How to Price Your Services: A Small Business Guide to Getting Paid What You're Worth

The Underpricing Epidemic

The number one mistake small business owners make is charging too little. We see it every day — talented, hardworking people leaving thousands of dollars on the table because they're afraid of losing customers to cheaper competitors.

Here's what we know after working with 150+ small businesses: Clients who pay more, demand more and complain less. Cheap clients are the hardest to work with.

Why Small Businesses Undercharge

Fear of Rejection

"What if they say no?" This fear drives most underpricing decisions. But consider: you only need to say yes to the right number of clients, not every client.

Comparing to the Wrong Benchmark

Charging based on what you'd pay someone else, rather than the value you deliver.

Not Knowing Your Numbers

Many business owners don't know their actual cost per job, per hour, or per project.

The Three Pricing Models

1. Cost-Plus Pricing

Formula: (Cost of Delivery) + (Desired Profit Margin) = Price

This is the floor. Never price below this.

How to calculate your cost:

Materials/supplies
Labor (including your own time at a fair hourly rate)
Overhead (rent, insurance, tools, software)
Marketing and sales costs
Taxes and fees

2. Value-Based Pricing

Price based on the outcome you deliver, not the time it takes.

Example: A bookkeeper who saves a client $15,000/year in tax savings is worth far more than $50/hour. They should charge $3,000-5,000/year.

Ask yourself: What is the result worth to the client?

3. Competitive Pricing

Research what competitors charge and position yourself strategically.

Price higher: Signal premium quality, attract better clients
Price the same: Compete on service and reputation
Price lower: Only sustainable with significantly lower costs

How to Raise Your Prices Without Losing Clients

Step 1: Give Advance Notice

30-60 days notice for existing clients shows respect.

Step 2: Explain the Value

"As I've invested in better tools and training, I'm able to deliver better results. My new pricing reflects this."

Step 3: Grandfather Some Clients

Consider keeping a few long-term, easy clients at current rates. But don't do this for difficult clients.

Step 4: Raise Rates for New Clients Immediately

You don't need to announce it. Just quote the new rate.

The Psychology of Pricing

Charm Pricing Works

$97 feels significantly less than $100 to most buyers. Use this where appropriate.

Tiered Pricing Increases Average Sale

Offer 3 options. Most buyers choose the middle. This is why our Starter/Growth/Scale packages work — the middle option anchors value.

Anchoring

Always present your premium option first. It makes other options seem more reasonable.

When You Know Your Pricing Is Wrong

Signs you're undercharging:

You're fully booked but not profitable
You attract high-maintenance, low-pay clients
You dread certain projects because the pay isn't worth it
You work more hours than planned on every project

Signs you might be overcharging:

Consistent rejection without feedback
You can't explain your value clearly
No repeat business or referrals

Action Steps

1. Calculate your true cost per hour/project this week

2. Research three competitors' pricing

3. Identify your top three results you've delivered for clients

4. Set a new price based on value, not fear

5. Test it on your next five proposals

Want help building a profitable business online? Our website and marketing packages are designed to generate leads that support premium pricing.