You probably set forth on this adventure in bridal land with a passion for your craft, but not much know-how on pricing. You may have thought to yourself, “Well, I want everyone to be able to afford me, so I’ll work for next to nothing, at least to start.” Or, maybe you doubt how good you truly are, or how much a client is willing to pay for your services. Maybe you are the other extreme—you think you can charge the highest amount in town because, let’s face it, you are the BEST around!
Either way, you don’t have a method to your madness.
What is the formula for determining how much you should charge for your services?
Do Your Homework First–
Factors: Location (Boston will drive a higher price than Cincinnati, and Cincinnati will command a higher price than a country town called Smithville), local demographics, who your target market is, your length of time in business, how many competitors you have and what you offer will all factor into this decision. Write down answers to all the above.
Competition: When I coach a wedding professional, one of the first questions I ask is, “How do you stack up to your competition?” Three out of four of my clients didn’t know (prior to working with me, that is). So here’ your homework: shop your competitors. Know what they offer, how much they charge, what their retainer/deposit is and the area they serve. If you can find out about their process (exactly what they do and how they do it), even better! Make a chart and document your discoveries.
Your Time: Have you ever calculated EXACTLY how much time you spend with a bride—from the minute the lead comes in till the follow-up after the wedding? No? You are not alone, most don’t. Here’s your third assignment: Create a spreadsheet and document, to the minute, how much time you spend with a bride. Include every step—every email, every phone call, every second you spend researching, creating Pinterest boards, ordering product, actually creating/doing your service/product, delivering/traveling, any after-the-wedding activities, etc. As a florist, my company invests about 10-14 hours per client. I know of a photographer who is extremely service-oriented and spends up to 80 hours with a client (she is very hands on, and don’t forget, editing the 1000+ photos after the wedding takes a considerable amount of time!). So break out the Excel spreadsheet and type away!
Next, determine how many hours a week you can actually work. Do you have another job that takes up your time or are you completely available, 24/7? Write down how many hours a week you can truly devote to your craft and clients. Then multiply that by 52 (or how many weeks a year you feasibly work) to get an annual total.
Overhead: What are your expenses (business only. If you are home-based, your overhead will not be as large as that of a brick-and-mortar) on an annual basis? Write this number down.
Income Goals: This one is simple—how much do you want to earn in a year? This is where the “Factors” above come in to play, so revisit these and establish a reasonable dollar amount. And, you guessed it, write it down.
For simple numbers sake, let’s assume the following:
Your Time: You have 20 hours a week you can actually work; 1040 hours a year
Your Overhead: Since you are home-based, you have cost of your goods, marketing, a commercial phone line and a website that are dedicated to the business. You are still using your home’s electric, gas, internet, etc., so factor 20% of your household utilities in to this figure as well. Let’s say the total is $1,000 a month, or $12,000 on the year
Income Goals: You would like to bring home $60,000 a year
Add it Up: $12,000 + $60,000 = $72,000 total annual revenue needed
Divide it Out: $72,000 / 1040 = $69.23
I like to round up; therefore, you need to charge $70 per hour to cover your expenses and pay yourself (please note: income taxes have not been figured in to this equation! Consult a tax advisor for more information on how to estimate your federal, state and local taxes. You will need to add that number to your revenue figure, then divide by total number of hours).
Now, remember back when we were talking about your time and we figured up exactly how much time you spend with a client? Multiply that number by the “per hour” dollar figure you just calculated and VOLIA! You now have a viable, chargeable amount!
If you spend 20 hours with a client, and you need to charge $70/hour… $1400 is the total retail cost you should be charging!
Now you can plan your offerings around the right price to charge and feel good about it!
**BONUS** FREE worksheet from Profitable Weddings that will help you determine what to charge! CLICK HERE for immediate access (Scroll down to the “What are you Worth?” image and click it)