One of the most challenging aspects of starting a business,
particularly if you are providing a service, is determining what to charge and
how to bid. It might be best to come at
pricing from two different directions.
First, if possible, do some research and see what other companies are
charging for similar services. Second,
put together a budget including expected expenses and projected revenue, and
figure out what you need to charge to cover your expenses. Budgeting can be especially challenging when you
are starting out, because you will not know all of your expenses or what to
expect for revenues, but do your best to come to a reasonable budget.
Study the numbers you have derived from each of these
processes, and determine what you will ultimately charge for your
services. If your business is pricing a
product, the process is similar, but it may be easier to find out what the
market will support and what others are charging for similar products.
Often a business providing a service must submit a proposal
or bid to an organization in order to gain them as a customer. Take care to put together proposals that
answer each specific requirement in the request, and be sure that it is
professional. You may find it helpful to
read books or take a class on how to write a proposal. Note that each
organization/project will want information in different ways. Some will ask for an hourly rate, some will
want a project cost. Some may not tell
you what they want. Expenses will be
handled differently. For example, if
travel is required, the company may pay for that separately, or you may have to
include that in your costing strategy.
Competition can be tough depending on your industry and
potential customers, especially when you are just starting out and trying to
make a name for your business. Do your
homework, be diligent, and don’t get discouraged.
___Kim Luedke is Co-owner of ProfessionalEdge Associates, offering a wide range of marketing and support services to businesses that want to increase their success, but aren't in a position to add to their staff.
