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Knowing your value is critical for your business’ success

 

There are so many articles out there that tell solopreneurs, freelancers and other entrepreneurs on how to price their products or services.  The best course of action, is to first think about what type of lifestyle you want your business to provide for you and your family. Then, you can actually quantify how your products and/or services should be priced accordingly.

 

Opportunity cost and your magic number

 

What is the opportunity cost of being an entrepreneur or small business owner?  Opportunity cost is a benefit missed when an investor, individual or business chooses one alternative over another.  Simply put, what do you need to make annually to make the cost of leaving your job worthwhile? How much money (after taxes and expenses) do you want to make annually? What does that mean you have to make monthly?  Weekly? Take the time to reflect and provide an honest answer to this question. For some of us, the business is solely designed to replace the opportunity cost of our salary earned prior to leaving our job to start our own business, and that’s okay.  For others, their entrepreneurial goals are to provide for their family for generations to come.

 

I know my magic number, now what?

 

So, now that you’ve figured out your opportunity cost and know your magic number to make small business ownership or entrepreneurship worthwhile, are your services priced accordingly? Since annual targets are hard to focus on, I recommend breaking it down further to monthly targets.  If you offer a premium service, are they at a premium price? If you offer premium services, but it takes 100 people or more to equal your monthly target, you are undervaluing your services.

 

Let’s say you are priced at the top of your particular industry and you are still not meeting your monthly target.  Then it may be a perfect opportunity to add to your product or service lines. Figure out how this additional service can help you reach your monthly targets and then price accordingly.

 

Next Steps

 

We took a simplified approach to pricing to drive a particular point home.  There is so much more that goes into pricing your products and/or services. This is a good start for you to delve deeper into how your products and/or services can help you reach your monthly and annual targets.  Veteran Wealth Partners is a veteran-owned company and is proud to be the go-to resource for veteran-owned small businesses and entrepreneurs. If you’re stuck on how to get your business to the next level, Veteran Wealth Partners are experts at growing businesses serious about building wealth so that they can leave a legacy.

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