Use cost to set your floor, the customer's value to set your ceiling, and the going range to check you're not an outlier. Then pick a price inside the overlap and test it on your next three quotes. No single method gives you the answer. Pricing feels like guessing because people try one method, get a number, and wonder if it's right.
Below are the three methods, two full examples with arithmetic (a house cleaner and a bookkeeper), and a way to test the result without risking the business. I haven't quoted any market rates, because the rate that matters is what buyers near you actually pay, and you can find that in an afternoon.
Method one: start from what the job costs you
Cost-plus is the floor. Add up everything the job takes from you: your time at the wage you need, supplies, travel, and a share of the costs that don't show up per job (insurance, software, taxes, the slow weeks). Then add a margin on top.
The part people skip is the share of invisible costs. A rough way to cover it: add 20 to 30 percent to your direct costs. If you only bill 60 percent of the hours you work, the other 40 percent of your time has to be paid for by the jobs you do bill. Price below this line and you're paying to work.
Method two: what the job is worth to the customer
Value-based pricing sets the ceiling. Ask what the customer would otherwise do about this problem, and what that costs them in money, time or risk. If they'd spend a Saturday doing it themselves, the price of that Saturday is the reference point. If a mistake costs them a tax penalty, the price of the penalty counts.
You can't charge the whole value, because the customer needs to come out ahead. But it tells you how far above cost you could go. A job that's worth $480 to the customer and costs you $358 leaves a lot of room, and a job that's worth $150 and costs $139 doesn't.
Method three: the range other people charge
Don't borrow rates from an article, including this one. Make your own list. Find three businesses that sell the same job to the same kind of customer near you and write down what each charges. Use published price pages first. If there are none, ask for a quote the way a customer would, or ask your own customers what they paid before they found you. You're looking for a range, say low, middle and high, and for what separates the high one from the low one: speed, guarantees, who does the work, how it's packaged.
Two worked examples
Rosa, a solo house cleaner, pricing a standard clean of a two-bedroom apartment.
Cost: 3.5 hours of paid time (3 cleaning, half an hour of travel and setup) at the $28 an hour she needs is $98. Supplies are $6 and mileage $7, so direct costs are $111. Adding 25 percent for insurance, slow weeks and self-employment tax gives $138.75, call it $139. That's her floor.
Value: the customer's alternative is a Saturday morning. Four hours at, say, $35 an hour of their own time is $140, plus the supplies they'd have to buy. The job is worth at least $150 to them, and more if they hate cleaning. Her ceiling is around $170.
Market: Rosa finds three local cleaners with published prices for a two-bedroom: $120, $145 and $165. The lowest has no insurance and the highest guarantees a re-clean within 24 hours.
Nadira, a bookkeeper, pricing monthly bookkeeping for a small business.
Cost: five hours a month at $55 is $275. With 30 percent for software, insurance and continuing education, $357.50. Her floor is about $358.
Value: the owner's alternative is doing it himself. Eight hours a month at $60 of his own time is $480, plus the risk of a missed filing. Her ceiling is around $480.
Market: three published monthly packages near her: $300, $400 and $450.
| Rosa (per clean) | Nadira (per month) | |
|---|---|---|
| Floor (cost-plus) | $139 | $358 |
| Ceiling (value) | about $170 | about $480 |
| Local range | $120 to $165 | $300 to $450 |
| Price she picks | $155 | $425 |
Rosa lands at $155. That's $16 above her floor, inside the local range near the top, and under her ceiling. She offers a 24-hour re-clean guarantee to justify being above the middle. Nadira picks $425, which is above two of the three competitors, and packages it as a fixed monthly fee with a quarterly review call. If your result falls below your own floor, the answer isn't to lower your wage. It's to cut the hours, change what's included, or pick a different customer.
Test it with three quotes
A price is a guess until strangers react to it. Quote the next three serious prospects at your number and watch.
- Three say yes without a question. You're probably low. Raise the next three by 10 to 15 percent.
- One says yes, two ask about price. Hold. You're in a normal place.
- Three say no and mention cost. Check that you're talking to the right buyer before you cut the price. If you are, look at the scope, not the number.
That's a rule of thumb, not a law, and three quotes is a small sample. It's still better than the opinion of a friend who doesn't buy what you sell. How you say the number out loud counts too; say the number and stop talking covers the habit, and how to deal with price objections covers what to say when someone pushes.
When to raise the price
Raise it when your calendar is full for six weeks, when new customers say yes without negotiating, or when your own costs go up. Give existing customers a month or two of notice and one plain sentence: "Starting March 1 my standard clean is $165. I wanted you to hear it from me first." Most won't leave over a modest increase. For consultants, how much to charge for consulting builds the same idea from a target income, and hourly rate vs flat fee helps you choose the shape of the price. If you want to know how many customers at your price replace a salary, that piece does the division, and customer acquisition cost tells you what a customer costs to win.
A well-set price still needs people to ask for it. Rocketship finds the buyers, emails them from your own Gmail, follows up, and books the meeting on its own. Plans that get you customers start at $24.99 a month (Launch), and every monthly plan starts with a 7-day free trial, card required.