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  • #971231
    Smick
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    Hi all

    After being an employee for most of my working career, I am in the planning and development stage of my first solo business and would like to get some advice and guidance on what to competitively charge for the service that I provide.

    Any advice would be mighty neat – Smick

    #1048560
    AgentMail
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    • Total posts: 1,741
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    Hi Smick,

    It might help the other FS members to have a bit more info on the services/products you are looking to sell.

    There are some basics you can follow:

    1. How much profit do you need to make
    2. How many ‘widgets’ can you sell (you will have to make some estimates here – be conservative)
    3. Check out your competitors – Understand their strengths and weaknesses in comparison to you and then compare their costs against where you want to position yourself. – You need to be very honest with yourself here – Some businesses will be better than yours, you can aspire to be as good as them, be don’t kid yourself that you are already there.
    4. Ask for feedback – Explain to your customers that as a new business, you would love their feedback on your pricing and any comparison they find. People are generally compelled to help – sure, you might get a couple of people try to pull a fast one, but you should know your industry enough to work them out.
    5. Don’t be afraid to adjust. If you float your price out there, and find that a) you are not getting enough sales, reduce your price (or adjust your service to meet the price) b) you are getting too many sales and not making enough, put your price up.

    My personal opinion is to go in lower, and then adjust up. As a new business, I would rather have customers to negotiate with than watching the tumble weed rolling by.

    Hope this helps,

    Carl

    #1048561
    Spider
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    Charge what you or your service is worth.
    Any less and you are ripping yourself off.

    If you are generally worth $100/hour, you’d be crazy to work for $50.
    If your target market won’t pay this, look for a market which will.

    #1048562
    Smick
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    Hello Carl

    I am planning to specialise in media and publicity, publishing and event management services aimed at rural and primary industry businesses.

    Based in provincial south east Victoria, I have acquired a broad knowledge around the rural sector particularly research, development and agriculture. Historically, I have managed community/farmer events, developed and run displays/activities at rural and educational field days; and also worked in various emergency responses and have been involved in issues management.

    Most of my potential competitors are based in Melbourne and other capital cities. I have the advantage of being local and based in a fast developing growth corridor.

    My general plan is to start with the bread and butter stuff ie media articles and management, writing case studies, and local publicity.

    I have also thought of doing some work free of charge for community benefit as it would be good way to support local events and get to know people around the traps.

    Longer term, I am looking at doing more event management type work as a collaborative effort with rural and farm industry consultants as this would be a higher income earner.

    I intend to develop my own branding and plan to develop a website, and have being trawling around FS to try and get some ideas.

    As a current salary earner, I am struggling in terms of what I should reasonably charge, ie what are the building blocks of determining costs? For example, I will need to visit clients, get their business history and assess their needs, develop an idea, write it up and then deliver via the requisite communicaton channels. There will also be overhead costs eg travelling, insurance, energy, materials, etc.

    Anymore feedback would be great – thanks Smick

    #1048563
    Smick
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    Spider, post: 59525 wrote:
    Charge what you or your service is worth.
    Any less and you are ripping yourself off.

    If you are generally worth $100/hour, you’d be crazy to work for $50.
    If your target market won’t pay this, look for a market which will.

    Thanks Spider, I know some plumbers and sparkies charge those sort of dollars just to come out and look at a job, but I guess just have to learn fast on this one!

    #1048564
    AgentMail
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    Hi Smick,

    That is quite a niche sector, which can be a good and a bad thing. It is probably best to focus on the ROI you can quantify to your customers – If you can show them $10,000 worth of additional business, cost reduction etc. why shouldn’t you charge $3-4k for it, or even more!

    A friend of mine runs a consulting company, specialising in information retention, NLP and speed reading. He can charge upwards of $10,000 for his consulting, and is often called back to the UK by government organisations, where he charges for his flights, accommodation, meals and everything else – on top of his consulting fees.

    The bottom line is, your customers need to see the value in what you charge – if they cannot see the value, you cannot charge the dollars!

    #1048565
    Smick
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    AgentMail, post: 59530 wrote:
    Hi Smick,

    That is quite a niche sector, which can be a good and a bad thing. It is probably best to focus on the ROI you can quantify to your customers – If you can show them $10,000 worth of additional business, cost reduction etc. why shouldn’t you charge $3-4k for it, or even more!

    A friend of mine runs a consulting company, specialising in information retention, NLP and speed reading. He can charge upwards of $10,000 for his consulting, and is often called back to the UK by government organisations, where he charges for his flights, accommodation, meals and everything else – on top of his consulting fees.

    The bottom line is, your customers need to see the value in what you charge – if they cannot see the value, you cannot charge the dollars!

    Thanks Carl, it’s food for thought. When you mention ‘niche sector’ what in your view are the pros and cons?

    #1048566
    Spider
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    • Total posts: 95
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    Also, the initial pricing structure you come up with now will undoubtedly change in future.
    You can only try and start somewhere, then after a while, experience will advise you what to do.
    The most important part is starting and learning from mistakes.

    #1048567
    Avatar Consulting
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    Setting the right price for your services

    Hi Smick

    Pricing is such a hard thing to do and even a few dollars less is a huge profit giveaway. I would suggest to look at these steps;

    1. Call around and find 10 other similar services in your area and get quotes for similar product. This way you are building a base market industry fee rate.
    2. Calculate all your expenses for the year, including establishment costs, and intended profit [at least +10% or your money is better in a bank]
    3. How long does it take you do complete 1 service [pick an average service]

    Using these figures you will be able to work out what you need to charge, then you can add your profit margin onto what you will charge.

    Pros and Cons of a niche market
    The market is small so it can only hold a few competitors [in fact any more than 3 and it is not a niche market space for you]

    You only have to advertise to your exact customer enabling your dollar spend to be more effective

    If something changes in your niche market. you can lose all your business in one hit.

    There are not many customers looking for a niche product so you will have to work harder to make money from them.

    You should start putting a business plan together as this will help you answer all your questions before spending any real money.

    #1048568
    The Hobbit
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    Before you guess at a rate for your services, calculate your costs;
    Total available weeks 52

    Less: Holidays 2
    Public Holidays 2
    Sick Leave 1
    Personal Development/Conferences 1
    __ Total Less 6

    Available weeks 46

    b) Hours worked per week 40

    c) Available hours for sale: 40 x 46

    40 x 46 = 1,840 hours per year – (rounded to 1,850)

    Next productivity, not all hours will billable, in fact in the early stages of a business it can be as low as 50%. therefore 50% x 1850 hours = 925 billable hours. If you want to earn say $60,000 pa you divide 60,000 by 925 = $65 per hour.
    Next fixed costs, add up one year’s worth of: rent, leases, phones, power, broadband, accounting fees, bank fees etc. Divide this amount by 925 and add the result to the $65 per hour and you have a cost. Now you can make an informed decision about where to set your fees. The market determines your fees, set as high as you can, but after completing this exercise you will know what is possible rather than guessing.
    Variable costs should be added on the fly to your fee, usually as a separate item e.g. Travelling expenses.
    A complete detailed explaination of how to set fees is included in our manual
    How to Become a Successful Consultant

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