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We covered cogs/coss options in the last blog (click here to read "Pricing For Your Business"). We will cover the price break down this week. Many people don’t understand what is involved in a business price most often. Although unfair pricing is sadly a common occurrence, it doesn’t mean all business owners are greedy. People don’t understand how to price in their business and often allow people to bargain with them. If you are confident that your pricing is fair, there’s no reason to bargain. You have to be willing to let that person go to the next person.
I will give you an example of accounting and tax services as opposed to bookkeeping. I charge a different rate for bookkeeping because most people offer bookkeeping between $25-$45 per hour. Tax planning and preparation are provided at a higher price per hour.
How would this work with a package? If a client pays a certain fee per month out of that package, I will apply different rates to the total package as well as hours. If the package is 5 hours for $312.50, I will break down the services the client’s needs. Bookkeeping 2.5 hours @45 per hour, for example. $112.50 is applied and a 1-hour meeting @ $65 and so on. Once the work falls over the 5 hours, then it reverts to an hourly rate. My clients and I will discuss if it is time for a package with more hours or if the month plus a couple of extra hours works better.
I want you to break down your services this week. What is the hourly rate plus taxes do you need to earn?
Your Assignments this week is to look at your pricing. Are you charging enough to cover your coss/cogs and labor?
Start With The Following:
1. Have you determined your Cost of service sold or cost of goods sold?
2. How much do you want to earn in profit? Use a percentage for this amount. Such as 5% markup.
Watch examples in the vlog here.