How to price your work without underselling yourself

Pricing is where many small businesses quietly fail. They're busy, customers are happy, and yet there's never enough money left at the end of the month.

Start with your real costs

Add up everything it takes to run your business for a year: tools, software, insurance, rent, accounting, marketing and your own pay. Many owners forget to include their own salary.

Count your real hours

You won't bill 40 hours a week. Some of your time goes to admin, marketing, travel and learning. Many service businesses bill only half to two-thirds of their working hours.

Divide your yearly costs, including your pay, by your billable hours. That's your minimum hourly rate.

Then look at value

Your minimum covers costs. Your price should also reflect the value you create. If your work saves a client thousands of dollars or hours of stress, that's worth more than the time it takes you.

Ways to raise prices gracefully

• Raise rates for new clients first
• Give existing clients notice and explain what's improved
• Offer packages instead of hourly rates, so clients focus on results
• Stop discounting by default

A sign you're too cheap

If almost everyone says yes immediately, you're probably charging too little. Some pushback is healthy.

Your price isn't just what you earn. It's a signal of the quality customers can expect.