Business to business service company that provides exceptional quality to its clients and maintains accurate & professional Bookkeeping, Accounting, Taxes, Consulting Services, Business Coaching & more.
As a start-up you rely mostly on the market price or a mere comparison to that of your competitors. Careful that you don’t end up overcharging or under charging your services as a results. There may be many underlying factors that made your competitors to charge their current prices. Thus a very clear and extensive research is required prior you conclude on the prices you set for your product.
I like playing this scenario: What if your competitor has a close relationship with their suppliers and they get a discount for the goods thus that afford them to charge an equally discounted price? You are only starting in the business thus you still have a lot of work to do to reach to a level of having such relationships. Do your research, don’t just ride with the wave.
1. The value you provide.
The first thing that you should focus on when pricing your services, and by far the most important, is the value that you provide to your clients.
You should not be thinking about the time or cost first because what your client is paying you for is a service that they value that they either can’t do or would rather not do themselves.
One way that you can increase prices is to increase your value or perceived. What I have done in my bookkeeping business is increased my prices by adding value to my clients. That value comes either in giving unlimited advisory services, having meetings at their convenience where we review their numbers, and providing monthly reports and recaps of ways they can increase their profits, managing their expenses and assistance in credit facility applications. Providing an accountant letter, management account, secretarial services, etc.
I make sure to work behind the scenes and communicate concisely so that they feel they are doing very little work and mostly I relieve a burden from them and allow them more time to focus on their income producing activities or the parts of their business they are passionate about.
In your business how you add value may be different but think about what your customer is experiencing working with you and know that they are paying you mostly for the transformation and peace of mind that you are giving them.
Even if it only takes you an hour to complete a task, you don’t need to limit that to a certain amount per hour, you can charge a premium price if the value is great enough. If you are saving someone from doing 10 hours of work themselves and getting frustrated, your value is great than the time it takes for you to complete a task, especially once you become an expert in your area from years of experience.
But remember, don’t lead with your experience, lead with the transformation the client will receive. People are most interested in what they will experience working with you, and not your work history.
2. Your time
The second thing that you should consider when pricing your services is the time it takes you to complete the job. You have to know, or track, the amount of time that it takes you to complete a task for your client and make sure that you are pricing it appropriately to profit.
Sometimes in the beginning of your business it may take you longer to complete tasks if you’re experiencing a learning curve. If that’s the case for you right now, then you can be a bit more flexible, knowing that it will get faster for you in the long run. But overall you need to be tracking your time because if you’re charging a certain amount for a service that is taking you 12 hours to complete, then you have an unsustainable business model because no one can work for small fee an hour and stay in business long term.
Depending on what services you provide, tracking your time may be simple or it might be tricky. If you work a little here or there on a project over the course of a month, you’ll have to create a log or system of recording your time so you can make sure your prices reflect the time it takes you.
One thing to pay attention to is the back and forth that you have communicating with clients. If you are spending a lot of time just communicating needs or changes, you have to build that into the cost. This may be something you don’t anticipate, but you should be aware of it and realize that even if it’s a quick response from your phone here and there, if this is the norm in your industry, you’ll find yourself a slave to your phone as your business grows and you may need to either increase prices to accommodate the time or create boundaries for streamlined communication.
3. Your costs
It should go without saying that you need to pay attention to the costs associated with offering your service. Even service based industries have costs associated with doing business.
In my business, I have to pay for software, bank fees, computer programs, and continuing education, and I have to make sure those costs are being paid by my customers or built in to the cost.
Be aware of what a job costs you, and pass it on to the customer, the same way a contractor would hand you a receipt to reimburse him for materials when doing a job on your home. Not in the exact same manner, but build it in to your price.
The money you charge should be able to cater for the business operational expenses. If you have employees you must pay salaries, buy electricity, etc. all these overheads must be covered by the prices you charge for your services. Pay a closer look to the fee you charge per service. If enough attention is placed – you should be able to determine the cost for your services or products correctly.
4. What you’re giving up
This one is huge. You have to be super aware of what you’re giving up when you’re working for a client.
Is it time with your family? Is it the ability to work on your passion? Is it preventing you from working on a client who values you more?
I’ve recently gotten to the point in my business where I realize that not everyone is going to think that my services are worth what I think they’re worth. But a massive part in being an entrepreneur is understanding your own worth and not negotiating it to the point of compromising your success.
You don’t have to be a jerk about it, but if you are talking to a potential new client and you can tell that they don’t see the value in the service that you provide then it might be best to part ways before you ever begin working together. That way you allow a space to find a client who values you, respects you, and understands your worth.
This will be beneficial in the long run even if you turn away customers because you are leaving space for better ones.
When you raise your prices you will get fewer people to come on board. But what would it look like if you could work with half the amount of clients and earn the same amount of money?
How would you be able to show up better and serve those ideal clients who value you? How much better would you feel in order to reach higher levels of success?
As your business grows and your expertise grows your prices should increase as well and sometimes you will outgrow your customers and that’s okay.
When you start raising prices you may start repelling people. The key is to properly communicate the benefit they will receive and leave them open to come on board and experience the transformation with you. Reaching a place in my business where I can be selective with my clients has been a game changer for me.
Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.
Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.
We have well trained and qualified staff that manages the aspect of both business and individual taxes.
We are the fast growing accounting service-providing agency in South Africa and across the globe.
If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog
Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.
You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za
Give people as much as they give you. Don’t waste your 100% for their 10%. Value your effort and make sure to keep something for yourself too.
Business to business service company that provides
exceptional quality to its clients and maintains accurate & professional Bookkeeping, Accounting, Taxes, Consulting Services, Business Coaching & many more.
View more posts
Matsobanemetja Business Consulting Pty Ltd 