Setting a Price for Your Service

Whether you’re a nanny, a landscaper, or a dog walker we all know the reason you went into business selling your service is to make a profit. While it’s important to advertise your service and connect with more clients, an equally important decision you need to make is how to price your service (aka your precious time!).

Although you have a lot of flexibility in how to set your prices, there’s not a set formula you can follow that will apply across the board for every situation. Pricing a service can be a little tricky because it’s more subjective to calculate your time, expertise, etc.

Things to Consider:

Competitors' Pricing

You need to be aware of what your competitors are charging for similar services in your area. This can come from their websites, phone calls, talking to friends and colleagues who have used their services, etc. Although you don’t need to compete on price alone, it’s important to be aware of what else is available on the marketplace.

Perceived Value to the Customer

This is where most of the subjectivity comes in when setting a price for a service. Think of how much your customer values your service and expertise and how easily they are able to get that from somebody else.

Your Direct Costs

Before deciding on a price, make sure to factor in any direct costs you will encounter in providing the service itself. For example, a cleaning business would need to factor in the cost of cleaning supplies, mileage, etc.

Decide on a Fair Profit Margin

Once you calculate your costs, you need to mark up your service to ensure you're not just breaking even and that you're actually making profit. Be mindful not to deter any customers by overcharging for your service.

Long Term Relationships

Service businesses are often dependent on relationships. Focus on building positive, long-lasting relationships with your customers rather than getting fixated on solely the price. If you have to compete on price alone to win a customer, you may ask yourself whether that customer will be loyal to you if they find someone offering a service at a lower price.

The bottom line is: How you set your price of your service could mean as much as great success or failure for your business.

How do you set your price for your service? Is there anything you would add?