3 Methods, One Mistake and a Few Tips

Often the most difficult thing about starting your own business is pricing your services. And just because you’re the new kid on the block doesn’t mean you have to under-price your services to get a leg up on the competition. It also doesn’t mean you should run up your prices to imply that your offer quality services worth their weight in gold. As with everything in life, the key is in finding balance. Here are a few things to consider when pricing your products and services:

3 Common Pricing Methods
There are three common methods used to price products and services. Each has its benefits; you should consider which works best for your business and the market in which you currently prepare taxes.

Cost-based pricing. With this pricing method, you determine the price of your services by calculating its cost to you (in retail this would be the wholesale cost of the item, plus overhead and distribution costs) plus the profit you hope to make. When determining the cost of your services, this simply requires you to decide how much your time is worth (in addition, of course, to your overhead and any other costs). When using cost-based pricing you want to make sure you don’t leave any of your costs out; doing so cuts will cut your profits.

Value-based pricing. In value-based pricing, price is determined by how much clients are willing to pay for a particular service, or how much your services are worth to clients. For example, you could probably charge more when clients come to you last minute, say April 10^th, to prepare their taxes; they need the service performed and it will be worth the additional charge for them to have you do it.

Market-based pricing. With this pricing method, your price is determined by how much a particular service generally runs. For example, if most tax preparers in your area charge $75 per hour, than you price your services at or around this same price. This requires just a little research and is the most common method small to mid-size businesses use to price their products and services.

One Big Pricing Mistake
The biggest mistake new business owners make is in under-pricing their products and services. Many assume they must first earn their place in the market by being the cheap guy on the block. Trust that your services are valuable and the market can sustain you charging just what you’re worth.

Pricing Tips
And here are some things you can do to make your services more appealing.

Offer exclusive services. When you offer exclusive services, you become even more valuable to current and potential clients because they’ll have a hard time finding those services anywhere else. And chances are, if a client comes to you for your exclusive services, they’ll come to you for your nonexclusive services as well.

Look for ways to add value to current services. There are ways you can enhance your current services to make them more appealing to clients. For example, offering free electronic tax submission could be the way to earn a client’s loyalty and life-long patronage.

Brand your business. Just yesterday I called a plumber blind, simply because his advertisements were family-friendly and boasted of honest, trust-worthy service. When your costumers recognize your brand, and that brand appeals to their wants and needs, you’ll find that simple marketing promoting that brand will bring more costumers to your door.

Offer perks to returning clients. When you have a loyal costumer you can offer incentives for them to remain loyal. Consider providing returning clients a discount or a free peripheral service, like 6 months worth of complimentary QuickBooks consultation.

The important thing about pricing is that it be both thoughtful and purposeful. Once you set your prices don’t be apologetic or tentative about them; remember, you offer a valuable service and deserve to be paid respectively. And when your clients see just how priceless your service is, they’ll be ready to refer you to their friends and family.

Are You Ready For The Next Step?
Be in business for yourself, but not by yourself getting paid what you’re worth! Are you tired of thinking, “Why not me?” You have gotten this far in your search to do what you want to in your chosen career, take the next step. The time is now to be able to get the training and the change you desire in your professional life. Click here to find out if Professional Tax Preparation Certification is a fit for you.