• Enquiry
• Quote
• Agree
• Work
• Invoice
• Paid

How to Price It

Cost is a fact about you and price is a judgement about the customer. Most small firms compute the first and call it the second.

For a software-side reference alongside this discussion of pricing, labour cost, and small-business finance, Monitask has this resource.

What your time costs — take one month, count every hour honestly, divide by what you invoiced. Most people find the real figure is between half and two thirds of the one they quote.

Cost, price and the gap — under cost-plus, getting better at your trade reduces your income, because a job that took eight hours now takes five.

Hourly against fixed — the choice is who carries the risk of overrun, and the hybrid fits most jobs: fixed for the known portion, hourly for the unknown.

Pricing for risk — six risks worth pricing, put in the number rather than in a line labelled risk, and the prices should move in both directions.

The job that lost money — small firms see a quiet month rather than a loss, and the loss is distributed across jobs that all looked fine.

Raising prices — apply it to new customers first, which produces evidence within weeks instead of nerve.

Discounts — a reduction teaches the customer that your first figure was not the real one, and most firms already discount invisibly through unbilled work.

• Cost, Price and the Gap

  Cost is what the job takes. Price is what it is worth to the customer. Confusing them is the commonest pricing error in small firms.

• Discounts

  A reduction is a lesson about your first number. Four discounts worth giving, and the alternative to cutting the price.

• Hourly Against Fixed

  Two ways to charge, each transferring risk in a different direction. Which suits which job, and the hybrid most firms should use.

• Pricing for Risk

  Some jobs carry costs that never appear as hours. Six risks worth pricing, and how to do it without a difficult conversation.

• Raising Prices

  The conversation most small firms avoid for years. When to have it, how to say it, and what actually tends to happen.

• The Job That Lost Money

  Losses in small firms hide as jobs that did less well than expected. Six places they hide, and the review that finds them.

• What Your Time Costs

  The hourly rate most small firms quote is not the one they earn. Where the difference goes, and how to find your own number.

For broader background on pricing, labour cost, and small-business finance, see LegalZoom.