COURSE ONE: BUSINESS
Download the workbook and then watch the lesson videos below.
LESSON 3: PRICING
LESSON 3: PRICING
Now that you have a solid business model and services that you offer in your business, let’s talk about how to price each one for profit.
It’s important that you know how to price for profit so that you can ensure that you are running a sustainable and scalable business.
For this lesson, I am going to teach you my signature Pricing for Profit Formula so that you can price these services, along with any other services you create in the future, for profit.
The first thing you want to do is set your hourly rate. I want you to decide how much money you want to make and take home per hour.
If you’re not sure, I recommend either using the hourly rate you had at your last or current job, or by totaling your current/ideal living expenses.
We are going to call this number your Take Home Hourly Rate.
Now, before we get to the next part of the formula, we need to work through a quick mindset shift.
Before starting a business, most people were employees. Because of that, a lot of people come into their business wanting to price their services like an employee. I want to help you shift your mindset from thinking like an employee to thinking like an entrepreneur.
As an employee, your only concern is thinking about how much money you need to make for yourself, as an entrepreneur, you need to think about how much money you need to make for the business.
As an entrepreneur, your responsibilities now include:
-Paying for taxes
-Covering your health insurance
-Covering business expenses
-Covering business investments
As you can see, your responsibilities have grown and you are now responsible for pricing for a business. Even if you don’t have all of these things yet, you will very soon and therefore need to consider how to price yourself to both profit and scale.
My Pricing for Profit Formula is going to help you do exactly that. Now that you’ve had that mindset shift, let’s continue with the formula.
In order to ensure that you are able to actually take home your Take Home Hourly Rate, we are going to take that number and double it to create your business hourly rate.
For example, if you decided that you want your Take Home Hourly rate to be $20, you are going to multiply that by 2 and get your Business Hourly Rate of $40/hour. By doing this you ensure that you are making enough money for your business and that you get to take home your hourly rate.
Now let’s take a look at the formula:
Business Hourly Rate x Time + Costs= Price
Here is an example of using this formula:
$40 x 10 hours + $20=$420
Price of service: $420
This is the exact formula you are going to use whenever you need to price something in your business.
Now, I want you to use this formula to calculate how much you are going to price the services you created in your business model.
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