Deciding what to charge can be one of the most challenging aspects of running your work from home business. It doesn’t matter if you’re selling services or products, in order for your business to be successful and support you, the pricing has to be right. It’s possible the question that haunts you the most is “How much should a home business charge?
First let’s tackle the ‘home business’ aspect. The truth is, it doesn’t matter that your office happens to be in your home. Your business is a business. Period. The fact that your business is based in your home should never have any impact on how you set your pricing.
Once you get past that mental roadblock, your instinct is going to be to think with an employee mentality. Employee mentality thoughts look something like this:
- How much do employers pay per hour for this?
- Are my prices affordable for clients?
- What do others charge for this?
Deciding how much to charge should never be based on any of these questions. Here’s why.
How Much Do Employers Pay for this?
Using this as a base for setting your own prices is setting yourself up for failure. Employers pay less per hour because they have overhead associated with each employee. Each employee requires an employer to pay taxes, health insurance cost, the cost of computers and other equipment and the overhead of office space. You, on the other hand, are responsible for all of those things for yourself. That means by only charging what an employer would pay, you aren’t covering the additional costs. This means you’re losing money not making it.
Are My Prices Affordable for Clients?
Your concern when setting your prices should never be based on affordability. As I mentioned in another article, the cold, hard truth is that selling your services as ‘affordable’ cheapens them immediately. And why is that? Because you’re focusing on the money. And when we focus on money, it’s always about finding the cheapest price. Running a business while trying to offer your services or products at dirt cheap prices will destroy you and your business. You’ll be overworked and underpaid.
“If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.”Red Adair
What Do Others Charge for This?
Basing your prices on what someone else is charging is a big mistake. One of the most critical parts of building a successful business is understanding how your business is unique from other competitors out there. If you’re basing your rates on what your competitors are charging you are totally ignoring everything that you bring to the table. Everything that is unique about you and your business is being pushed aside and ignored. You have no clue what others may have as far as skills, training, and knowledge. You do however know exactly what you have in your arsenal. Why in the world would you ignore your own abilities and simply charge what someone else does? It makes no sense and it’s incredibly bad for business.
“Pricing is branding.”Richie Norton
Remember, pricing is a part of your brand. If you set your prices with an employee mentality rather than that of the highly skilled owner of a specialized business your results will be less than successful. Low-ball and incorrectly set prices make a bad impression on clients. They won’t expect much and many potential clients and customers won’t consider you at all. As amazing as it may sound, underpricing is one of the most common reasons so many businesses struggle to find clients. Because no one is going to believe you’re providing Tiffany-level services or product at Dollar Tree prices.
So How Much Should You Charge?
The answer to this question is that it should be as individual as your business is. Your prices should be based on your skills, experience, and knowledge. Most importantly, it should be based on the value of what you are offering.
Are you ready to set your prices based on value?
Setting Your Rates Based on Value
Setting our rates/prices is one of the most difficult things small and home-based businesses face. Sadly, many new entrepreneurs charge too little which can be a stumbling block to success. Take the first step towards getting paid what you are really worth.
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