Finance & Cash Flow
Most small businesses discover their pricing was wrong years too late
Pricing is set once, early, usually by copying somebody else, and then defended for a decade. This session works out what a job actually costs, what it is worth to the customer, and how to move a price that has been wrong for years.
A price set by looking at a competitor is a guess about their costs, not yours.
Most owners price by matching the market, discounting to win work, and hoping volume covers it. That works until a cost rises, and then the whole business is running to stand still on margins nobody ever calculated.
The businesses that price well know three numbers: what it costs them to deliver, what it is worth to the customer, and what the alternative costs. Very few small businesses know the first one properly.
How to set a price
31 topics across 6 areas. Six things to work out.
What It Actually Costs YouAlmost always more than the owner thinks.6
Direct cost is the easy part. The one that gets missed is the share of everything else — rent, salaries, your own time, the rework, the jobs that went wrong.
- Materials and direct labour
- A fair share of fixed costs
- Your own time, valued
- Rework and wastage
- Cost of delivery and support
- The jobs that lose money and are never counted
What It Is Worth to the CustomerA different question from what it costs.5
- What problem does it solve for them?
- What does that problem cost them?
- What is the alternative, and what does that cost?
- What would they lose by not buying?
- Who else could supply it?
What the Market SaysUseful information, not an instruction.5
- What competitors charge
- What they include that you do not
- Where you are genuinely different
- Why the cheapest supplier is rarely the largest
- What a customer is really comparing
DiscountingThe fastest way to destroy a margin.4
A ten per cent discount on a thirty per cent margin means selling a third more just to stand still. Very few owners have done that arithmetic before agreeing to it.
- What a discount costs in volume terms
- When to give one and when to add value instead
- Discounting to win work you cannot deliver profitably
- How to say no and keep the relationship
Raising a PriceHarder than setting one, and usually overdue.5
Announce it, do not apologise for it, give notice, and expect to lose a small number of customers — usually the ones costing you most.
- How much notice to give
- How to explain it
- Whether to apply it to everyone at once
- What to offer alongside it
- Which customers you will lose, and whether that is bad
Different Ways to ChargeThe structure matters as much as the number.6
- Per unit or per job
- Hourly against fixed price
- Retainer or subscription
- Tiered options
- Value-based
- Why offering three options changes what people choose
Signs the price is wrong
- You win almost every quote you send
- Customers never question the price
- Margins fall every year without a decision being made
- The busiest months are not the most profitable
- You cannot say what a specific job earned
- You compete only on price and it is exhausting
What participants work out in the room
- The true cost of one thing they sell
- The margin they actually earn on it
- What a ten per cent discount costs them in volume
- One price they will raise, and by how much
- How they will explain it
How the session runs
Participants cost one real product or service properly, including the parts usually left out, and compare that with what they currently charge. Most rooms produce at least one owner discovering a line they have been selling at a loss. A practitioner then works through raising a price — the notice, the explanation, and the customers it will cost.
What your students leave with
- The true cost of at least one thing they sell
- The actual margin on it, calculated rather than assumed
- What discounting costs in volume terms
- A view on value pricing against cost-plus
- One price they intend to raise, and how they will explain it
- Alternative ways of structuring what they charge
Scheduled sessions
Nothing scheduled yet
Sessions are arranged with a college once a date is agreed. Ask us and we will find the right person for it.
A student rather than a college? See what is coming up, or ask your placement team to host this.
A price copied from a competitor is a guess about their costs.
Tell us who your students are and what stage they are at. Sessions are free for participants.