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Pricing: Services & Products

Pricing: Services & Products. Class Group Activity. First Steps: ID “The Thing”. identify a passion, talent and/or need for service/product define boundaries: community, consumers research competition: nature, cost, quantity and quality of services/products; achievement stats

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Pricing: Services & Products

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  1. Pricing: Services & Products Class Group Activity

  2. First Steps: ID “The Thing” • identify a passion, talent and/or need for service/product • define boundaries: community, consumers • research competition: nature, cost, quantity and quality of services/products; achievement stats • build a new model that innovates based on distinguishing characteristics • branding

  3. Next Steps: Prioritizing • timetable: realistically assess what's needed now vs. what can wait • subdivide primary, secondary, tertiary markets, etc.

  4. Service Pricing: Billable Hours Formula (determining hourly rate) • 1) determine annual salary ("take home" pay) • 2) calculate fixed costs ("overhead") - rent, utilities, phone, internet, etc. • 3) determine profit goal, expressed as percentage (Profits are for: bills, salary, reinvestment)

  5. Billable Hours Formula Desired annual salary + Annual fixed costs (overhead) + Profit goal, expressed as a percentage ÷ Your number of annual billable hours = Your Hourly Rate

  6. Your Price vs. Market Rate • compare this rate with Market Rate for your market, then justify difference in cost; or, redo Billable Hours Pricing accounting for the Market Rate • determine flexible pricing options to help reach hourly rate goal

  7. Product Pricing • research range of competitive rates as compared with standard of quality • research costs from supplier • determine markup percentage above cost and calculate price

  8. Next Steps • working budget • cash flow projection • profit/loss forecast

  9. Share Your Findings Sum up: "What I've learned and how I'll use it"

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