The Costco Connection - December 2007 - Page 11
ONE OF THE MOST COMMON reasons small and home-based businesses struggle is that they chronically undercharge. Don’t make that mistake. Here’s a list of do’s and don’ts to help you establish a fair price for your services.
Don’t discount your prices for fear of not getting enough business, and don’t feel embarrassed to openly charge a fair fee for what you offer. Establish yourself in a specialty where you can excel at what you offer and charge accordingly.
Don’t forget to cover your out-of-pocket expenses and your indirect costs for overhead and benefits in the fee you quote. Take advertising costs, office expenses, travel, health insurance, vacation and sick leave, and retirement benefits into consideration when setting your fees.
Don’t forget you need to add on a reasonable profit so you can expand and grow your business.
Do quote fees openly and clearly upfront and get agreement, preferably in writing, before starting to work.
Do explain the way you work so the customer understands why doing the job in a “cheaper” way would actually be more expensive and will not achieve what he or she wants.
Do calculate all costs and profit in any fixed fee you quote. Or, if you will be charging a fixed hourly fee plus costs, make that clear upfront as well.
Do let a prospective client know beforehand if you will be charging a fee for your sales call, initial consultation or proposal development. Don’t surprise clients with a bill.
Do discuss any possible additional cost increases that you foresee arising with your clients, and obtain their authorization before proceeding with the project.
Never sell yourself short. Value what you provide. But remember: The only surprise your clients should have when they get the bill is what an outstanding product or service they got for the agreed-upon price.
Paul & Sarah Edwards are pioneers in the home-business field. They can be reached on the Web at www.pinemountaininstitute.com
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