How to price services for your business isn’t just about beating your competitorsโ rates. Itโs about understanding all the factors that affect your pricing, like your costs, what your customers are willing to pay and what others in the market are charging. The goal isnโt just to get the job but to price your services in a way that actually makes a profit.
Understand Your Costs
To price your services for profit, you need a clear understanding of your costs. These include both direct costs tied to specific jobs and indirect costs (also known as overhead) like insurance, maintenance, and transportation.
Letโs start with indirect costs, since they apply across all jobs and help determine how much to add to each service price. Begin by listing your regular overhead expenses, such as:
- Rent or lease: For office space, storage, or vehicles
- Utilities: Electricity, gas, water, internet, and phone
- Insurance: Liability, property, and workersโ compensation
- Office supplies: Paper, pens, and other everyday essentials
- Equipment maintenance: Repairs for tools, vehicles, and other gear
- Marketing and advertising: Expenses to promote your business
- Training and education: Costs for employee development and training
- Technology: Software, hardware, and IT support
- Travel and transportation: Getting to and from client sites or events
If you can break these expenses into monthly amounts, itโll be easier to include them in your pricing strategy.
Next, calculate the direct costs for each job or service. For example, if you offer residential pressure washing, your pricing might vary depending on whether youโre washing the siding of a house or a driveway.
Hereโs what direct costs for pressure washing a house might include:
- Cleaning agents
- Specialty equipment rental
- Labor (hourly rate or per square foot)
- Additional charges, such as for multi-story homes
- Water for the job (if the customer is unable to supply)
Now that youโve outlined both overhead and project-specific costs, compare them to determine how many jobs you need to complete just to break even. For example, if your monthly overhead costs are $3,000 and you complete an average of 15 jobs per month, you will need to add an average of $200 in overhead costs per job.
From there, you can add your desired profit margin. For example, if your overhead and project costs total $400 and you want a 20% profit, your pricing might look like this:
- $200 (overhead) + $200 (project costs) = $400 (subtotal)
- $400 x 20% = $80 (profit)
- $400 + $80 = $480 final project price
Customer and Market Pricing Expectations
Now that you understand your own costs, itโs time to look at what your customers expect to pay and what your competitors are charging. This helps ensure your prices are competitive while still profitable.
Start With Industry Pricing Resources
Websites like HomeGuide and HomeAdvisor are great tools for researching market rates. These platforms are often where potential customers go first to see if a service fits their budget, making them a smart place to begin your pricing research.
- HomeGuide offers pricing based on specific services and locations. For example, in St. Paul, Minnesota, pressure washing typically costs $170โ$310 per job or $0.35โ$0.77 per square foot. If you offer pressure washing in that area, thatโs the general pricing range youโll want to stay within.
- HomeAdvisor provides national averages, such as $50โ$100 per hour or $0.10โ$0.50 per square foot for pressure washing, depending on the job size and complexity.
Check Out Competitor Websites
Another useful strategy is visiting websites of other local service providers. Some may list their prices online, while others may require customers to call for quotes. Either way, this gives you a sense of how your competitors position themselves and what customers in your area are used to seeing.
Final Thoughts: Price With Purpose
Learning how to price services isnโt about racing to the bottom, itโs about building a sustainable, profitable business. By understanding your costs, researching your market, and setting clear profit goals, you can create a pricing structure that works for both you and your customers.
As your business grows, revisit your pricing regularly. Costs change, market expectations shift, and your experience adds value; your pricebook should reflect that.
Need help staying organized while managing projects and pricing? Tools like Project 2 Payment make it easier to manage your pricebook, invoice clients, and stay on top of your financial goals, all in one place.
Confident Pricing Starts with the Right Tools
Take control of your costs, quotes, and paymentsโall in one platform.