As an entrepreneur, how do you set your price? Is your rate too low? Then you are working for too low an income. On the contrary, is your rate too high? Then you again run the risk of losing customers. So how do you set your price and make sure your finances are well organised? In this article, we will explain all about pricing and finance.
How to determine the right price?
This is down to several factors. For instance, you need to be keen on making sure you don't just cover costs, but also consider your value. And your competition: what is it doing? But also your position in the market, what about that? Consider, for example:
- Costing: Here you calculate how much money you need to charge to cover your costs as well as make a profit.
- Market research: Do research on what your competitors charge. How can you make yourself unique in that?
- Value for your customer: Dare to charge a price that matches the quality and expertise of your product or service.
- Testing and customisation: Start with a price and evaluate whether customers are willing to pay what you charge. You can only learn from that.
Which pricing strategy suits you?
- Hourly rate: This is useful for freelancers, but at the same time it can limit your income.
- Project price: Perfect for an assignment where the picture is already clear.
- Subscription model: This is great for recurring revenue for longer collaborations.
- Performance-based pricing: This is a payment based on the performance delivered.
Organising money matters tightly
Besides setting your price, managing your finances is also very important. So make sure:
- you have a clear financial plan: Map out your monthly expenses and expected income.
- have good records: Use a good accounting system , such as MoneyMonk, to keep the overview.
- Sufficient reservation for taxes: Keep part of your turnover separate for VAT and income tax purposes.
Don't get underpaid
Novices often make the mistake of charging less. They are afraid of losing customers if they charge more. But be aware that a 'fair price' ensures that your business stays healthy. Your customers will get the quality they expect. Know your worth and dare to stand for it. Make sure your pricing and money matters are in order!
