Pricing professional services can be a challenge. I know this, because it often comes up during conversations with clients.
In theory, this is what you should do:
1. Decide on your turnover figure for the year ahead.
2. Divide this figure by 12 (months).
3. Now divide the resulting figure by 15…
…which represents the maximum number of billable days that most of us can manage without going insane.
For example, a projected turnover of £120,000 = £10,000 per month.
£10,000 per month divided by 15 equates to £666.67 per day.
You may not wish to aim for 15 days billable days per month.
On the other hand, you may be struggling to achieve anything like this.
Your business model may be based on retainers, a series of client sessions or a steady stream of ‘gigs’ such as training days or projects. In any event, you still need to know what you are aiming for and connect up time with money.
The question then becomes: do you reveal your daily rate or only quote by the project?
Over the years, my clients have told me that there are times when there is huge pressure to discount, including:
A. When you are starting out.
B. When there is a recession.
C. During tenders.
D. No one is buying your services at the rate that you want to charge.
E. When sales are dropping off for other reasons (i.e. not enough marketing / sales activity).
I have found that setting prices for services is connected to confidence. When business is good and you are feeling confident – it is easier to ask for higher rates. When the competition keeps beating you, or clients are not buying, then you will be more likely to go soft on pricing.
You can regain your confidence again by relentlessly adding value to your proposition and investing in your brand (regardless of the size of your enterprise).
With regards to discounting – in general terms – the answer is no, don’t do this as it all too easily become a narcotic.
From time to time, discounting can be used on a tactical basis.
However, don’t discount your services as a way of doing business.
