Offering Services As A Home Business

Service businesses such as website design, graphic design, photography and so forth face interesting challenges. You have to know how to estimate the time it will take you to complete a project and what your time is worth, without scaring away potential customers. And if you're just getting started, even finding customers may be a challenge.

One of the quickest ways to go out of business, even working at home, is to under price your services so that it is all but impossible to make a profit.

There are many factors to consider when pricing; for example, difficulty of projects, technical requirements, rate the competition charges and what market segment you are targeting.
It's easy to tell yourself that you'll run a discount service and get lots of customers. It's certainly true that cheap services get a lot of customers, but they have to do a lot more work to earn the same money as a higher priced service. Don't only think about how many customers you want; think about how many hours you want to work to earn a living. If you want to be working your business 80 hours a week in 20 years, stick with being a discount provider.

If your services are equal to or better than a mid priced company's services, why not price your services in the midrange. This will allow your home business a much healthier bottom line, and you should still get plenty of customers.

Deciding to be a high-priced company means that you are targeting a highly profitable clientele, but they can be pickier as well. You need to be able to provide results if you are charging more than the average.

Your technical skills will greatly determine what you can charge. A website designer who only knows HTML will not be able to earn as much per project as one who can create a database driven PHP website. You may want to consider upgrading your skills as you build your home business so that you can take on the more challenging and more profitable projects out there.

It's not always easy to price what the competition charges. Not everyone posts on their website what they charge. The words 'call or email for quote' are quite common online. Competitors are also not supposed to tell each other what they charge, to prevent price fixing. But you can still get a general idea by pretending to be a potential customer if you like. Do not do much of this, as it is not fair to waste a competitor's time, but appears to be not uncommon in some industries.

Perhaps a better way to determine your rates is to figure out what you want to earn each year, the number of hours you want to work each week, and figure out what you need to charge per hour to make a profit. Remember that most of your hours, particularly at the start, will not be spent in working for customers; instead they may be spent in marketing your home business and otherwise trying to get customers. You need to include assumptions for those in your calculations as well, since you can't directly bill the customers for that.