When you’re first launching, it’s easy to feel overwhelmed about how to set service rates. However, with a straightforward approach, your pricing won’t be a wild guess or comparison to anyone else. As a result, you’ll get rates that are fair, cover your costs, and are easy to justify to your clients. Here’s a way to set prices for your service that will fuel your long-term growth.
1. Understand Your Costs
A lot of small businesses fail because they do not account for costs. As Deloitte calculated, 60% of pricing errors come from ignoring unaccounted or ongoing expenses. You must list all tools and software, travel expenses, admin’s time, equipment, utilities, and any other overhead.
It is possible to underprice your work or services if the true costs are not fully considered. It is better to set the right rate once at the start. It leaves no need to worry about how to find or save some money to pay office rent the next month.
2. Evaluate the Value of Your Service
According to McKinsey, companies that switch to value-based pricing can boost profits by 25%, so this is an important aspect for you. Think about what makes your service truly special. Is it the experience you have? Is it the speed at which you work? The reliability?
It could be your quality or convenience, or maybe it’s working with you. When people understand the value, they will be more likely to agree to your high rates.
3. Research Market Benchmarks
Marketplaces like Upwork and Seek and employer websites like Glassdoor can list some costs for your review. However, according to IBISWorld, the cost of services can vary by 40% or more between different areas.
In this case, this type of website can help you avoid setting the prices too high or too low. Note that you do not have to have the same prices. If you have more experience than your average competitor, the price can be higher, depending on the competition.
4. Choose a Clear Pricing Structure
Having a transparent pricing structure just makes life easier. According to Statista, a structured model is helping 31% of businesses to increase their customer satisfaction rates. You can charge by the hour, per project, or use tiered packages and monthly retainers. Hourly rates are flexible, but package access is more predictable.
5. Communicate Your Rates With Confidence
According to Gallup, expressing confidence can boost customer faith in you by over 20%, and the same applies to your ghostwriting service. Tell your customers what they will get and not for what price. Sound your rating in a clear and even voice. This way, you will make the customers feel at ease.
Yes, you must be upfront with what the money pays for and what your money will not go into. People prefer openness to surprises.
6. Review and Adjust Your Rates Regularly
Your skills grow, your experience grows, and your overheads certainly grow. ABS data reports that the average cost of running a business is growing by 3-4% every twelve months. This rate of increase means that you need to raise your pricing in order to maintain the same profit level.
That said, set a date in your calendar to reassess your pricing at least once a year. Consider whether your current rate corresponds with the value you bring to the table. Consider if it still covers your growing overheads. Just as your qualifications should improve over time, your pricing should also increase accordingly.
Better Pricing Starts With Clarity
It’s easy to set your service rates the right way when you have a clear, simple plan. The more transparent you are about pricing, the better off your business will be in the short and long term.
