How I figured out how much to charge when I started my business

Posted by devan under Marketing
From http://www.enmast.com 3578 days ago
Made Hot by: Copysugar on July 10, 2014 4:09 am

When you first start out, it's hard to know how much to charge for your products and/or services. Here's how one business owner did it!

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Comments

Written by 27will
3570 days ago

Interesting to see a case study like this from someone starting a business out of a dorm from the ground up. The best experience can often come through trial and error.

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Written by HeatherStone
3570 days ago

Hi Devan,

I know you work for a business consultancy. Give us your take. What's the best recommendation for how to go about setting prices?

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Written by devan
3563 days ago

Absolutely! Well I could talk about this for a while, but I'll hit a few basics. ;)

Well rule of thumb #1 that we stand by very strongly at our firm is to always charge for value vs. hourly. Or if you do it by project, make sure you have a well written out creative brief/scope of the project so if you go beyond that, you and the client know that it will cost more.

Of course there's a lot of factors and variables that go along with figuring out your pricing (experience, industry, expertise, etc). But start with research looking for people who are doing similar work for you.

Also, another way is to figure out how much money you could be saving or making the client for working with them -- and figure out your value based on that. I've heard some people say that their value that they charge is based on the ROI. So like 1:3 ratio or 1:5 ratio.

But if you do go the hourly rate route (which I recommend for beginners) do research and see what other people are charging, and figuring out how much do you want to make a year, then figure out how many working hours that you will be working (not doing admin, marketing, or development), and figure out what the hourly rate would be for that. It's always a lot more than you think it should be. The time you take for doing admin/marketing/etc is included in your hourly rate.

Hope that wasn't too confusing!

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