How to Price Your Services

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  • 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.

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Posted on January 12

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