Many small business owners set their prices with a basic formula. They look at what their closest competitors charge, or they work out how many hours a job will take and add a small profit margin on top.
This approach usually leaves money on the table. It often forces you to justify your labor costs to your clients instead of getting paid for the real value you deliver.
To get out of this trap, stop pricing your hours. Price the specific outcome your customer receives. When your price is tied to the relief of a painful problem, the exact number usually becomes a smaller detail to the buyer.
The shift to outcome-based pricing
When you price by the hour, you often create an unintended conflict with your customer. The faster and better you are at your job, the less money you make.
Outcome-based pricing changes the focus. It moves the conversation from how long a job will take to what the result is worth to the person buying it.
To set an outcome-based price, look at what the problem costs your customer if they do nothing. How much money or time do they lose while it stays unsolved? Your price should look like a sensible choice compared to the ongoing cost of their frustration.
An example of small business offer pricing
Look at how pricing changes for a local house cleaning company.
The standard approach is to charge an hourly rate, such as $45 an hour, to clean a home. The homeowner has to watch the clock, worry about how many hours they are buying, and wonder whether the cleaner is working fast enough.
A smarter cleaning company packages its service into a specific outcome called the "Deep Clean and Maintain" package:
- What is included: A six-hour first deep clean of all baseboards, appliances, and windows, followed by three upkeep cleans every two weeks.
- The price: $480 flat fee.
- Who it is for: Busy homeowners getting their house ready for family guests who want it looking its best without tracking a cleaner's hours.
The customer is no longer paying for a number of hours. They are paying for a clear result for a specific event. The price is easy to understand because it matches the size of the job.
Keep your pricing transparent
One of the easiest ways to build trust with local customers is to show your price upfront next to what is included. When you hide your prices behind consultation calls or quote forms, you often add friction to the sale.
Clear, flat-rate pricing shows that you know your service inside and out. It reassures customers that there will be no surprise fees, which makes it much easier for them to choose you over a competitor.
What to read next
- Start with the group's main guide, Why customers compare on price.
- See how to turn this pricing into long-term customers in Turn one-time customers into regulars.
- For monthly plans, read Home service yearly plans.
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