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Pricing Your Professional Services: Your Time is Money!

If you’re a new small business owner offering professional services and are struggling with nailing down your pricing, you’re not alone. At SCORE Maine, we talk with a lot of new services providers who find arriving at the right rates a mysterious endeavor. With no inventory or cost of goods sold to deal with, you’d think pricing professional services would be easy. But that’s not the case!

Time and value stand as the predominant considerations when determining rates for professional services. Assessing each correctly involves understanding all the factors  involved in providing the services you offer,  as well as the value you bring to your clients.

As you consider the time spent in delivering your services, there’s one component a lot of new professional services providers fail to consider.

The time they’ll spend collaborating with clients.

Besides the time you’ll spend doing “the work,” you’ll spend valuable time exchanging information and communicating with clients, too.

The time required for client collaboration can vary dramatically depending on a number of things:

  •  Scope of the project – Stating the obvious, larger projects will require more of your time and effort.
  • Complexity of the project – The more complicated the project, the more hours you’ll spend collaborating on it.
  • Your clients’ preferred method of communicating – Find out in advance if your clients prefer to communicate via email, phone calls, Google Hangout,  or face-to-face meetings (which involve commute time). Some clients may prefer collaborating via a project management tool like Basecamp, Trello, etc. If you haven’t used a particular tool before, you’ll have a learning curve to conquer—which adds to the time you’ll spend on the project.
  • The levels of approval a project goes through – If your work will be reviewed by multiple individuals or multiple departments, it is likely you’ll be asked to make adjustments to accommodate additional points of view.
  • Clients’ responsiveness (or lack of) – It is critical that you gauge responsiveness prior to working with a client. When clients fail to respond in a timely manner to your questions, or when they’re slow to review the work you’ve sent them, you might find yourself spending a lot of time following up…and following up again.
  • Clients’ decisiveness – Some clients might not have a very good grasp on what they want from you before you start working on their projects. That often leads to spending more time than anticipated as indecisive clients tend to change their minds and ask you to switch direction along the way.

As a professional services provider, your time is money—and collaboration can take a lot of your time. Always factor it into your pricing so you’re not short-changing yourself.

Account for collaboration time  when you issue proposals to clients. That can help clients understand there’s more involved to the services you provide than just the work you produce.

Have you faced challenges in pricing your professional services? We’d love to hear about your experience here, so feel free to leave a comment.

Need help with your business pricing? Our SCORE mentors are here to give you free guidance.

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