Setting up your price as a function of your costs is one of the big lies we’ve been taught into.
From hospitality…
Calculate labour (staff) + supplies and then add what “the best practice” on profit margin in the industry is. Now you have your price.
To B2B…
Calculate what it costs you, add a margin and you’re good to go. You have a price.
To consulting…
Estimate how much you’d like to make in a year based on your costs, divide it by 2000 hours (aprox what you work in a year) and you have your hourly rate [commonly mistaken with a price].
Don’t forget that you can’t charge more than X per hour. Best practices.
In all of these cases, the price is a function of what it costs you.
It takes into account ONLY your side of the table.
Like if your customers, guests, clients owe you something “because it costs you”.
And it’s no rocket science.
If the price is higher than the cost, you got a profit and thrive, right? Right?… Right….?
As pricing expert, Ron Baker, says:
A question to ponder:
What if you took yourself out of the equation?
B-bye your time, your worth, your costs, your effort…
What would you ask?