When you're running a business by yourself, it can be really tricky to price your services properly. I realized this while speaking with a friend of mine from London who's an interior designer - and quickly realized how I could help him and others in the same situation. I've already written about the Decoy Effect, but if you want to read about it some more, here's someone else writing about it. Even if you know what the phenomenon is, it can be hard to apply it to your business.
So I made an app that helped you with it.
The app is straightforward, although it may look complicated. Before you use it though, you'll need to gather a few bits of information:
- How many different packages do you want to offer? For example, if you're a photographer, you may want to offer 4 different photoshoot packages
- How much time and materials go into each package? For example, if you're a photographer, you may use 1 roll of film for every hour of shooting, and you might offer packages in increments of 1-hour sessions
- How much do you want to charge per hour? One easy technique to calculate an appropriate hourly rate is to divide 150% of your desired annual salary by 2000 hours
- Which package do you want to sell the most of? This is your target package. For example, if you're a photographer, you may want to sell the most of your highest package so you can make the most money
If you have all this information lined up, you can input it all into the calculator and it'll give you a suggested pricing structure. It may not be the case that the package that requires the most effort from you should be priced the highest! Under the hood, there's a simple algorithm to suggest prices to maximize sales of your Target package relative to other packages. If you want to know more about the equations behind the calculator, check out this explainer.
This calculator is fully functional, but I'd love to hear from you. Is this useful? Is it easy to navigate and understand? Are there any changes you'd like to see in it? Please reach out to me if you have any feedback at all: the best way is to email:
sid+projects@harmonicdecisions.com
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