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Putting a Price on Work at Home Business Products or Services

Aug 17, 2007
One of the hardest things for any new work at home business owner to identify isn't where the intended client is, or whether or not to use a free Internet hosting service - or even whether or not to hire a professional accountant to take care of the finances. Instead, the hardest thing that most work at home business owners must do is put a price on their products or services. For those who have a home based business which is a franchise from a "mother" company, this isn't such an issue as prices are usually given for each item. For those who have a service based non-quantitative work at home business on the other hand, the task is even more difficult than those who make and sell their own products!

No-one wants to work for free, but on the other hand, it's very difficult to find that perfect pricing structure - the one where your client feels they are getting a good deal, and you feel as if you are earning a decent salary for what you do. All work at home businesses need to set out their financial plans quite close to the launch of their business - earlier if they hope to acquire funding from a banking or other financial institution - and so it's something that requires a lot of serious thought before having much of an opportunity to test the market.

One strategy is to collect information on similar products or services. What do people pay for these? Talk to friends and acquaintances - see if any of them know what the current "going rate" is for the kind of product or service your work at home business will offer. This will give you some kind of up-to-date approximate cost - of course your business may not be offering exactly the same, perhaps it's a lesser service, perhaps it's a more exclusive one, but at least you have some kind of "ballpark" figure to start with.

Think about your overheads for each product or service you provide. Factor in everything from paperwork and packaging for orders to time spent in the grocery aisles or post office queues. Remember to include a small percentage on each item for wear and tear of any equipment you use in the business, and don't forget that your work at home business requires power for lighting, computers, etc. Take the base cost for each product you are selling and then add a percentage that seems reasonable to cover all of the "overheads" and then add a percentage as your profit. How does this price compare with the "ballpark" figure you acquired earlier? If it's lower then your profit margin is too low, if your figure is higher then you need to see where you can lower costs and still make a decent salary.

For service-orientated work at home businesses, one of the most important factors you need to consider is "time". How long does each manicure or facial take to do? What do you need to take into account in costing "materials" used on each procedure? What about transport and equipment? If you are offering a service out of your own home, you need to consider heating and lighting for your clients as well as any "hospitality" you offer them. Again take everything into account, but instead of adding a profit margin, you are adding your hourly rate for providing the service. As with the product based business, check how this compares with your research findings on similar services in the area and adjust your figures accordingly.

One of the greatest mistakes to make when starting a business is to offer low prices because work at home business owners don't think that people will buy from them. People will always be attracted to a good deal. If you want to offer "starter prices" for a few months until you establish a regular clientele, consider offering a discount rather than starting off with low prices. Have your brochures printed with the regular prices, and then promote a "limited period only discount" which will give you the attractive "try me" price that will help bring your first customers.

Always remember that you are a work at home business owner, not a non-profit organization! Your business is there to provide you with an income and the only way it can do that is if you price your products or services at realistic rates.
About the Author
Martin Boyd is the owner of a Work At Home Income Directory dedicated to helping work at home income seekers to maximise there income and find work from home opportunities.
http://www.theworkathomesuccessbusiness.com
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