Starting a new business or starting as self-employed is an exciting time, but it can also be very stressful, and you may have several questions. One thing that many people struggle with is how to price their services. It all depends on what your trade is, what service you are offering, and of course, how much time things take to do. To make things easier, we’ve compiled a list of options for you to consider.
Charging by the day or by the hour
This may appear to be the most straightforward option, but it does require a little bit of math to begin with. The pro to this way of pricing is that once it’s worked out, you charge your client the set rate. It works out well for you financially because if you hit a bump in the road, you will be paid for the additional time.
However, your clients may not like this, as you could be seen to be spending too much time unnecessary time on something. Additionally, if you finish a job much quicker than anticipated, you will earn less money.
Set fixed fees
This is ideal for freelancers, as setting a fixed fee means that you are selling a service as a package. Your client knows what they are getting, and you know what you have to do. It’s a win-win situation. However, you should also consider amendments, as any changes required mean more work for you. Another great thing about fixed fees is that you can get the job done faster and you won’t be out of pocket.
A downside to fixed fees is that a job you do may have been undervalued, so you end up having to spend more time on something, for the same amount of money. The best way to work around this situation is to maintain clear communication with your clients.
Value Pricing
This is a popular method of pricing, but it is also the most difficult. Rather than having a fixed rate, you charge what the job is worth to the client. While it is financially beneficial for you, it is also time-consuming, as you have to set aside extra time to meet with your clients and to price jobs up individually.
The great thing about value pricing is that you can adapt the work to suit your client’s requirements and budget. You can also charge more if a client wants a last-minute job with a quick turnaround.
The cons to value pricing are that you have to spend more time pricing things up, and even then, it is not a guarantee that you will get the work. You can expect to price up for some jobs which you don’t end up doing, which of course isn’t ideal for you.
Now you know the options available, and how they work, you just need to work out which one is best for you. Starting a new business can be stressful, but having the right assistance can help to ease the burden. Please feel free to get in touch with us if you require an accountant for your new venture.