Finance & Cash Flow
Many 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.
Explore this page6 sections
A price set by looking at a competitor is a guess about their costs, not yours.
Many 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. Many small businesses have never worked out the first one properly.
How to set a price
32 topics across 6 areas. Six things to work out.
What It Actually Costs YouOften more than the owner thinks.6 topics
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 topics
- 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 topics
- 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 topics
A ten per cent price cut on a thirty per cent margin leaves twenty, so you must sell half as much again just to earn the same money. Many owners have not done that arithmetic before agreeing to a discount.
- 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.6 topics
Announce it, do not apologise for it, give notice, and expect to lose some customers — sometimes 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
- Whether your price includes GST, and what to do when a GST rate changes
Different Ways to ChargeThe structure matters as much as the number.6 topics
- 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. It is common for an owner to discover 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
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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.
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Ask for this session
Tell us who you are and what you have in mind. A person reads it and writes back, usually within two working days.
- Tell us what you need
A topic or a question is enough to start.
- A person replies
Usually within two working days.
- Agree the next step
We work out the details together.
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.