As an entrepreneur, it can be tricky trying to figure out what to charge people for your product or service. Pricing yourself competitively while making a good living can be a balancing act.
Here are a couple of factors that every small business owner needs to consider when figuring out what to charge for their products or services:
How much does it cost to run your business?
Remember to think beyond the obvious costs associated with creating your product or providing your service. You also have day-to-day overhead expenses such as: electricity, rent, Internet, gas, daycare, phone, website hosting, taxes, insurance, subscriptions, equipment etc. All these costs need to be factored into your rate.
What is your time worth?
How much time do you spend working and how much do you make during this time? Even if you charge per project or per product, it’s a good idea to have a handle on what your hourly rate is. This way you can determine if you’re spending too much time on particular tasks, or if you’re charging enough.
What do you want to pay yourself?
What salary do you want for yourself? Remember that if you’re in a business that periodically hits a slow season, you will want to anticipate and respond to that. Also, don’t sell yourself short: take your experience into account and know your value.
What’s the going industry rate?
While you want to check out what your competition is charging and be on par as much as possible, be very mindful of your value. Be sure you are comparing apples to apples. If a big box store offers the same product or service as you do at a much lower price, investigate to make sure the cheaper price comes with the same level of expertise and quality that you offer. If your pricing seems out of whack with industry rates, you may have to revisit your costs or the value that you bring.
Need help with your branding and marketing? Contact Kim Speed at Purple Moon Creative today!