One of the hardest things to do is a business owner is to gauge how much to charge for your service. How do you monetize what you bring to the market? You spent a lot of time learning this trade, now it’s time to get paid properly for your work.

How to Price a Service: 3 Ways to Charge for Your Work

–   By the hour or the day

–   A fixed cost and a markup

–   A retainer fee

1. Charge hourly or day rate

This is a very common way of pricing a service. However, it is also one of the worst ones for everyone involved.

Simply put, if a client is paying you by the hour or day, there is no incentive for you to finish your work earlier. After all, if you can do a job in 2 hours and you tell the client that it’s going to take 8, you are definitely going to take your time and use up the entire 8 hours that you are paid for. The client ends up paying more and you end up spending more time on a simple project that could have taken just 2 hours. Nobody wins.

2. Charge for costs and add a markup

In some industries and for some businesses, this makes sense. If you sell services, it isn’t the ideal way to charge for your work. Let’s see an example.

You run a restoration company and you need $1,000 of hard costs, as well as $200 for labor which you need for a project. So, you end up charging $3,000 so that you have enough room to make money every time, and you’re safe – there’s a clear $1,800 profit for you.

3. Charge a Retainer fee

If a client wants you to work with them every month but doesn’t want to bring you on as a salaried employee, they will ask for a retainer contract. This essentially means working the same number of hours every month for a fixed price. This is similar to hourly pricing but it extends on a monthly level.