Pricing: Services & Products Class Group Activity.

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Presentation transcript:

Pricing: Services & Products Class Group Activity

First Steps: ID “The Thing” identify a passion, talent and/or need for service/product define boundaries: community, consumers research competition: nature, cost, quantity and quality of services/products; achievement stats build a new model that innovates based on distinguishing characteristics branding

Next Steps: Prioritizing timetable: realistically assess what's needed now vs. what can wait subdivide primary, secondary, tertiary markets, etc.

Service Pricing: Billable Hours Formula (determining hourly rate) 1) determine annual salary ("take home" pay) 2) calculate fixed costs ("overhead") - rent, utilities, phone, internet, etc. 3) determine profit goal, expressed as percentage (Profits are for: bills, salary, reinvestment)

Billable Hours Formula Desired annual salary + Annual fixed costs (overhead) + Profit goal, expressed as a percentage ÷ Your number of annual billable hours = Your Hourly Rate

Your Price vs. Market Rate compare this rate with Market Rate for your market, then justify difference in cost; or, redo Billable Hours Pricing accounting for the Market Rate determine flexible pricing options to help reach hourly rate goal

Product Pricing research range of competitive rates as compared with standard of quality research costs from supplier determine markup percentage above cost and calculate price

Next Steps working budget cash flow projection profit/loss forecast

Share Your Findings Sum up: "What I've learned and how I'll use it"