Alas! You’ve decided to go into business for yourself. Before jumping into running a business, there are a number of things you’ll need to consider first before rolling out your prices, which are essentially your consulting fees.
One of the first things you have to consider in determining the price, or the amount of your consulting fees, is your level of experience and expertise. Certainly, someone with little experience will not be able to command the same prices as someone with years of experience. Pricing is a delicate balance and you should spend a good deal of time thinking about it. How people perceive the value of someone’s services is often found in the pricing. Some people believe that if something costs more, it must be among the best offered. This simply is not true when it comes to services. The following is a few suggestions in helping you to determine price.
Research what others are charging for the same services you will be offering. Find those with the same level of experience that you have, and place the price of your services somewhere within the price range. The price you settle with will be determined, too, by the cost of doing business.
Cost vs. Price
Not everyone has the same costs in the psychic service industry. Some people may have more expenses to cover than others. You will need to determine the cost of doing business before setting your price.
First Things First
Total up your costs and overhead: Telephone, Internet, computer, rent, utilities, supplies, and the like. Divide the total by 30 days to get an idea of what you need to make in order to pay your costs. After you do the math, this should show you what you need to make each day in order to pay for your expenses and cost of doing business.
- Total business expenses: Your Cost / 30 Days = Cost Per Day
Once you know what your cost per day is, you can determine how many hours you need to work and what you need to charge per hour or day just to pay for your expenses.
- Cost Per Day / Number Hours Worked = Cost Per Hour
From this point, you will need to determine how much you will need to make per hour in order to cover your cost, plus how much markup you’ll use in order to make a profit.
The sum of the profit should fit into the price range you researched earlier. Naturally, this simple formula applies to hourly rates, or retainers; however, you’ll need to determine a cost-per-project from time to time such as a special event or party.
In the case of charging per project, include the cost of transportation, plus time and expenses. If you buy an airplane ticket, rent a hotel, purchase meals, and require extras, add your price per hour onto those expenses, and then divide the total by the total number of hours in the project.
When pricing for a retainer, you may decide to discount the normal cost a bit for the sake of your client who is willing to retain a guaranteed number of hours from you each month.
If you are charging one flat rate for your services, be sure to add expenses where applicable. For example: $500 plus expenses.
Be careful not to price yourself out of business by charging a price too high for most to reach. You also want to make sure that you are not doing the extreme opposite by “low-balling” your prices where someone considers it a bargain or a discount. By doing this, you are setting yourself up to fail. Why? Because people may perceive your low price as being indicative of low value.
Over time, adjust your prices according to the market and what your true competitors are charging. Remember, you must do so gradually as you can’t double your prices overnight, or you will risk losing a good portion of your clientele.
The only time you will not consider price based solely off what your competitors are charging is when you reach a supply vs. demand situation. If you are in such demand, and have only a set number of hours to provide your service, then you can raise your prices to meet such a demand. Thus, you’ll work smarter rather than harder.