What’s It Worth To You Anyway?

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What’s It Worth To You Anyway?

Figuring out what price to charge for your services doesn't have to require a crystal ball. It all starts with planning, which Pricetag can provide, and doing some upfront research. Here are some tips on how to set prices so that you don't price yourself out or underbid on a project: 

1. Do your homework. Just like in school, doing your homework pays off. Find out who your competition is and get a price quote from them. Even a general idea of what their rates are will give you a better idea of what the market will bear. 

2. Add up your costs. This seems like a basic place to start, but too many people forget to put basic costs beyond their time into their pricing. These should include your costs for supplies and any expenses associated with the job. Some, such as gas and taking a client to lunch, are part of any job and can possibly be deducted from your income taxes, so don't think you can include every cost in your bid. 

3. Start low. Having low prices when first starting a business can be a good introduction to customers and can help you quickly beat competitors. However, it will give you a lower profit margin, or even make it difficult to make a profit. Over the long-term, however, and with the right number of clients, it can result in profits and more market share, if you can stay in business long enough to get there. 

4. Start high. Another approach is to start with high prices so you can immediately recoup your startup costs, and lower prices later so you can compete with other businesses. As a roofing contractor we know once told us, it's better to start with high prices so you can be selective with projects you want to do when business is booming. After all, when the phone's ringing off the hook, you can afford to be picky. Just be sure to be smart and drop prices when the phone isn't ringing off the hook as much. 

5. Set your profit margin. Everyone deserves to make a profit, so be sure to set prices by charging for more than just your expenses. It could be 5%, 10%, 25% or more, but try to find an area that earns you enough money to live on. All of these tips should help get you started in setting a price that's fair to you and your customer. If you're still stumped, start searching for that elusive crystal ball.
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