I built out a spreadsheet that has all my expenses (office space, supplies, interest/bank fees, healthcare, advertising, salaries, insurance, legal services, etc.) plus target annual profit and estimated taxes. Divide that by annual billable hours (and allow for vacation time) to get an hourly rate. Don't forget to include a target profit for the year - you want to make sure you're growing your company, not just maintaining it.
Once I have an hourly rate, that number goes into other sheets where I have estimated time requirements for specific types of jobs. These job sheets are built to give me a range between a job going quick and a job taking a long time. I compare this to reality and adjust the numbers as time goes on, and now it gives me a good range to quote with. I typically quote near the top of the ranges and know not to negotiate below the mid points.
All that being said - you need to be competitive within your industry and your market. Find out what other people charge, and align your fees according to the value you bring compared to others. Do you do the job better, faster, etc? Do you add/offer something that others don't? All that matters - don't short sell yourself if you offer more value.
If this all sounds like a pain - it is. But; you only need to do it once and then you have a tool that will be incredibly valuable to you and your company.
This is a tricky question. As a business owner you work hard and deserve to paid fairly but in today's market there is always someone who will do it at a lesser cost. That being said, you normally get what you pay for in those situations.
I would suggest do your research, what are other comapnies in your field charging for similar services if not the same services, you do not want to be the highest priced as you will never make enough to survive. But you obviously cannot be the highest cost either, fall in line with the market and as long as you do a good job for your customer, I have found, they should be willing to refer you or give you repeat business. Once the word of mouth gets around , it will snowball. Never under price yourself, the customer will see this as a reflection of your abilities. Stand behind your work and your prices!!
depends on what those things or jobs are, obviously. Are you a fine artist? If you look at your product and what it cost you to produce it in time, materials and ability (because high ability has a high value) And that is the lowest figure you could accept, then decide what feels the best to you, what feels like a good exchange amount. you can research what others charge for a similar product so you have a comparison amount and info you can use to handle a clients considerations if your amount turns out to be more than theirs, for example. So you have your amount now. Stick to it, don't change it or get reasonable and give discounts unless you know, beyond a reasonable doubt, that this client means future business or is an existing client who has given you alot of business already. I am all for rewarding long time, paying clients.
Under stand your numbers, if you have no idea what they are, there is no way you can accurately price your product or services. Most won't check to see what the benchmark is in their industry, it
needs to be on gross profit margin% not price. It is important to
understand what your fixed costs are vs your variable costs, then
determine your break even than look at how to obtain the right gross
profit margin %.
Maury brought a key factor. Sadly, writers are in a tough spot. Clients know they can cheat you and they do not value the writing. They can go to to a junk site and get writing for $1-2. They don't care about quality. Eventually, they complain, but are rarely willing to spend any money on a writer. I quit 2 years ago. Wasn't worth the stress. There is a demand but as long as you have writers willing to do it for free or a few dollars, AND clients that see you as a "donkey"- you are in a tough market. I have a Ph.D. and teach writing at a university for $100 an hour. To a client, I am a fool. "Whatever." So, I quit. They do not understand what we do and what amazing skills we have. My writing awarded me a full scholarship to B.U. and it was for a Ph.D. My skills as a writer are top shelf and I am a professional researcher. I got tired of trying to "prove" myself to cheapskates and thieves. Unless you write for finance or tech- good luck.
Know your competition - then beat them with price and service - but never "give away" your services - you will always regret it - if you provide exceptional service at reasonable prices, clients will flock to you. And always remember - poor service, or poor quality service or performance, isn't worth anything - people love to get services for low cost but no one will ever rave about your service if in fact it was terrible.
Have the confidence to set a price and stick to it. Special cases may call for a discount,or even an increase, but not every client is a special case. Other comments in this thread are very good.
We typically don't like to work on an hourly rate or for a percentage of the construction cost. We prefer to meet at no charge with out potential client to look at the basic project, kick around some ideas, and explain to them how the process works. At that point, based on the meeting and 41 years of experience, we'll figure out how much time and involvement it will take for us to develop designs and construction documents, including any zoning or planning approval meetings, as well as any needed engineering consultants. We then prepare a proposal that outlines the scope of the work, describes our services, and explains how the fee will be apportioned. We believe that this gives us the most appropriate fee that is fair to both us and our clients.
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Answers (1-10)
You must take into consideration many factors.
