Pricing your work: a starting framework for new businesses

New business owners almost always underprice, usually out of nerves, and then find it hard to raise prices later. It is far easier to start from a defensible number. Here is a framework you can work through in an evening.

1. Know your floor

Add up your true monthly costs: materials, fuel, insurance, software, equipment wearing out, and the salary you actually need to live. Divide by the hours you can realistically bill each month, remembering that quoting, travel, admin and marketing are not billable. For most solo businesses, barely half the working week is billable. The result is your floor: the hourly figure below which you are paying to work.

2. Price the job, not the hour

Wherever you can, quote a fixed price for a defined outcome rather than an hourly rate. Customers prefer certainty, and fixed pricing rewards you for being fast and good instead of punishing you for it. Use your floor privately to sanity check every fixed quote.

3. Anchor against the market, not the cheapest

Gather three to five competitor prices for comparable work. Ignore the cheapest; there is always someone underpricing their way out of business. Position yourself in the middle or upper middle, and let your reviews, photographs and responsiveness justify it. Competing on price alone is a race you win by losing.

4. Present prices with confidence

• Offer two or three options where it suits the work, such as a standard and a premium version. Many customers choose the middle option, and options move the conversation from “how much” to “which one”.
• Put quotes in writing, itemised enough to show value but not so itemised that every line invites negotiation.
• Take deposits for booked work. A deposit filters out no shows and funds your materials.

5. Review every quarter

When you are booked solid for weeks ahead, that is not just success, it is a price signal. Raise prices for new customers first, modestly and without apology. A 10 percent increase that loses you one customer in ten leaves you earning the same for less work.

Cost figures and thresholds change; check current tax and VAT rules on gov.uk when setting prices.