How Do You Price Up Your Services?

Well, If you're selling anything called X
First, Market Research : Know the competition, price and quality of their deliverable

Then identify your key differentiator from the competition. There are only 2 differentiators : Price and Quality differentiators.
For Price Differentiators : You need a lower cost model
Quality : Pay premiums for outsourcing or when hiring higher skilled employees.
Then Calculate Costs :
X would need incur something called COGS (Cost of Goods Sold) whether its a good or a service, this is there.
Cost = Raw Material + Labour (Only labour if outsourced or a service) + additional costs (electricity + PC Depreciation + office operation + etc...)

Pricing :
If you are on the Price differentiator scheme : Go for lower margins as you will definitely be attracting a wide range of customers, and hence benefit from the economy of scale (Costs are less when you sell more)

If you are on quality differentiator : Higher Margins and Focus Targeted Marketing on customers would understand your offering and pay the extra buck for quality.

PM me if you need anything from this perspective. Im a Sales Manager

Normally I do an overhead plus time plus 10% . I've used this for awhile and it seems to work out okay. I don't apply this to my employees because they work on a wide number of tasks and using there numbers for just one element won't make any since . I also like the formula the above poster made... it seems much more complex however.

For most offliners I suggest they price this way.

1. Figure out how much your time is worth. $125 per hour for 40 hours at 1/3rd billable makes you about $50k take home depending on taxes. But it gives you and Idea. For beginers I would suggest $50/hr, most people $100 to $200 per hour. Beyond that you really need to be outscoucing to cheaper people and be making more money by having more people working for you. Speakers and high end consultants can make more but most of what we are talking about doing here the businesses are expecting to be charged about $100/hr that is the going rate.

2. Figure out how many hours the project should take.

3. Use a 120% flub factor on hours so 5hrs becomes 6hrs and so forth.

4. (Hourly rate) * (est. hours * 120%) + expenses = Goal Quote Amount.

5. If you know a potential client will want to beat you up on price raise the quote and never go below the number in step 4 unless you have to but only reduce one month or something. Never agree to a lower rate long term. Use things like setup fees and such and discount them.

Luke: Honest answer? You really need a better idea of what you are selling before you start selling it.

You have to treat this like a business. If you don't know how long something will take you haven't done it before. So why sell it as a service. Using an outsourcer? Well base prices on what they will charge and figure out a conversion formula for their charges to what your service is worth.

I know everyone including me tells people here to take action. But that is because we assume you already have a basic business model and you will know what it will cost you and what to charge. You need basic planning in a business.

If you don't know the basics on the industry you plan to open your business in you will likely fail. So get that info first.

In marketing online marketing services to B&M businesses you could start by doing it yourself with normal IM. Or you could use money and hire a few outsources to make websites for you and SEO them. That way you know the costs and the quality you can expect from them.

Or you might find that marketing consulting is not the business for you.

A bootstrapping business should be something you can do yourself and can use your skills on. Once you get it off the ground you will hire people to do it instead of you doing it.

I personally could open a number of different businesses based on my skills since I have done marketing, management, and sales all at different times in my career.

But before I open any business I run the numbers in my head. I need to know how fast I can get it into the black and how much capital I will need till then. Rather that capital is money or my labor.

10-20% higher than my priciest competitor.