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 technology consulting business
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How To Price Your Technology Consulting
One of the most challenging aspects to starting a technology consulting business is determining how much to charge for your technology consulting.
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 technology consulting, it's critical that you first identify all of your costs and consequently mark up your technology consulting so you can factor in a profit.
The actual cost of your technology consulting 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 technology consulting, you'll want to create goals for revenue + how much profit you want your technology 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 technology consulting 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 technology consulting fits best in the marketplace.
All of these factors play an equal part in pricing your technology consulting, 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 Technology Consulting
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 technology consulting business
8. DeepBench Inc. ($1.2M/year)
Nikhil Punwaney (from Boston, MA, USA) started DeepBench Inc. over 4 years ago.
My name is Nikhil and I am one of the co-founders and the CTO of DeepBench. DeepBench helps businesses make better-informed decisions by connecting clients with expert individuals. We use technology to match client requests with the best-suited advisors quickly and cost-effectively.
We currently have a network of over 25,000 advisors, provide expert finding services to 450 clients, and have facilitated just under 2,000 consultations.
9. Agile Worx ($480K/year)
David Bishop (from Atlanta, Georgia, USA) started Agile Worx ago.
My name is David Bishop, and I started Agile Worx, an organization that provides tools, training, and consulting services to technology companies. Our main product is “Metagility” a new, patented framework that leverages agile principles to help technology companies become #1 in their market.
Although there are other “agile frameworks” on the market, “Metagility” is the only framework that has received a US patent and proven by scientific peer-reviewed research to accomplish what we say it does.
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