Setting a proper price for your product or service can be a difficult decision for small business owners. Even as an accountant, I have at times struggled how to quote a potential client. The key to pricing is whether the money that you request is equal to the value of the product in the customer’s eyes. As well, you want there to be a demand for your product at this price in order to help generate profit.

One way to determine how to price your product is to do some research as to what your competition is selling similar products for. This can be done by looking at web pages or social media where pricing is available. This can be tricky if your product is custom made. Then you would want to figure the cost to produce your product and then add a markup to determine your price. Consulting with your peers or friends may be a way to determine pricing. Hopefully, they will be honest enough to tell you what they would pay for your product.

As for services, such as my accounting practice, I have taken a couple different approaches. For most of my career I was used to billing clients an hourly rate. This rate was predetermined by my employer based on the cost to deliver services with a markup attached. However, I have started to use a value pricing model. For example, I will quote $150 for a sole-proprietor tax return provided everything is well organized. I have factored in how much time I will spend on a typical sole-proprietor return, but I am charging a flat fee. Bookkeeping is the same way, I will ask questions to determine how many transactions per month I am required to process and then set a fee based on that.

Taking a step back to think about your pricing is crucial as you do not want to be receiving less than what you are truly worth.

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