Wednesday, June 08, 2005

Pricing Realism

Every industry has its issues with setting prices and estimating. Particularly we get enquiries on pricing guidelines for contractors, graphic designers, crafts people and consulting services. While I strongly believe clients should be proactive enough to join their industry association through which they can usually get very sound advice on setting rates and benchmarking, I realize they often do not. Associations are a huge resource to us but more and more the best and most useful information is understandably reserved for members. Even sites that are actually trying to sell you something can still sometimes offer a few useful nuggets. As with everything, you should never rely on only one source.

For example:

The Plumbing-Heating-Cooling Contractors Association website has a number of articles on the topic, discussing the merits of various service pricing methods. Sites such as these also often include bulletin boards where business and owners can advise each other, an informal but often quite useful source. http://www.phccweb.org

Wire-Sculpture.com offers an article entitled “How to Price your Wire Jewelry for Wholesale or Retail Business”. They describe various scenarios and guidelines for working out a price.

Entrepreneur.com One article I sent out recently is called “Setting the Right Price: How to balance costs and profits when charging for the items you sell”. In this case the example business is a gift basket service. I find that often the type of business is less important – that the metric is what is useful, usually along service and product lines.

We also have a number of books in our collection dealing with this issue.

How to Start and Build a Law Practice by Jay G. Foonberg is a very useful source of information on setting fees, billing and getting paid.

Estimating for Contractors: How to Make Estimates that Win Jobs by Paul J. Cook is another good if dated.

A bit sideways from this topic is a book entitled: Consultant & Independent Contractor Agreements by Attorney Stephen Fishman which is a Nolo Press publication and is very current. It covers various types of contractors including construction, and including a number of issues that should be addressed in a business agreement. Nolo’s website is a great resource and also has advice on figuring how much you're worth aimed at the service enterprise.

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