Top 5 Tips on Setting Your Computer Service Rates
When you first start up your new IT business, it can be difficult to judge how best to set your computer service rates.
Some computer consultants set their rates too low because they think that, by setting them low, they will beat out the competition, or they may not yet have confidence in the worth of their services.
On the other hand, some consultants set their rates way too high because they have not carried out adequate research into their market place.
Here are five tips that will help you to set your computer service rates correctly:
Work out how much you need to earn hourly to support your business and lifestyle, regardless of whether or not you follow an "hourly rate" pricing model. This should be based on the number of billable hours you have available to sell to your clients. So add up everything—taxes, healthcare contributions, pensions, savings, living expenses, business expenses, and so on to get a minimum base figure.
Understand that where you are located and selling your services has a big impact on what you can charge. It might be that you used to commute to a corporate job, but you are now consulting in your local community. If that is the case, then the rates that can be supported might not be the same as those you saw in your corporate role.
Your experience as a new consultant will affect your computer service rates. You may be highly experienced in your field, but as a new business, you will not be able to charge the same as more established consultants. For consultants just starting out, their rates, on average, are 20% below those with more experience.
Do not undervalue your services or purposefully bid lower in order to gain business. This is not a sustainable position. If you find yourself in this position, you'll face an uphill struggle to increase your rates with those clients. It is perfectly reasonable to offer a small, keenly-priced initial project by way of some kind of audit so that both parties find out if they are a fit. But any long-term projects must satisfy your revenue projections and income goals.
Don’t let your competition dictate your pricing structure. If anything at all, your pricing should be based on the value that you add, above and beyond the services that they provide. It is all about the value that you bring to the mix.
A little research around setting your computer service rates at this early stage will help to avoid some pitfalls later.
You need to establish yourself as an authority in your marketplace. A cheap service is generally never perceived in that way. You also do not want to price yourself out of the market. Finding the right balance for your local market is vital.
Have you established the computer service rates for your business? If so, please share your thoughts and experiences with us in the comments section.
And to follow-through on the startup tips introduced in this short post, download your free copy of the special report on How to Start a Computer Consulting Business: 6 Proven Ways to Build Your Initial Client Base.
Creative Commons Image Source: flickr OwenBlacker