How to price your services as a new business
Key takeaways
- Start from your costs and your time, not from what a competitor charges.
- Track the hours each job really takes. Most owners underestimate.
- Package your services so customers compare value, not hourly rates.
- Review prices after your first ten jobs.
New business owners often set prices by looking at a competitor and going a little lower. That can win work, but it can also lock you into jobs that lose money. Here is a steadier way.
Step 1: Know your costs
- Materials and supplies for each job.
- Software, rent, insurance and other monthly bills.
- Payment processing fees.
Step 2: Value your time
Decide what an hour of your work needs to earn. Then track how long each type of job takes, from the first call to the final follow-up. The real number is almost always higher than you expect.
Step 3: Do the sum
Price = hours x your hourly target + direct costs. This is your floor. Pricing below it means you are paying to work.
Step 4: Check the market
Now look at competitors. If your floor is well above the market, find ways to work faster or offer something they do not. If it is well below, you have room to raise your price.
Step 5: Package it
Offer two or three clear packages with set prices. Customers find packages easier to buy than hourly estimates, and you get paid for results, not time.
Step 6: Review
After ten jobs, compare what you charged with the hours you logged. Raise the price on anything that earned less than your target.
Quick answers
How do I set prices for a new service business?
Add up your direct costs, multiply the hours a job takes by what your time needs to earn, and use that as your minimum price. Then compare with the market and package your services.
Should I charge less than competitors when starting?
A lower launch price can help win early clients, but make sure it still covers your costs and time, and plan when it will rise.
How often should I review my prices?
After your first ten jobs, and then at least once a year.
Want help setting your prices?
Pricing is part of our launch planning and the Business Builder program.
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