Self-employed? How do you price your services?

[PrincessKitty1]

If you are self-employed, I would be interested in hearing how you price your services.

DH is self-employed as a computer tech-- repairing, networking, training etc. for homes and small businesses. He had an interesting discussion with one of his clients yesterday. His client noted that DH's price has gone up $10/hour this year (DH had not raised his prices in about 3 years).

His client (the owner of a small business) then went on to say that if DH charged double the price, he would still use him. He then talked about his own business, and how he had raised his own prices over the years and now had considerably fewer clients and made considerably more money. That sounded great to DH!

Of course, DH and I have called around to other techs in town to find out how much they charge, and DH purposely priced himself in the low-middle end. However, he has been self-employed for about 5 years now, has a fair number of regular clients, and is really top-notch at what he does (also honest and pleasant to deal with, so people trust him and he gets lots of word-of-mouth referrals).

We are wondering if DH is not charging enough. Besides comparing your prices to the competition, how do you set your prices??

 

[orljustin]

From what I read out there, people who know what they are doing, and double their rates, do end up with more money and less work.

 

[Charade]

From what I read out there, people who know what they are doing, and double their rates, do end up with more money and less work.

works for me!!!

 

[Mike.Wazowski]

there are way to many elements to consider in this though...

does DH had to keep up training, licensing, insurances, does he provide the health insurance for the family, etc...

so you aren't always comparing apples to apples when comparing your prices to the competition.
when he gets a refferel he should charge a percentage more and see how it is recienved... worst case he loses a job - best case he knows that the local market can handle that rate and you all make more money for the same work!

 

[PrincessKitty1]

there are way to many elements to consider in this though...

does DH had to keep up training, licensing, insurances, does he provide the health insurance for the family, etc...

so you aren't always comparing apples to apples when comparing your prices to the competition.
when he gets a refferel he should charge a percentage more and see how it is recienved... worst case he loses a job - best case he knows that the local market can handle that rate and you all make more money for the same work!

Good points....another conversation with a (potential) client has had DH mulling over these issues. He has lots of experience in networking, but only for small businesses (I think it's 10 or 12 computers). Over that # of computers requires a different kind of networking with a server (or different software--I'm pretty ignorant about this, it's DH's thing ) that DH is not familiar with.

He was asked to give an estimate on networking 15 computers. He advised the company that he charged by the hour and that he estimated the job would take 8 hours, which would be $640. The potential client then showed him an estimate from another company for $9000!

DH decided he could not get up to speed on the special networking that would be required before he would be needed to do the job, so he declined the job. But this has definitely got us both thinking...we know some other techs charge more per hour for networking (and some charge more per hour for businesses vs. homes) but we didn't know how much more!!

 

[FroggyinArk]

we contacted compoarable services, i workedfor comparabl services for years, we figured the cost of our overhead, and broke it down to the lowest numbers we could live with, and i know our going rate is less than 1/2 hte national average. how ever that is also the highest rate our area will support.

 

[Jennasis]

I hear you. I am self employed (we own a horse farm where we board horses, train horses and do riding lessons). I live in fear of being forced by the economy to raise our prices because I am terrified that all my clients will leave us for cheaper digs.

That being said, we are THE most affordable barn (with comparable servcies and amenities) in a 3 county swath of NC. Our lesson prices are average. I raised my lesson prices about 2 years ago an extra $5 an hour and luckily nobody ran for the hills. We offer top notch cust9omer service and amenities, the horses are super well-cared-for and my board should probably be a good $50 more per month tha it is, especially considering ALL of my contractors (feed, hay, shavings, and the farrier) have ALL raised their prices more than once in the past year and a half.

We are barely squeeking by. However in my area, people would rather pay $150 per month for a barbed-wire grassless pasture in Jim-Bob's backyard, or on Paw-Paw's cow farm than to pay me $300 a month for top notch facilities and care...so I can't raise my prices (other area commercial barns have been in a price freeze for at least 5 years for the same reason and they are ALL more expensive than me.)

 

[cardaway]

We have a home based daycare - hopefully soon to be a full size center - and did research to put ourselves at 90% of the cost of most of the centers in the area.

 

[Am_I_There_Yet]

My husband owns a home inspection business, and before I married him I owned a plumbing company with my ex.

In both cases, we price-shopped other businesses to see what the going rate was, and then placed ourselves where we would make a profit, but not scare anyone away.

We would (or still do) raise our prices due to the rise of gas and insurance prices.

It's funny, because DH gets price-shopped too.

 

[Brier Rose]

However in my area, people would rather pay $150 per month for a barbed-wire grassless pasture in Jim-Bob's backyard, or on Paw-Paw's cow farm than to pay me $300 a month for top notch facilities and care...so I can't raise my prices (other area commercial barns have been in a price freeze for at least 5 years for the same reason and they are ALL more expensive than me.)

Wow..$300??

We don't have DD's horse anymore, but we were paying $500 a month for a crap hole here! Not to mention $45.00 an hour (which was always more like 45min. ) for lessons on top of that, and it was SOOO not worth it!

Wish we lived closer to ya!

 

[Jennasis]

I hear ya Brier Rose. I used to live on Long Island where I managed a large lesson and boarding facility. It was $650 a month (plus an extra $3 per day if you wanted your horse turned out...in a 30ft. dirt round pen). The stalls were like dungeons and the owner was a rude, awful money hungry maniac.

