Services for your Business

by Caron_Beesley, Community Moderator

  • Created: November 19, 2012, 7:54 am
  • Updated: November 28, 2012, 3:53 pm

The goal of business is to make a profit. Many small businesses fail at this because they don’t know how to price their products or services, but pricing is the critical element to achieving a profit, a factor that all firms can control.

If you’re a startup or are revisiting your pricing strategy, here are some suggestions from industry experts and small business owners to help you get the price right.

1) Understand service costs and their impact on pricing

Every service has different costs. Many small service firms fail to analyze their services' total cost and thus fail to price them profitably. By analyzing the cost of each service, prices can be set to maximize profits and eliminate unprofitable services.

The Iowa Small Business Development Center offers a useful cheat sheet on How To Price Your Products and Services, which includes tips for analyzing your total costs. Components to understand and analyze are:

  • Material costs
  • Labor costs, including, but salaries plus benefits
  • Overhead costs. Any cost not readily identifiable with a particular product is overhead. Taxes, rent, insurance, marketing and transportation are all overhead. Part of the overhead costs must be allocated to each service performed or product produced and must be adjusted annually.

Tip: To help you calculate your gross margin and understand its impact on pricing, read Understanding Gross Margin and how it Can Make or Break your Start-Up.

2) What are your competitors charging?

Pricing isn’t just about making a profit and covering your operating expenses, it’s also about where you want to position yourself in the marketplace, explains Scott Gerber, host of’s Ask Gerber. Where do you want your brand to be in the grand scheme of things? Perhaps you want to be the high-end competitor to someone who’s at the low-end of the market, or the reverse. The key, as Gerber suggests, is figuring out what’s going to get you the best penetration in the market as fast as possible, and broadening your client base according to what your competitors are not doing with their pricing models.

Useful Tools: Check out SBA’s SizeUp tool to help you assess how your business stacks up against the competition.

Tip: Do not try to compete with a large store's prices. They buy in larger volumes and their cost per unit is less. Instead, highlight other factors, like customer service.

3) Take advantage of front-end, back-end and/or tiered pricing

This is a common tactic for structuring your pricing model. Gerber suggests thinking of a car dealership. A sales rep knows he has multiple options for generating revenue from every customer who walks onto the lot. So the rep has the advantage of not only locking the customer down on a price for a car (the front-end pricing), but can also be pretty sure that the customer is going to pay more on top of that price for financing options and other add-ons – whether they anticipated this or not. Consider this the back-end pricing option. Bundled together, they equate what is also known as tiered pricing.

Tip: Think of ways you can tier your small business’ pricing structure to sell people early on the notion of a price, and then add options that ultimately will help you increase your bottom line.

4) Understand your conversions and metrics

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2010-07-28 09:32:15 by sunnydazetnt

Need your opinion only :-) New business Idea.

Thanks for your help. I am thinking of starting a mobile spray tanning business and I wanted to guage the interest in this. I would come to your home and you could tan in the privacy and comfort of your own home. Other services like Temporary Airbrush Tattoos, Temporary body crystals and jewlry will also be available.
Thanks again for your help.

2012-09-17 08:24:55 by -

Your ad is spam. Discussion forums are for

Chatting about various issues, not advertising your business and soliciting clientele.
Post in Services.
I, personally, will not be doing business with you because I don't believe in rewarding spammers but most of your target audience will be on your local site and they probably won't see your spam here in this forum, so there's still hope for you.

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