Pricing: hourly rate, fixed price or estimate?

The price is the most visible part of a quote, but also where it is easiest to go wrong. A price that is too low eats your profitability, a price that is too high loses the customer. The most important thing is that the customer understands what the price means.

Three ways to price

Hourly rate Good when the scope of the job is unclear. The risk is on the customer: they do not know the final total. So state the estimated number of hours and an upper limit.

Fixed price Good when the job is clearly defined: window cleaning, a single installation, cleaning. The customer knows the price in advance. Your risk is that the job takes longer than expected. So write down precisely what the price includes.

Estimate Good when you cannot know in advance. Say clearly that the price is an estimate, what it depends on and what the upper limit is. If the estimate is going to be exceeded, tell the customer before you do extra work.

What the price is made of

• your own working time and pay,
• materials,
• travel and equipment,
• insurance, software and other running costs of the business,
• taxes and value-added tax,
• urgency and the time of year.

Work out from your costs what your own hourly rate is. Do not guess. This is the foundation of pricing, and you can build a quote on top of it.

Value-added tax

In Palvelunyt.fi's quote form the price is entered including VAT. Find out from your bookkeeper or the Tax Administration's pages how VAT applies to your particular business.

Do not price out of fear alone

The cheapest quote does not always win. A customer often chooses the one who seems reliable and replies quickly. A price that is too low can also raise suspicion.

Say what the price includes

Write in the quote whether the price includes materials, travel, waste and cleaning. It prevents misunderstandings and reduces complaints.

Review your prices regularly

Costs change. Review your prices at least once a year.