There are many methods that can be used to calculate what should be charged for products and services. In this session we are coming from three main perspectives:-1. What are others in my industry charging?2. How much do I want to earn in a year?3. How do I value myself and what I do or sell?
What are others in my industry charging?
Many people don’t know how to calculate or come up with a price for their products and or services so they use what others charge as a guide. This is all good and well but doesn’t take into account any variations you have from them. You may have a ‘at home office’ and they have a dedicated premises; you have higher qualifications or more valuable experience than others; you may have other sources of income to supplement this activity, etc. All these points can make a significant difference to how much you can or should charge. The other reason this is not an accurate method to use alone or at all is because this doesn’t take into account the following factors:-• the location of your target market• the types of people who are your target market• the income of your target market• the value of your products/services in the mind of your target market• the value you add to your clients/customers• the value you feel you have to add (we will expand on this later)• the unique elements of your product or serviceUsing industry rates as a pricing model keeps your mind in the competitive not creative mindset and this in turn limits your earning capacity and opportunities.
How much do I really want to earn in a year?
Using this pricing method in combination with others can be much more beneficial. This keeps your mind in the creative mindset and the philosophy that everything is limitless.Now imagine your ideal life –what it would look like, what would it include, where would you live if you could choose to live anywhere, where would you work from, what would your home be like?, where would you holiday? These are all things to consider.So to have a lifestyle like this how much income is required each year? From this amount deduct income from other sources and your partners income. Once you know how much annual income you require you can calculate what that is in weekly, fortnightly or monthly frequencies.Using our example this would mean an annual income of the $165,000 means the following amounts in other frequencies:-$13,750 per month$ 6,346 per fortnight$ 3,173 per weekIf you have a service business where you charge by the hour and have products to sell, and you know 70% of your business profits come from your services and you work 1430 hours per year (an average of 29.8 hours per week conducting your services). In one year you would need to earn $115,500 per year from your services alone. This would mean you need to earn $81 per hour for yourself (so add on any expenses, superannuation and taxes).If you have products as well, you can total number of products sold per year and divide this into the remaining amount of earnings require for the year, this will give you the average base price per product (don’t forget to add on any expenses, superannuation and taxes). For example that means $49,500 divided by 1,700 (products sold) gives an average product base price of $29.
How do I value myself and what I do or sell?
The last pricing method is a very good place to start from but the last consideration is and should be how you feel about the value you add to others personally and through your products. For example if your product saves people a lot of time then it is of more value to them and they are often prepared to pay a little more money for good quality products or services.It is difficult for small business operators to get an understanding and true appreciation of what they have to offer, yet this is essential if we are going to be successful in business. Why is it so difficult for us to appreciate our own value, many factors could be mentioned here. Fundamentally it comes down to the following reasons:-• our childhood has affected or feelings of worthiness and we haven’t let them go• &nbs...
As with most who have businesses, we also need to be efficient with our time and materials, avoid clutter. When you have a home business it is even more important because there is less available space. Following a few basic principles keeps the place look tidier, making it easier to find things in a hurry and in an energy sense it clears the way for more good things to come our way, whether they are opportunity or money.
Here are a number of principles we can utilise to prevent clutter.