How to price your services

Okay guys, it’s biz Tuesday and today I’m talking about how to price your services. Now this topic has been on my mind for a while now because it’s not as straight forward as pricing products. I briefly touched on that in this post here where I explained how to set prices for your products and services right. However, lately I’ve been noticing that my pricing strategy for my services is not working for me.

Particularly the hourly consultation fee part of it. I evaluated this and basically concluded that by offering hourly consultation – where clients approach me for an advice and I charge them per hour, I’m not attracting the right clients for my business. A lot of this type of work, I must admit, is time wasting and on some occasions I wasn’t paid for my invoices. Now, this is completely my fault and the procedures I had implemented haven’t been effective. I admit.

So I’ve decided to create a filtering barrier which hopefully will eliminate potential work which otherwise would be a waste of my time and therefore money. Because, as we all know, time is money.

Before I get into it I want to clarify briefly the different ways of charging for services.

1. Job fee
This basically is a fee, which you charge your client after you evaluate the project as a whole. The scope of work as we call it in interior design. The best way how you arrive at this fee is a percentage of the total value of the project. This includes labour, products and your design/consultancy fee.

2. Hourly fee
This is the most easier fee your clients can understand. You charge them per every hour you work on the project. Simple.

3. Hourly fee /consultation fee + product margin
Now this may apply to only certain industries and markets and the idea is that you charge your client/customer your hourly/consultation fee plus you are earning a margin from every product you sell to them directly. Obviously the more products you sell the more revenue you generate.

So these are the options you have to charge for your services. Now I knew how hourly fee worked from my book-keeper and it was and still is working very well for her. She has a certain number of clients each month and she charges each of them for the amount of hours she works on their books.

However, when I tried to implement it in my hourly consultation service I found it’s not as effective.

One: I now realised that I’m dealing with the end client, not another business, so basically recovering invoices is much harder than from other businesses.

And two: I would have to have a lot of clients to actually survive.

Or three: I would have to increase the hourly fee which might make my hourly consultation too expensive and clients might feel that they are not getting value out of it.

I also realised that clients are on the internet and they search. They know how much products cost. If I put a product in my design, clients can go and find the price. And they want it as cheapest as possible. So charging clients a margin on top  or just below the RRP is not a good way to go either. I do think however, if you can charge a trade price to your client that this is something they will appreciate. Immediately there is a value in it.

But what I’ve learnt is to build my service fees more around the job fee. This is also known as value based fee. I’ve implemented this in my Room Design e-design service and it’s been working very well. Clients can immediately understand the price and the value they are getting.

Now let’s talk about Free Initial Consultation and filtering the time waster. I think most designers offer this to evaluate the client’s requirements and needs. However this can start a project (unintentionally)  which is not attractive to you or your business. From my experience at the end of the meeting you have to either charge a fee and you request a payment from the client there and then or you send them an invoice. If they don’t pay, you don’t carry any work and move on. You need to see their commitment.

The biggest lesson I learnt (the hard way) is not to do the work and charge clients on delivery. Because some of them don’t pay you for it at all.

Have you had any bad experiences for charging for your services? What’s your strategy? Put your comment below. Any advice? Any thoughts on this?

Karolina Barnes Studio


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