How Your Service Pricing Needs to Change When You Build a Team

What we often see in the service-based industry is after 6-figures have been reached (sometimes multiple 6-figures), service providers will try to replace their current offer with something completely brand new. We know this is super tempting, especially when you’ve reached the point where you’ve started to tap out of what you can personally do within your business.

However, pricing is one of your greatest opportunities for expansion, especially when you can work with fewer people and make more money. While many may acknowledge price shifts over time, they aren’t seeing premium pricing as an opportunity to grow their team. 

Keep reading as we dive into how to calculate premium pricing for your service, grow your team ethically, and why you may be pricing inappropriately to begin with.

Growing Your Team Ethically

The most unethical trend to avoid is hiring before you can even afford to. We know that paying high salaries is done with good intentions, but if your business isn’t making enough money to justify it, then you’re only causing harm to you and your team. Before you even think about scaling, you need to calculate the appropriate pricing.

Premium Pricing That Budgets for Teams

We’re fans of looking at the cold hard facts (numbers) when talking about pricing, but many people charge what they think is right. Pricing needs to incorporate your operational costs - your salary, taxes, benefits, and all other overhead. Don’t forget rent and insurance! We developed a calculator for our Incubator clients that takes all costs into account when adjusting your pricing.

FACTORING IN YOUR TIME AND COST

Most service-based businesses understand their price needs to cover the time they are working with their client. But what about all the other costs to run your business and keep the lights on. Our rule of thumb is that you should be charging 3 to 4x your costs on any given project (this is called a multiplier). When clients are your income, they don’t just pay for their project but also for you to run your company. Know that you have every right to include your costs in their pricing.

If you price without a multiplier, you’re only getting paid for the time you’re actively working on a client’s project. You’ll end up taking on more undesirable clients, which costs more and leads to team burnout. Start working with the caliber of clients that will pay the premium price point, even before you have staff, so when you are ready to delegate more, your systems are in place.

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Why You May be Pricing Inappropriately to Begin With

We see time and time again (especially in this economic client) service-providers pricing based on what they think their ideal client can pay.However good your intentions are to make your services accessible to more clients, that may just be the very thing that’s letting you and your business down. Countless entrepreneurs (this could be you!) set pricing so low that they’re struggling to even pay themselves, let alone bring in a team or cover the expenses of a growing company.

For us, our pricing strategy hasn’t changed much over the past seven years, however the required minimum, because we have a team, has changed radically. Working premium from the get-go does more than just line the pockets of your business; it builds self-belief and the skills required for long-term success.

A Built-for-You Team Calculator

Inside the Incubator, we’ve already built a team calculator that allows you to fully take into account how to price today as well as how a team affects your pricing and goals inside your business. You’ll be armed with exactly what your costs are on a monthly and annual basis to build out a team. You’ll know your team hourly costs and billable rate. This allows you to price appropriately for overages (i.e. scope creep) or any added services.

Join a community of like minded service providers growing their leadership and delegation skills. We can’t wait to see you build sustainable systems that work for a team, get paid appropriately and ethically run a team. Apply here for the Incubator, then DM us on Instagram @bossproject so we can get chatting ASAP.