist, but hourly may work better for a freelance copywriter.
Do you want to get your prices right so that you can land your dream client?
If so, here are the five most common ways to price your services.
1. 5 Different Ways To Price Your Services: Hourly Or Daily
Pricing your services hourly or daily is very common for both freelancers and small business owners. However it can create issues for both the client and the worker. This is because there isn’t an incentive for the employee to finish the work quickly. This can result in projects dragging on for longer than expected. This can result in an unhappy client who doesn’t buy your services again.
However there are times when charging hourly or daily suits everyone involved. For instance, this pricing service works well if the project deliverables are unclear. This can make it nearly impossible to gauge how long the project will take, so an hourly or daily service ensures you will be paid properly for your time. Just make sure to include a daily report so that the client knows you are working for the time they are paying!
2. Per Commission
Some freelancers or small business owners charge client by commission. This could be a piece of art, or it could be a fully designed website. Either way, this is a good way to price your services – but only if you are fairly certain about how long the project will take.
For instance, if you are new to website design and you have landed a giant client, you may be unsure how long the project will actually take. If this is the case, you may want to charge daily to ensure you are actually paid for all of the work you do. If not, you may end up overworked and underpaid!
3. Using A Retainer Package
If you have clients that you work with on a returning monthly basis, a retainer package could be a good way to price your services. This basically means that you will work the same amount of hours each month for a set cost. This is fairly similar to charging by the hour or day, but it tends to be more efficient for freelancers who work with long-term clients. A retainer package benefits both the employee and the client, as it means the client won’t overspend (and the employee has guaranteed work).
If you want to hire support, a retainer package is a great option – and it’s something we offer. Click here to open a new tab so you can find out more about how our virtual support retainer packages can help your small business to grow.
4. Charging Costs (Plus Markup)
For some freelancers and small business owners it makes sense to charge for costs plus markup. This system tends to work well for contractors. For instance, if you own a plumbing company and you can buy supplies for £1,000, you might charge £2,0000 for an installation. This means that the costs of the product and the labour are covered, so there is a guaranteed profit every time.
5. Offering A Value Based Price System
Finally you can use a value based pricing system. If you do this, it is best to work out the cost based on the value that you provide. For instance, if you update websites and you prove that this service can increase their overall revenue by £5,000 a month, you may want to charge a flat fee of £5,000. This means that you are paid well for your work. It also means that the client will ideally make a big profit after the first month!