1) What does it cost you to do your services
2) Whats your market like
3) Higher Quality work, will yield more money
4) Total over head of the business.... are you charging enough to cover this AND make money
I built out a spreadsheet that has all my expenses (office space, supplies, interest/bank fees, healthcare, advertising, salaries, insurance, legal services, etc.) plus target annual profit and estimated taxes. Divide that by annual billable hours (and allow for vacation time) to get an hourly rate. Don't forget to include a target profit for the year - you want to make sure you're growing your company, not just maintaining it.
Once I have an hourly rate, that number goes into other sheets where I have estimated time requirements for specific types of jobs. These job sheets are built to give me a range between a job going quick and a job taking a long time. I compare this to reality and adjust the numbers as time goes on, and now it gives me a good range to quote with. I typically quote near the top of the ranges and know not to negotiate below the mid points.
All that being said - you need to be competitive within your industry and your market. Find out what other people charge, and align your fees according to the value you bring compared to others. Do you do the job better, faster, etc? Do you add/offer something that others don't? All that matters - don't short sell yourself if you offer more value.
If this all sounds like a pain - it is. But; you only need to do it once and then you have a tool that will be incredibly valuable to you and your company.
This is a tricky question. As a business owner you work hard and deserve to paid fairly but in today's market there is always someone who will do it at a lesser cost. That being said, you normally get what you pay for in those situations.
I would suggest do your research, what are other comapnies in your field charging for similar services if not the same services, you do not want to be the highest priced as you will never make enough to survive. But you obviously cannot be the highest cost either, fall in line with the market and as long as you do a good job for your customer, I have found, they should be willing to refer you or give you repeat business. Once the word of mouth gets around , it will snowball. Never under price yourself, the customer will see this as a reflection of your abilities. Stand behind your work and your prices!!
depends on what those things or jobs are, obviously. Are you a fine artist? If you look at your product and what it cost you to produce it in time, materials and ability (because high ability has a high value) And that is the lowest figure you could accept, then decide what feels the best to you, what feels like a good exchange amount. you can research what others charge for a similar product so you have a comparison amount and info you can use to handle a clients considerations if your amount turns out to be more than theirs, for example. So you have your amount now. Stick to it, don't change it or get reasonable and give discounts unless you know, beyond a reasonable doubt, that this client means future business or is an existing client who has given you alot of business already. I am all for rewarding long time, paying clients.
Under stand your numbers, if you have no idea what they are, there is no way you can accurately price your product or services. Most won't check to see what the benchmark is in their industry, it needs to be on gross profit margin% not price. It is important to understand what your fixed costs are vs your variable costs, then determine your break even than look at how to obtain the right gross profit margin %.
Several ideas. First, find out what client pays for similar services. If you match that no argument.
Or you can take a risk and say "after we are done pay me what it is truly worth to you."
Maury brought a key factor. Sadly, writers are in a tough spot. Clients know they can cheat you and they do not value the writing. They can go to to a junk site and get writing for $1-2. They don't care about quality. Eventually, they complain, but are rarely willing to spend any money on a writer. I quit 2 years ago. Wasn't worth the stress. There is a demand but as long as you have writers willing to do it for free or a few dollars, AND clients that see you as a "donkey"- you are in a tough market. I have a Ph.D. and teach writing at a university for $100 an hour. To a client, I am a fool. "Whatever." So, I quit. They do not understand what we do and what amazing skills we have. My writing awarded me a full scholarship to B.U. and it was for a Ph.D. My skills as a writer are top shelf and I am a professional researcher. I got tired of trying to "prove" myself to cheapskates and thieves. Unless you write for finance or tech- good luck.
Know your competition - then beat them with price and service - but never "give away" your services - you will always regret it - if you provide exceptional service at reasonable prices, clients will flock to you. And always remember - poor service, or poor quality service or performance, isn't worth anything - people love to get services for low cost but no one will ever rave about your service if in fact it was terrible.
Have the confidence to set a price and stick to it. Special cases may call for a discount,or even an increase, but not every client is a special case. Other comments in this thread are very good.
We typically don't like to work on an hourly rate or for a percentage of the construction cost. We prefer to meet at no charge with out potential client to look at the basic project, kick around some ideas, and explain to them how the process works. At that point, based on the meeting and 41 years of experience, we'll figure out how much time and involvement it will take for us to develop designs and construction documents, including any zoning or planning approval meetings, as well as any needed engineering consultants. We then prepare a proposal that outlines the scope of the work, describes our services, and explains how the fee will be apportioned. We believe that this gives us the most appropriate fee that is fair to both us and our clients.