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The Dilemma of Pricing Your Service
Kate Gingold
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The Dilemma of Pricing Your Service

The Sprocket Report

Business owners are also consumers themselves, so setting an appropriate price for our own services can be a real dilemma. Here are some tips for thinking it through:

How many times have you balked at hiring a service, saying “I could do it myself for half that price!”

On the other hand, how often have you gratefully over-paid someone to provide a service that you simply refuse to do yourself.

So how do you set the price for what your business is selling? You want to price it high enough to make a profit. But not so high that no one is willing to pay. High enough to cover your expenses. Low enough to be competitive. It’s a crazy see-saw!

There isn’t one right way to price your service, but there are three elements to keep in mind when working through the numbers.


Cost + Profit

This seems obvious: Total up what it costs to provide your service, add on a reasonable profit and that becomes the price to the customer. But many business owners forget to include all the little items that eat away at their profit.

Even simple home-based businesses have overhead expenditures. There are equipment costs like computers and phones. Office costs like paper and stamps. Service costs like internet and software subscriptions. Marketing costs like ads and networking memberships.

And don’t forget to account for your own time. Small biz owners often do tasks such as sales, marketing and invoicing in addition to the actual service provided. Don’t forget to add those “salaries” to the expense column.


Competitor Analysis

As a consumer yourself, you know how people research and compare. Everyone wants to be sure they are getting their money’s worth and no one wants to get fooled into being overcharged.

Once you have added up all your expenses, it may surprise you to see how costly your service really is! If you didn’t already do a competitive analysis for your original business plan, now would be a great time. (Or, if it’s been a while since you checked the competition, maybe it’s time to review.)

You might aim to stay in line with your competitors’ prices. Or maybe your price wound up being much higher or much lower. Regardless of what the numbers actually are, make sure your customer understands your value proposition.


Value Proposition

The value of your service is determined by your customer. With your guidance.

Dollar stores do big business with folks looking for cheap, throw-away stuff. High-end branded items do well with folks wanting to underscore their taste and economic level. Neither end of the spectrum is wrong – as long as it’s being marketing to the right audience.

Identifying your differentiator, embracing that difference and marketing it to the kind of customer who will appreciate that quality is the final and best determination for pricing your service correctly.


Trimming expenses can boost profit or make your service compare more favorably with the competition. One way to cut costs can be to outsource some tasks so you can focus on the high-return activities that you do best. If you’re ready to turn over your website, content marketing or social media tasks, give us a call. We’d be happy to help you work smarter!

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Kate Gingold

Kate GingoldKate Gingold

I have been writing a blog with web marketing tips and techniques every other week since 2003. In addition to blogging and client content writing, I write books and a blog on local history.

Other posts by Kate Gingold
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Full biography

I have been writing a blog with web marketing tips and techniques every other week since 2003. In addition to blogging and client content writing, I write books and a blog on local history.


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