Pricing Your Services
Feb 2nd, 2008 by admin
When determining prices, it is important to first calculate ‘cost-based prices’ or what it costs you to be in and stay in business. Costs include business and administrative expenses (including recurring expenses such as phone and utility bills, rent, etc.), salaries and benefits. After determining your costs, you need to calculate your salable time. Keep in mind holidays, vacations, sick time and so on, as well as time that will essentially be non-billable such as time spent on record keeping, marketing, etc. Forty-five working weeks per year are considered standard, but again, some of that time will be for non-billable activities. To calculate your basic rate, divide your annual costs by the number of salable hours.
Once you have a basic idea of what to charge, you should consider other factors such as going rates, competitive environment and so on. It is also perfectly acceptable and common practice to have ‘sets’ of prices such as:
- Large corporations vs. small to midsize businesses
- Discounts for regular, repeat clients
- Fixed prices for standard services or bundled value-added services
- Sliding scale based on number of employees or locations
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