Working out what your service is worth starts with your costs: materials, wages, overheads and ongoing business expenses. Then you add a margin, and that’s where value comes in. Two businesses with similar costs can charge very different prices based on quality, experience and how well they explain the value they deliver. Clear positioning is what justifies your price.

Step 1: Know your cost to deliver

List everything it takes to deliver the service:

• Materials and supplies

• Wages, including your own time and your team’s

• Overheads like rent, insurance, software and vehicles

• Ongoing costs such as marketing, training and admin

Divide overheads across the work you expect to deliver in a year to get a cost per job or per hour.

Step 2: Set your margin

Your margin is what’s left after costs. It funds growth, protects you from surprises and rewards the risk you take. Check industry benchmarks to see typical margins, then decide where you want to sit.

Step 3: Price for value, not just cost

Cost tells you the minimum. Value tells you what the client is willing to pay. Ask:

• What result does the client get?

• What would it cost them if the problem wasn’t solved?

• What makes your service better: speed, expertise, reliability, experience?

Step 4: Position and explain it

Clients compare what they can see. If your proposals, website and conversations clearly show your expertise, process and results, a higher price makes sense to them. If they can’t see the difference, they’ll compare on price alone.

A typical Melbourne scenario

Two Melbourne photographers charge for the same half-day shoot. One charges $600, the other $1,500. The second has similar costs but shows a clear process, a portfolio for corporate clients and a guaranteed 48-hour turnaround. Corporate clients happily pay more because the value, and the reduced risk, are obvious.

Key takeaways

• Start with a full picture of your costs, including your own time.

• Add a margin that funds growth and protects you.

• Price for the value clients receive, not just your costs.

• Clear positioning and marketing justify a higher price.

General information only.

Read why founders underprice and how to fix it and what is pricing power?, or talk to our small business advisors.