How to Price Your Services
- John does consulting for ABC Company.
- He helps ABC Company with X.
- He thinks charging them $10K for X is outrageous.
What in the $&@^%*+ should John charge?
Say ABC Company is 30-person company -- a super small company relative to the rest of the established ones out there.
Say the ABC Company pays, on average, $40K/year to each of its 30 employees; that means that their payroll:
- Costs $1,200,000 per year.
- (...or $100,000 per month)
If John is helping ABC Company work 10% faster for instance, that means he's freeing up $120,000 for the company every year to work on other tasks.
BAM
$10K Becomes Cheap
$10K becomes a bargain to the company if John saves ABC Company $120,000 every year (which works out to a ridiculous 1200% return on investment).
The average company is happy if it can achieve returns greater than 10% every year (which beats market averages and 90% of mutual fund managers); SO GUESS WHAT JOHN:
- YOU CAN INCREASE YOUR PRICES FURTHER
- WOOOOHOOOO!
Instead of the 'crazy' $10K John had assumed, he can skyrocket his prices and still look attractive to the company.
Pitch Concrete Value
Businesses have tremendous resources; if you can help them increase their bottom lines by even a tiny fraction, you will build a sustainably sweet business.
O U KNO!
Price by X value.
If you enjoyed How to Price Your Services, get a complimentary subscription to our freshest articles through email or through your feed reader.
Posted on January 12