Method of setting a fair price for a service

ajlancer Level X³

July 12, 2016, 5:49 am

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I know most of the new freelancers do not know how to establish a price for a service, and they set the price that they think is best. But, most of the time, it will not be a fair price, or an appropriate one for that particular service. I am going to share a method which I used for my service pricing.

For example:
> Firstly make a project plan, what process you need to use
> And calculate for whole project date
> How much time need to spend each day for a project
> Product manufacturing cost

Explanation: If you guess a project may need 7 days to be completed and if you need to spend 3 hours a day, it means that 21 hours are needed to complete the whole project.
If you feel that an hourly cost of $5 may be manageable for the particular project, it manes that for each day, you are going to charge $15.

Simple math:
Each day 3 hours x $5 per hour =$15 for per day charge
Project needs to completed in 7 days
7 days x $15 = $105 will be charged for full project

What about you and how do you set a fair price?

Regards by AJlancer

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EliteWriter

That is quite a good idea, and it can offer a good foundation for pricing various services. I find it a good way of calculating a fair price is to consider how much work you can manage to complete in one hour. Based on that I can decide on my hourly rate, and then apply it accordingly. Since I offer writing services I also need to take into account the type of writing. A short description will take much less time and research than a lengthy article. Some writers apply different rates for content writing, article writing, editing, rewriting, proofreading and translation services.

10 years ago

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Lynne

Thanks Ajlancer, this will come in handy for me for if I decide to sell some services here. How to price my services was something I was stuggling with.

I guess it would also be a good idea to see what other people are charging for similar services. Different services will certainly also have different values, so your method could be used as a way to get an approximate price and then checking what the market related prices are for different services can be used to tweak the price maybe?

10 years ago

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augusta

To set a fair price for customers I think it will depend solely on what others are charging then I will take an average of that to ascertain the middle ground price then I will then fix my price.

it pertinent to always offer a good service to be able to charge more.

9 years ago

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TommyCarey

Your equation is a simple way to look at it. You'll also have to factor in your experience since not everyone is created equal. If you have a lot of experience and you suck at what you do, you can't really offer a high priced service. I myself don't sell on SeoClerks or other marketplaces because I can't compete with the $1 to $100 services that are offering the moon, sun and stars in their packages lol. I do offer an outstanding service and I've never had a client be pissed off when we finish a month of work. I do charge a lot compared to here, I charge a minimum of $595 per month for my services because I can. I've been doing SEO and Online Marketing for so long that I know exactly how to rank a website in the search engines over time and I can give almost an exact estimate on how long it will take.

So a more advanced way to calculate how much your service should cost, you should do this...

Experience Rate x Hours per day x Days to Complete = Price

For me it would be $30 x 8 x XXX = A lot of money

It's basically the same as what you mentioned, but some people won't be able to profit due to the fact we have to battle people in third world countries that can out price us

It doesn't matter if I can offer top rankings in 3 months for difficult keywords if someone else says they can do the same thing for $100 a month. The sad thing is that people will buy into a lot of the full service packages and be sad when it doesn't pan out. I've bought plenty of "guaranteed rankings" packages to only move a few spots from where I originally was.

I'm looking for someone to pay me $60,000 a year for my services, but it's difficult to do

10 years ago

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ajlancer

Hi Razzy thanks for sharing your excellent knowledge. I agree and understand what you tried to say. Actually most of the new freelancer does not know how to set the price. Sometimes you will see same service sell by other user but price is too low. And most of them from third world country. I do not want to criticize them. But, they think only, if they earn something or some pocket money, it would be enough. They do not consider what is his value and what he needs to do of his work? You will see It is difficult to set fair price on marketplace, when you will sell service for $100 but other your competitors sell same service for $40. Buyer will not see quality first, he may consider service by price. So, I think everybody should use a method for setting fair price.

Regards by Ajlancer

10 years ago

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hitmeasap

Hello ajlancer,
I have made a topic on this here: How Do You Set Your Prices? ( feel free to add your post in there

With that being said, I do think you have a pretty good system to set your prices.. but there's one thing I wonder about.

If you feel that an hourly cost of $5 may be manageable for the particular project, it manes that for each day, you are going to charge $15.

How would one know that $5 is a proper hourly cost?

$5 doesn't even cover the cost of a meal at McDonald's in Sweden for instance. And if you're working in a grocery store you have about $13,50 per hour (in Sweden) so you'll have to compare different costs, such as living expenses etc. to finally come up with that $5 to begin with. After that, I do agree with you calculation. I think it's a good way to set your prices.

I usually set my prices based on my competitors services and their quality. If I truly believe that I'll provide better quality than my competitors, then I'll charge more. I also charge a little extra due to my support I always provide my customers with.

Best Regards,
hitmeasap

10 years ago

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ajlancer

Hi hitmeasap thanks for replay. I just made an example, if you think that hourly coast you can manage by $5 by calculation of productive coast. Yes! I agree with you $5 not much for a good meal, not only your country but also our country is not possible. In addition, you know some of seller working for $.05 per hours even, who sell social media services as example. Price settings by compare with competitor also good way to set fair price but this method always not working for me. Because, I see some of competitor sell same service but price too low and I cannot. I do not know how they manage? But, I know what I need to do and I always consider according to my method what I said in above.
Again thanks for leave your valuable opinion.

Regards by Ajlancer

10 years ago

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Barida

Another point of note anyway is that in setting prices of goods and services in a certain sector, the firm doing so should be sensitive to the price that the other competitors in the business are selling so as not to set a price that might end up driving the targeted customers away and into the hands of the other rivals. So, I think even after using such an awesome method to set price, there is need to compare it with what others are selling and make adjustments where necessary.

9 years ago

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Corzhens

Thanks for the formula that you shared for getting an estimated cost of a service. That is a good computation that you showed us. However we have to be aware that clients in the online business are not the same as clients in the offline business because prices in e-commerce tend to be lower than the traditional offline business. My point is that potential clients will always be asking for a discount no matter how you explain your computation.

8 years ago

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