One of the toughest parts to running a business that is profitable is knowing how to price your services to help ensure you are giving clients an excellent service, whilst also remaining profitable. It can be a difficult conversation to have when you realise that your business, although serving or delivering to many clients, isn't actually profitable, and you have to up your prices or close the business.The prices of services can be one of the trickiest elements to making your business run smoothly, particularly if you are charging for your time, over a tangible product. There are formulas and systems that can help you create a profitable business, and these are covered in my book - Rewire Your Business for Success: The 6-step method to increase profit and reclaim your freedom - but I wanted to share a few key areas to help you confidently price yourself in the market for the industry you are in, whilst also remaining confidently profitable.
Speak with your accountant
I cannot stress enough the importance that your accountant will play in this element of starting or running your business profitably. They will know the ins and outs of your business with much more experience and knowledge - this is their job after all! They can work with you to see the outgoings of the business, areas that perhaps can be cut, and the general day to day running costs of your business. All of this can help you determine your prices. Consider the cost per client When you take on a new client, how much time and dedication goes into getting them started with your service? This, alongside the time you will be spending on the service you provide, needs to be added into your pricing. You need to ensure that you are not running at a loss before your client even signs up to use your service. Do new clients tend to take 2-3 hours of free consultations, emails, correspondence, free gifts etc before they sign up? This all adds to your expenses and costs prior to them becoming a client and should be considered as a part of your pricing structure.
How can you up-sell to your current clients?
As you may have seen from the cost per client exercise - a new client can ultimately cost your business more than they may end up spending, so it is important to know the areas you can work on to help deliver more services to current and ongoing clients, so they can feel they are being given excellent service - but you are increasing your profits thanks to the client having already signed up to use your services.
Regularly check your costs and your pricing
Another element that business owners tend to forget about is the running costs of their business change - but they do not increase their prices for fear of losing clients. You must regularly review your pricing within your business and make sure that you are continuing to run your profit margins that you originally set about having, during your conversation with your accountant. Have a yearly review with your accountant to help develop the key strategies for the year ahead, and how you can continue to deliver an excellent service to your clients, whilst remaining profitable.If you have new team members, new office space, higher supplier costs, extra time needed to add new programmes to your deliverables - these are all areas that can cost your business more money, but may not be implemented into your prices. With the right support from an accountant who understands you, your business, your clients, and your financials - it will be an easy to work on process when you are developing your pricing with your clients.If you have found this article helpful we recommend our article on How my business can be more profitable.
