How to Determine The Price For Your Business/Service:
Our price calculator is designed to be simple and easy to use. It covers everything you need to price your consulting business
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How To Price Your Consulting Services
One of the most challenging aspects to starting a consulting business is determining how much to charge for your consulting services.
When businesses under-price their product, this can be extremely detrimental to their bottom line and reputation.
Often times, businesses under-price their products to drive demand and volume, but that last thing you want is for customers to view your product/service as "cheap." Additionally, this can have a big impact on the type of customer you attract, which can be difficult to recover from.
On the other hand, when businesses over-price, this tends to be just as damaging to the business.
When customers buy, it's likely that they will explore the internet and look at other competitors to ensure they're getting the best value + deal. This is why it's so important that you research your competition and understand where you land in the marketplace.
Here are some factors to consider when pricing your product:
Understand your customer
It's important that out of the gates, you identify the type of customer you want to attract and how much they're willing to pay for your service. One great way to do this is by surveying your customers. Here are some important items you'll want to takeaway:
- Customer demographic: Age, gender, location, etc.
- Buying habits of your customer: What they buy + when they buy
- Level of price sensitivity with your customer
All of these segments will help you identify the type of customer you're attracting and how to price your product accordingly.
Understand your costs
When pricing your consulting services, it's critical that you first identify all of your costs and consequently mark up your consulting services so you can factor in a profit.
The actual cost of your consulting services may include things like:
- The actual cost to make the product (ie. raw materials, supplies, manufacturer).
- Shipping + overhead fees
- Operating costs to run your business
You may want to consider creating a spreadsheet with every single expense involved in operating/owning your business. This will give you an idea as to what you need to generate in order to at the very least, break-even and will help you price your products to factor in a profit.
Create revenue goals
When determining the price of your consulting services, you'll want to create goals for revenue + how much profit you want your consulting business to make.
This process is simpler than you may think:
- Think about your breakeven cost (by completing the above step).
- Create a revenue goal based on your break-even cost
- Evaluate the # of items you plan to sell in a given period (make sure this is a realistic number)
- Divide your revenue goal by the number of items you plan to sell
This figure will help determine your estimated price per product in order to meet your revenue goals.
Evaluate your competition
The last piece in determining how to price your consulting services is by simply looking at your competition.
The best way to do this is by finding like-minded businesses that offer product(s) with similar perceived value. Then, you can compare prices of the different businesses and determine where your consulting services fits best in the marketplace.
All of these factors play an equal part in pricing your consulting services, so it's important you evaluate each one individually to come up with an accurate price that will help optimize your business from the start.
More Tips On Pricing Your Consulting Services
Lauren Costanza, founder of Bluminary provides us with a detailed spreadsheet of all of her costs associated with running her business:
I knew this would be a self-funded adventure, and I set aside $3,000. During the first three months, I had a detailed spreadsheet where I tracked where the money was going and what was going toward products versus researching and developing new products.
The spreadsheets involved columns and rows of numbers to craft a budget and gain an understanding of how much would need to be invested at each stage of the process - from gathering supplies to building a website, and shipping materials.
Thanks for reading. We wish you success in your business endeavors.
Examples of a successful consulting business
8. HelloFuture ($3.52M/year)
Kalaboukis (from San Jose, CA, USA) started HelloFuture over 11 years ago.
My name is Kalaboukis, I am a futurist and innovator. Over my career, I’ve worked with both major corporations and startups to futurize their enterprise, and envision, create, build and ship great, profitable new products.
I’ve been in business for around 10 years, and have built a practice that works with both major corporations and startups in the technology, financial services, and retail space, with revenues around $293k per month. I’m named inventor on 122 patents and cited on 1181 patents in the internet, social networking, and fintech space, plus I’ve authored several books on innovation and the future and blogs and podcast at thinkfuture.com
9. Consulting Success ($2.4M/year)
Michael Zipursky (from Vancouver, British Columbia, Canada) started Consulting Success almost 13 years ago.
My name is Michael Zipursky, and I’m the founder & CEO of Consulting Success®. We help consultants optimize their consulting business. That means helping them improve their service offerings, pricing, marketing, messaging, lead generation, and more.
- Clarity Coaching Program: our coaching program for consultants who want a personal and customized strategic plan to grow their consulting business — and a community of like-minded consulting business owners. Consulting Success® is a 7-figure business with high-profit margins — one that allows us to travel and work with clients around the world.
10. Xena Intelligence ($300K/year)
Akhil Suresh Nair (from Boston, MA, USA) started Xena Intelligence almost 2 years ago.
Hey guys! I am Akhil Nair, the co-founder of Parzenn Partners. We are a management consulting firm focused on the small and mid-sized businesses.
Ever since we launched this product a month ago, we have had over 50 businesses take the free assessment test and have 4 paying clients who have taken the paid in-depth analysis test & a couple of them hired have hired us as consultants to resolve some of their immediate red-flags. We have made $23,000 so far on this product over the past month.
11. Liz Illg ($0/year)
Liz Illg (from Phoenix, AZ, USA) started Liz Illg about 3 years ago.
Early on in my entrepreneurship, I learned that I needed help if I wanted to be a brand visionary. I couldn't do all of the daily duties while still being the dreamer and strategist for my business so I became the systems and documentation expert.
Since I was a little girl, I always had big ideas and when I became an entrepreneur, I was able to turn my ideas into profitable businesses. I graduated with a Master’s Degree in Educational Leadership and a Bachelor’s Degree in Business. My studies did prepare me for much of the work I would be doing in my consulting career but much of my business experience came from boots on the groundwork while growing my company.
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