Here we have an indoor arena, outdoor arena, trails, laundry facility, heated/AC'd lounge/office with satellite tv/dvd/vcr/playstation, trailer parking, 3- 7 acres grass PASTURES, 3- 1/2 acre dirt paddocks, 3 board fencing with hotwire on top, 12 x 12 stalls in our airy well-ventilated barn, all day turnout (or all night in summer), stall fans in summer, and we'll boot/blanket/fly spray your horse...all for $300 per month.

The ONLY other barn in town with an indoor arena gets $550, but they also have a regulation dressage court and a cross country course as well as 220 acres of trails and host horse shows every weekend. The next most expensive barn in the county is $350 with NO indoor, then a couple are $325 with no indoor (including a good friend who followed me down from NY only to open a competing barn 5 miles away and charge more...his barn isn't full either right now), then me at $300 with unarguably the best facilities at the lowest price available. If I could transplant THIS barn back to NY I would get $800-$1000 a month EASILY...it's just this area, people aren't willing to pay anything when they can throw the horse in someone's backyard.

I'm stumped sometimes. However I have faith that this is what God meant for DH and I to do and that we'll be all right.

 

[PrincessKitty1]

Bump!

 

[Brier Rose]

I hear ya Brier Rose. I used to live on Long Island where I managed a large lesson and boarding facility. It was $650 a month (plus an extra $3 per day if you wanted your horse turned out...in a 30ft. dirt round pen). The stalls were like dungeons and the owner was a rude, awful money hungry maniac.

Here we have an indoor arena, outdoor arena, trails, laundry facility, heated/AC'd lounge/office with satellite tv/dvd/vcr/playstation, trailer parking, 3- 7 acres grass PASTURES, 3- 1/2 acre dirt paddocks, 3 board fencing with hotwire on top, 12 x 12 stalls in our airy well-ventilated barn, all day turnout (or all night in summer), stall fans in summer, and we'll boot/blanket/fly spray your horse...all for $300 per month.

The ONLY other barn in town with an indoor arena gets $550, but they also have a regulation dressage court and a cross country course as well as 220 acres of trails and host horse shows every weekend. The next most expensive barn in the county is $350 with NO indoor, then a couple are $325 with no indoor (including a good friend who followed me down from NY only to open a competing barn 5 miles away and charge more...his barn isn't full either right now), then me at $300 with unarguably the best facilities at the lowest price available. If I could transplant THIS barn back to NY I would get $800-$1000 a month EASILY...it's just this area, people aren't willing to pay anything when they can throw the horse in someone's backyard.

I'm stumped sometimes. However I have faith that this is what God meant for DH and I to do and that we'll be all right.

I tell you what if you were ANYWHERE close to us, you'd have yourself a new customer! I can tell you do what you do because you love it. It's HARD work to be sure!

I wish I had pictures our "old" place! Not to mention the fact that it was over run with HUGE spiders. I mean, I know it's a barn, but come one..spray every now and then...or at the very least clean all of the webs. You couldn't even see out of the windows!

About a week after we had our horse there she got bit by something.

Of course there's no telling what, but the vet said it very well could have been a spider. Long story short..she got cellulitis in her leg, kept digging at it with her hoof, and cut herself so badly she had to have surgery! She was out of commission for months!

When she first got sick, the owner tried to blame it on DD saying that she was sick because DD put her up wet!

Sorry OP..didn't mean to hijack your thread.

 

[challada]

Due to a need in my area, I've started an "on the side" business doing some of the same stuff that I do for a living. I first did for a friend and then she told a friend who told more friends and so on and so on. I kind of scrambled to determine a rate as my girlfriend just gave me a chunk of money to do the work (she's got oodles of it) and then people started asking my "rate". I ended up going back and figuring out what my hourly rate was as a consultant and using that as a guide.

 

[tw1nsmom]

The problem with comparing prices for computer consulting/tech/networking services is that different people provide different levels of knowledge and services.

DH handles computers for small businesses with multiple small offices. He only does personal computers for some of his larger clients as a favor, and of course friends and family. He does do servers, vpns, computer forensics, phone interfacing, and really a bunch of stuff that I don't know too much about. He charges a lot per hour, but it's what companies with comparable knowledge in the area charge. He also is able to handle all his clients' technology needs as they grow larger. He has a few clients with multiple locations around the country.

If he didn't have that specialized knowledge he wouldn't be able to charge as much. So, I guess what I'm trying to say is you have to be careful what you use as a price comparison when determining fees. Having said that, he did find that as his prices rose, he lost some clients, but retained better, more reliable clients. When he charged less some of his clients seemed to not take as seriously and weren't prompt with paying their bills.

 

[Anewman]

You have to consider your target market.

My brother-in-law is a contractor/painter, and AREA CODE plays a big part in the quote.

I have installed home theaters in multi million dollar homes(for friends) and some of the quotes they got were outragous.

If your husband is targeting small businesses he has to price differentaly than he would if he was doing a job for say NASA.

 

[PrincessKitty1]

I have installed home theaters in multi million dollar homes(for friends) and some of the quotes they got were outragous.

Yes, one of DH's earliest clients was amazed at how reasonable his work was because "People take one look at my house and double the price!"