Over the years I’ve had the pleasure of working with many different types of service-based creative businesses, from pattern designers to dog walkers. No matter what service they are providing, each creative entrepreneur seems to have one big question. How much should I charge for my service?
While the amount to charge can vary widely across industries, I’m going to teach you how to set a base price so you are profitable and comfortable when quoting your pricing. I have an easy way to price your services so you can pay yourself, your taxes and keep your business running!
So que the happy number dance now! Oh wait, that’s probably just me. But I promise you’ll be dancing when you have confidence your pricing is created from a place of understanding what profitable really looks like for you and your business. Numbers are incredibly powerful my friend!
First things first, make sure you’ve completed How to Calculate Your Business Profit. You’ll need your business profit number to get the best results in this exercise so don’t skip this step!
Next, snag your worksheet below for this exercise. You can fill it out as you read this post!
Time is Money
We’ve all heard it before “Time is money!” As a service based business owner, that couldn’t be truer. Your time is spread thin. Sometimes we forget how much time it actually takes to produce the final product for our clients from answering emails, to booking, to travel time, to editing, to ordering, to packaging, and writing a thank you notes.
If you’re not factoring in how much time you spend with each type of client you service, you might be missing the mark when you build your pricing and packages.
Write out your workflow for each type of client you serve and track the amount of time you spend on each task. You might be surprised at how many hours you spend with your clients from beginning to end. This is your “Time Per Client in Hours” on your worksheet. If you prefer an electronic time tracker I recommend Hubstaff – they offer a robust time tracking service along with a host of other tools (timesheets, invoicing, budgeting, scheduling, monitoring, etc.).
Goal Per Month
Now, you’ll want to set a monthly goal for how many clients or sessions you want to book per month. If you aren’t servicing your ideal amount of clients right now, that’s ok! For this exercise, use the ideal number of clients you’d like to have so we can work through that in your pricing.
Since we’re talking time and goals, let’s hit work/life balance real quick. Now that you know the total amount of client hours you’re aiming to work per month, make sure that doesn’t equal or exceed the total amount of hours you’d like to work in your business.
If you want to work a maximum of 40 hours per week, which is roughly 160 hours any given month, the amount of time you spend on client work should be less than 160. You still have other non-client related tasks you need to have time for in your business like answer emails, marketing, social media and a whole slew of other things.
Crunch the Numbers
Now it’s time for number crunching! If you’ve completed How to Calculate Your Business Profit to get your average sales profit goal needed and your total client hours, then you’re ready to calculate the amount of profit you need per client on your worksheet here.
Knowing what you need to profit on average per type of client gives you the power to start creating the right products, pricing, and packages to hit and exceed your goals for a profitable business!