How to Price Services?

How does one appropriately price service? It’s not a magic number that’s pulled out of thin air, and the amount you see is not in fact the wage that is being earned. There is so much misconception around service-based businesses its alarming. We have set out on a series of small business-related blog posts. Collaboration not competition, this statement stands out a lot in my mind. Those of us with the knowledge vs those learning, because you can’t just copy someone else’s price list, your costs into the service are not always the same (products, rent, insurance etc.) What are your variable factors when trying to price a service. Insurance ( I always forget to include this one, oops) some services require a lot heftier insurance then others ( dermaplaning, laser, microneedle are the ones I pay a large portion more for )Rent, Hydro, Water, Equipment depreciations ( oops mine also don’t factor this, bad jess), one time consumables, internet, phone, program fees, product cost per service ( facial products etc , this one involves a weight scale to weigh how much you are using out of the bottle) next you factor in an hourly wage) This formula is based on being full 80% of your open hours. When you are just starting out that is not necessarily going to happen and oh boy is it very stressful. For example, say your client scheduling program is 40$ a month, you are opened 40 hours a week. 40 hours a week times 4 weeks to a month brings you to 160 hours. 40$ divided by 160 hours is .25cents. So, each service that’s an hour-long accounts 25 cents for this. The same math goes to each cost you need to figure out, minus one time use items it is what it is per service. Equipment depreciation, this one is a little trickier as you must estimate how long you think that piece of equipment will last. Say my cuticle nippers are good for 6 months. 40 hours a week x 4 weeks a month is 160 hours times the 6 months I think it will last take me to 960 hours. My nippers are 32$ each (they do not last 6 months for all the other Estheticians reading a long) That takes us to 3 cents a service. However, this math is slightly flawed as not all my 40 hours will be manicures and pedicures. So, then we must estimate which percent of our schedule will be manicures and pedicures in a week, this involves us adjusting our 40 hours number to that new estimate. And to redo our math. See where Im going with this. I’m going to be honest here math was not my strong point in school. So doing this math is a lot. I picked one service a night to calculate, and that made it a bit easier on my brain space. Which I do understand this is one of the least interesting blog posts in which I have written. I really feel as if a joke is in order but here, I am drawing a blank knowing that this blog post is dry as fuck hoping that it won’t cost me any followers because dear lord, we need all of those in which we can get. I promise you the next blog post won’t be anywhere near as terrible, now here I am hoping that I made sense of all this dryness. Good gully Jess you might as well write a how to on taxes next (fret not. I won’t…yet, but maybe during tax time) I’m really hoping when Tanner sits down to edit this he will recognize my struggles and add something in here with a bit of wow factor. A note from the editor……I have no spice to add to this stew…….back your prices up with cost break downs…..know what your consumables are costing, know what your operation costs to run per hour….period…this tedious work is not glamorous, but its part running a business. But here we have it calculating costs on your service-based business.