Knowing the value of the product or service you offer as a sole proprietor or self-employed business owner (that is, as a SOHO - small office/home office) is important. As large companies shed jobs during the latest downturn, many people discovered that working for themselves was just about the only option available, but figuring out how and what to charge for their services as an individual can leave even the most talented people scratching their heads.
Most self-employed service providers charge in one of the following ways:
By the hour: You establish an hourly rate, keep track of your time, and bill clients for hours spent on their behalf. This is the standard pricing approach for service businesses handling small-project jobs.
By the project: You and your client agree in advance on a fixed price for a defined amount of work. This is the standard pricing approach for service businesses handling large-project jobs.
A combined approach: A building contractor, for example, may bid on a set of plans and establish a fee for the project. But he may also stipulate that additional client-requested work over and above that covered by the estimate is to be paid at an established hourly rate.
Other businesses follow other billing approaches. For example, authors often receive a royalty, or a percentage of the cover price, for each book sold. A photographer might sell rights to photos based on the way the purchaser will use them. And some professionals are paid retainers, or upfront payments, in return for their availability to work on an as-needed basis.
As an example, a computer network expert might charge clients a monthly retainer. In return, he agrees to keep their computer systems updated and up and running. If a client needs him, he’s available 24/7. If not, he enjoys his free time. The monthly fees provide him a steady month-by-month income, and his clients couldn’t be happier because they view the monthly fee as a computer insurance policy that’s always in effect.
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Source:http://www.dummies.com/how-to/content/oneperson-or-soho-business-putting-a-price-on-wha0.html
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