When determining the price at which you sell your products or services, DON’T turn to your competition, or the ‘market price’ to set your level.
I’ve heard it said so many times that ‘we can’t charge any more because that's the market value’ or ‘that’s what our competitors charge’.
That works if you want to earn what your competitors earn but how do you know that they earn want YOU want to earn?
To set your hourly rate, you must decide what you want to earn in a year, realistically understand how many productive hours you will have per day and what your overheads will be and then do the maths to give you a figure that works out.
Put simply if you’re making curtains and you know the job will take you 5 hours to complete and you want to earn on average £10 per hour, you can’t just charge £50 for the curtains because you’ve incurred costs in materials, overheads (heating, lighting, rent and rates, etc.), which will mean your profit in the job will be much less than the £50 charged.
Associate that with lost hours in the same day, taken up quoting for the job, ordering the material, etc. and before you know where you are, your hourly rate has become £5 per hour.
Project that realistic hourly rate forward and your annual salary will be half what you originally wanted.
Don’t leave your earning potential to chance, or allow it to be set by your competition. Set your prices to reflect the the lifestyle you want from your business!
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