Start & Run an Internet Research Business. Gerhard W. Kautz
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Название: Start & Run an Internet Research Business
Автор: Gerhard W. Kautz
Издательство: Ingram
Жанр: Экономика
Серия: Start & Run Business Series
isbn: 9781770407367
isbn:
5.2 Competition
Competition can affect your pricing. If there is little or no competition, you could take a chance and mark up your rates. If there is competition, you may actually have to reduce your price in order to get contracts.
5.3 Client understanding of personnel costs
You will run across some clients who will be shocked at your price because they do not fully understand the price of labor. Others, particularly in the service industry, will mentally relate your hourly rate with their own charge-out rates. Their rates could be very high, such as lawyers, or engineering companies, so if your rates are a fraction of theirs, they will not quibble with you. You may want to mark up your rates slightly higher for these clients.
5.4 Profit
Since you are a for-profit company, you may want to add a small percentage to your calculated price or rate, for profit. For example, 10 percent or 15 percent is very reasonable.
6. Overall Pricing Approach
Having considered all of the previously mentioned pricing issues, you can now calculate an official price or charge-out rate for your services. You should work it out for an hour’s service, although sometimes clients may want you to quote to them on the basis of an eight-hour day. The best way to explain the overall pricing process is with the following example.
Example
Mr. A went through the process of establishing his price.
Overhead:
He totaled his annual house costs, which came to $34,268. Since he would use the spare bedroom in his seven-room home as an office, he calculated one seventh of the amount as his office “rental” cost. This came to $4,895. He then worked through the list of other overhead costs, using utility bills and the like to establish the costs. For some he just had to make an estimate of the annual cost. The cost of these other items came to $4,977. His total annual overhead would be (4,895 + 4,977) $9,872.
Salary expectation:
In his last job he was earning about $58,000 a year, plus company benefits. He added $12,000 for the company benefits, and so his salary expectation was $70,000 per year.
Time calculation:
Mr. A’s time calculations are in the example in Section 4. He had arrived at the maximum billable days per year of 147.
Basic price calculation:
With his total overhead of $9,872, and his salary expectation of $70,000, his basic annual company income would have to be $79,872. This equated to (79,872 ÷ 147) $543.35 per eight-hour day, or about $67.92 per hour.
Markup:
Mr. A did not think his specialty warranted any extra markup. He did not know of any competition in his area, so he decided not to add or subtract anything for it in the beginning. Client understanding markup would depend on the situations as he encountered them. However, he did decide on a small 10 percent profit markup, or about $6.79.
Final price:
When he added the 10 percent profit to the base price he had calculated, it came out to (6.79 + 67.92) $74.71 per hour. He decided that his price, or charge-out rate would be $75 per hour.
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