Pricing of services is the way a company determines how much to charge for its work. Three basic models have different consequences. An hourly rate is the simplest and the most poorly incentivised – the faster and better you work, the less you earn. A project price shifts the risk onto the supplier but rewards efficiency, and the customer knows in advance what they are paying. Value-based pricing is derived from the benefit to the client and is the most profitable, but requires you to be able to quantify that benefit. Whatever the model, calculate your floor: all costs, including overheads, holidays, non-billable time and sick leave, divided by the hours that are actually billable. This number tends to be surprisingly high, and many companies work below it for years. Review your price list at least once a year, otherwise inflation will quietly rob you of margin.
See also: Price list on the website versus price on request, Company marketing budget, Results guarantee.
