Knowing how to price your services means covering your costs, paying yourself fairly and staying competitive enough that customers say yes.
How to price your services: start with your costs
List what it costs to deliver your service: tools, software, insurance, travel, and your share of overhead. Then decide what you need to earn per hour for your time. This article is general information, not financial advice, and nothing here promises income. Prices should reflect your own costs and market.
- Direct costs of delivering the work
- Overhead such as software and insurance
- The pay you need for your time
How to price your services using an hourly rate
Estimate how many hours you can actually bill in a week, since much of your time goes to admin, sales and learning. Divide the income you need by those billable hours to find a floor. Taxes and slow weeks also matter, and our guide on estimated taxes for small business explains why to set money aside. Keep this in mind with how to price your services.
- Estimate billable hours honestly
- Divide your target by billable hours
- Include taxes and slow weeks
Check the market
Look at what similar providers charge locally and online. Ask a few potential customers what they would expect to pay. Your price can sit above, at or below the market, but you should know why. Free advisors at SCORE and SBDCs can review your pricing. It is a key part of how to price your services.
- Look at similar providers
- Ask potential customers
- Decide where you want to sit and why
Other ways to price your services
Hourly pricing is simple but can punish efficiency. Flat project fees reward speed, and packages or monthly retainers create steady income. Value-based pricing ties the price to the result for the customer. Choose the model that fits the work and explain it clearly. Remember this about how to price your services.
- Hourly rates
- Flat fees and packages
- Retainers
Test, raise and explain your prices
Start with a price you can defend, then adjust as you learn. Raise rates gradually for new customers and give existing clients notice. Write terms down in a simple agreement, and keep clean records using the bookkeeping basics. Our guide on starting a business now or waiting can help if you are still deciding when to begin. This is central to how to price your services.
- Adjust after a few real jobs
- Give clients notice of increases
- Put your terms in writing
Avoid common pricing mistakes
Do not underprice to win work, forget taxes, ignore your unpaid time or skip written terms. Be careful with anyone who tells you to buy a program because it guarantees you will earn a set amount. Our guide to business opportunity scams lists warning signs. This matters for how to price your services.
- Underpricing to win work
- Forgetting taxes and overhead
- Skipping written terms
Related reading on how to price your services
- Estimated Taxes for Small Business Owners Explained
- Bookkeeping Basics for Small Business Owners
- Start a Business Now or Wait? How to Decide
- Legal Basics for Starting a Business: A Checklist
- Business Opportunity Scams: 12 Red Flags to Check
- Which Business Opportunity Is Right for Me?
- SCORE free business mentoring
- America’s SBDC small business advising
- SBA guide to managing your business
- SBA guide to planning your business
