Kids Kreative Korner
What if You're Not Selling a Product? Here's How to Price Your Services.
By Bonnie Drew
Service businesses, like snow shoveling or cleaning aquariums, have almost no overhead costs. Instead of the cost analysis method of setting prices, a service business primarily bases its prices on a fair wage per hour.
First estimate the time you expect the job to take (for example, two hours to shovel the driveway). Then multiply by the amount you wish to make per hour ($4.50 an hour X 2 hours = $9). Add the cost of equipment or supplies ($1 for wear and tear on the snow shovel). Your total price for the job is $10.
After you have figured the selling price (of a product or service), you need to check your price against the going rate. How does your price compare to what others are charging for similar products or services? If your price is lower than everyone else's, you may be undervaluing your product. If your price is higher than everyone else, you may be spending too much on supplies and charging too much for labor. Look for ways to cut costs.
The first few times you talk to customers about money, you may feel a little unsure about quoting your fees. Remind yourself that your fees are based on careful research. You can assure your customers that your rates are fair when compared to what others charge.
Another way to boost your confidence is to make a written list of the services you provide and your rates. When you start discussing money with your customers, hand them a copy of your price list. Your customers will appreciate the professional way you handle your business, and you will be happier with what you earn.
Remember that once you make a deal with a customer for a certain price, you must honor what you said, even if the job takes longer or the supplies cost more than you expected. So do your research. Then create a price list and include it in your business plan.
Bonnie Drew is the author of FAST CASH FOR KIDS (2nd edition), published by Career Press (1-800-227-3371). She is also the creator of the KIDS BUSINESS software for young entrepreneurs, available from Homeland Publications (713-332-9764).
Drew is also Editor of YoungBiz online magazine, published by Kid's Way, Inc., a company that helps youth prepare for business and the workplace of the 21st century. For more information, write to Kid's Way at 5589 Peachtree Rd, Chamblee, GA 30341 or call toll free 1-888-KidsWay (1-888-543-7929). YoungBiz magazine can be found at: http://www.youngbiz.com
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