How to Set a Price for a Product or Service

Tired of guessing what prices will work for your business? 

You cannot run your business through guesswork. You can’t even rely on bookkeeping tools to tell you what your expenses are. Why? Let’s find out! Watch this video to learn how to set your prices.

Tyler wasn’t able to confidently set his prices until he understood what his expenses were. When he knew what it cost to run his business and offer services, he felt confident to set his prices. He even said, “I have to charge x price just to make a little bit of money.” In other words, this price is non-negotiable if I want to be paid.

You can follow Tyler Link’s story through his website: https://www.contractorceo.co/  

How would an understanding of business costs change the way business owners set their views on pricing?

How to set a price for a product or service

First, crunch those numbers to know the true costs of running your business. You’ll need to know what your expenses are so you can set accurate pricing.

Costs should include:

• Materials
• Insurance
• Rent or mortgage
• Taxes
• Utilities
• Online tools and services
• Maintenance
• Marketing
• Gas
• Legal assistance
• Employee compensation

And the list goes on. But what you should know is, before you set your prices, you need to know ALL of your business costs. Once you do, you’ll be able to set a price that will pay you not just pay for your expenses.

For example, if you sell high-price cleaning services, you would need to know how much it costs you to drive to each cleaning location, what supplies cost you, the cost of taxes, insurance, marketing, employees, and legal help.

Factoring in every detail and cost down, will help you see how much you need to charge to make a profit.

Second, use various bookkeeping tools. These can help run the numbers for you. They are able to give you general business health reports. They show how your business is performing financially.

However, bookkeeping tools like QuickBooks or Wave do not factor in industry KPIs (key performance metrics). Each industry and industry subsection has unique KPIs that must be factored in.

Conclusion

To know where to set your prices so that you get paid, get organized now – don’t set prices on estimates. Get pricing confidence through comprehensive business health reports, mastering your specific costs and KPIs, and tapping into your resources if you’re still unsure. We help businesses gather data for accurate pricing setting so that you know you’ll get paid. Contact us to learn more. Your first meeting is free!