You may have started your business for a whole variety of reasons: flexibility, passion for your mission, totally by accident. But you stay in business for only one: it makes money. If you don’t make money, you’re out of business. And the key to making money is having the right pricing model.
How do you know you’re pricing properly? First, you need to understand your costs. All of your costs. You need to know how much it’s costing you to do business, so that you know when you are making a profit.
Once you’ve got a handle on your costs, you’ll need to settle on a pricing strategy. Will you price by the project or by the hour? Will you price high or low relative to your competition? Will you price your products separately or bundle them together, or both? Will you mark up (add on a fixed percentage of profit to your costs) each of your products or services at the same rate?
Answering these questions may require you to do some research. What are your competitors charging? Are they charging by the project or by the hour? What are my potential clients willing to pay for these services? If I enter the market at a lower price, will I be perceived as having lower quality? Before finalizing your pricing structure and strategy, it is well worth having as much data as you can about the competition, and, more importantly, about your clients.
Don’t sell yourself or your business short by overlooking the importance of well-thought-out pricing. You’ll end up frustrated and resenting your clients–and that’s never good.