On this page (9 sections)
How much should you charge for your services? Enough to cover your costs and pay you properly, at a level the market will accept, and ideally tied to what the result is worth to the customer. That’s three numbers: a floor, a market range and a value ceiling. Your price lives somewhere between the first and the last.
Most people price by guessing what a competitor charges and knocking a bit off. That skips the floor, so they end up busy and broke. Here’s the method I’d use instead, step by step, with a worksheet you can fill in.
Key takeaways
- Start with your floor: the price below which every job loses you money. A common cause of underpricing is that nobody worked this out.
- Then check the market range and the value of the result to the customer. Price toward value, not toward the cheapest competitor.
- Packages with a clear scope are usually easier to sell than hourly rates, and they reward you for getting better at the work.
The three numbers behind every price
- Your floorCosts plus the pay you need
- The market rangeWhat buyers expect to pay
- The valueWhat the result is worth to them
- Your priceBetween the floor and the value
| Method | How it works | Good for | Watch out for |
|---|---|---|---|
| Cost-plus | Your costs and pay, plus a margin | Setting the minimum | Ignores what the work is worth |
| Market-based | Priced near similar providers | Checking you’re in range | Copies competitors’ mistakes |
| Value-based | Priced on the outcome for the customer | Specialists with clear results | Needs you to understand the customer well |
| Packaged | A fixed price for a fixed scope | Repeatable services | Scope creep if the package is vague |
None of these is “right” on its own. Cost-plus gives you a floor. Market and value tell you where above it to sit. Packaging is how you present the result.
Step 1: Work out your floor
Your floor is the lowest price at which the work still pays for itself. To find it, you need three things:
- The yearly income you need. What you’d need to pay yourself if this were a job.
- Your yearly business costs. Software, insurance, equipment, vehicle, phone, accounting, advertising, training.
- Your billable hours. Not the hours you work. The hours someone pays for. Admin, quoting, travel, marketing and chasing invoices all take time nobody pays for directly.
Then: (income + costs) ÷ billable hours = your hourly floor.
This is an illustration, not a client story. Say a solo consultant wants to earn CA$80,000 a year and spends CA$20,000 a year running the business. They work about 48 weeks a year, but after admin, sales and travel, only about 1,000 hours a year are billable. Their floor is (80,000 + 20,000) ÷ 1,000 = CA$100 an hour. That’s before income tax, before slow months and before any profit. Charging CA$75 an hour because a competitor does would mean losing money on every hour they sell.
Most people are surprised by how few hours are billable. Track a normal week before you trust your estimate.
Step 2: Check the market range
Next, find out what customers expect to pay. You’re not looking to match anyone. You’re checking you’re not wildly outside what buyers see as normal.
- Look for providers who publish prices. Note what’s included, not just the number.
- Ask recent customers what else they considered and what those options cost.
- Ask people who said no where they went instead.
The customer research questions post has questions for exactly these conversations. If your floor is above the whole market range, that’s important news. Either your costs are too high, your billable hours are too low, or you need a more specialised offer that justifies a higher price.
Step 3: Price on the value of the result
This is where most of the room is. Ask: what is the result worth to this customer?
A bookkeeper who saves a contractor from underquoting jobs isn’t selling hours of data entry. They’re selling better decisions on every quote. A web designer whose site brings in more enquiries is selling the enquiries, not the pages.
You don’t need an exact figure. You need a rough sense of the stakes. If the result is worth a lot to the customer and your price is close to your floor, you’re probably undercharging. A clear value proposition makes this easier, because the customer can see the result they’re paying for.
Step 4: Package it
Once you know the floor and the value, turn the work into packages with a clear scope and a fixed price. A package tells the customer exactly what they get, and it means you earn more as you get faster.
A simple structure:
| Package | What’s included | Who it’s for |
|---|---|---|
| Starter | The core service, clearly limited | Testing you out |
| Standard | The full service most people need | Most customers |
| Ongoing | Monthly support after the main work | Customers who want help continuing |
I price my own work this way. The Growth Diagnostic is CA$1,500 for a standard scope (one business, one agreed problem): a 20-minute fit call, a 30-minute intake with read-only access, a written 90-day plan and a one-hour walkthrough. Doing the work is separate, and bigger jobs are quoted before they start. Monthly advisory afterwards is optional, with scope and price agreed in writing up front. A fixed price for a fixed scope means nobody has to watch the clock.
Step 5: Say the price with confidence
How you present the price matters nearly as much as the number.
- Show the scope first, then the price. People judge price against what they get.
- Say it plainly. No apologising, no “it’s only”. State it and stop talking.
- Offer a choice of packages, not a discount. A smaller scope at a lower price protects your rate.
- Put it in writing. A short proposal with scope, price, timing and what’s not included prevents arguments later.
When and how to raise your prices
Signs you’re too cheap: nearly everyone says yes without asking about price, you’re fully booked but not earning what you expected, or one bad job wipes out a month.
Raise prices for new customers first. Give existing customers notice and a date. Some will leave. Before you decide the increase failed, check whether the higher price on the customers who stayed made up for it. Often it does, and you have more time for the customers you kept.
Common mistakes
- Pricing from a competitor’s number. You don’t know their costs, their hours or whether they’re making money.
- Counting worked hours as billable hours. This alone makes most service prices too low.
- Discounting to win the job. It sets the customer’s expectation for every job after it.
- Vague packages. “Social media management” with no limits invites endless extra requests. Write what’s in and what’s out.
- Never revisiting prices. Costs go up every year. If your prices don’t, your pay goes down.
Where this fits
Price is half of the offer. The other half is what you’re promising and to whom. If both are clear, ads and follow-up get much easier, which is why I look at the offer first in where growth gets stuck. And if you’re weighing up paying someone else for marketing help, the cost to hire a marketing consultant explains the main options.
If you’d like help working out where your pricing and offer are holding you back, the Growth Diagnostic covers it. Book a call and we’ll see if it’s a fit.
Questions people ask
How do I calculate my hourly rate?
Add the income you want to the yearly costs of running the business, then divide by the hours you can realistically bill, not the hours you work. That gives you a floor. Add room for tax, slow months and profit before you call it a price.
Should I charge hourly or a fixed price?
Hourly is simple when the scope is unclear. A fixed price for a defined scope is usually easier for customers to say yes to, and it rewards you for getting faster. Many service businesses start hourly and move to packages once they know how long the work takes.
How do I know if my prices are too low?
Common signs: almost everyone says yes without asking about price, you're fully booked but not making the money you expected, and you can't afford to fix mistakes. A few people saying no on price is normal and healthy.
How do I raise my prices without losing customers?
Raise prices for new customers first, give existing customers notice, and explain what's included. Some people may leave. Check whether the higher price on the customers who stay more than makes up for it before deciding it failed.