Correctly knowing how to price services and packages is something many business owners struggle with. Often, pricing by the hour is the default option for service-based industries and new businesses. But if you want to have financial freedom, this needs to change - and fast!
There are so many reasons why pricing by the hour isn’t a good option for you. Primarily, you’re tying yourself into the time for money trap. You’re limiting your earning potential by the number of hours and days you can work.
But also, pricing by the hour punishes efficiency. As you get better at something, you get faster. The faster you get, the quicker you can deliver things - and if you’re charging by the hour, the less you’ll earn. Someone else can produce a lower standard of work over a longer period of time and get paid more!
You’re the CEO of...
Which product or service makes you the most money in your business? Do you even know this?
If you have lots and lots of products and services in your business, you need to really think about focusing that down, and knowing which ones really make you money. But do you know how much money they each make?
If you offer one to one consultancy, is that actually worth doing? If you do a course, is that worth doing?
I want you to think about how which products and services in your business make the most money. And then you can make some conscious decisions about the best way to manage your business.
Start by looking at the split of your revenue. Look at your revenue for the last 12 months ideally, but whatever you can pull out. Look at how much you made from each of your products, how much time they took you take you to deliver each time.
Let's say you have one to one consultancy. Look at how much one to one time you actually spent and how much revenue you...
As a topic, pricing is one that often leads to the most heated conversations amongst business owners. However, it’s also an area that a lot of people struggle with and have questions about. But if you want your business to grow and earn you a decent wage, pricing is something you need to consider and talk about. And if you’re still looking to price by the hour, it’s a conversation we need to have!
Last week we looked at one of the biggest pricing dilemmas - the importance of putting your prices on your website. Now, we’re going to look at why it’s so essential that you don’t price by the hour and what other options are available to you.
No matter how you price your services and products, It helps to know your hourly rate. Primarily, this is so you can accurately reflect the time spent on something and factor that into your pricing decisions. It isn’t a figure that you share...