How to Price Your Services Using Real Financial Data

Most service providers set their prices emotionally—based on fear, comparison, or “what feels reasonable.”
But sustainable, confident pricing comes from data, not guesswork.

When you use real financial numbers to set your rates, you get:

• consistent profit

• predictable cash flow

• clarity on your capacity

• confidence in your value

• the ability to grow without burning out

Here’s how to build a pricing strategy rooted in facts instead of feelings.

1. Start by Calculating Your Cost to Deliver the Service (Your “True Cost”)

This is where most owners get it wrong—they ignore hidden costs.

Your “true cost” includes:

Direct Costs (per client)

• subcontractor hours

• materials or supplies

• software used for that client

• payment processor fees

Indirect Costs (monthly overhead)

• rent

• utilities

• general software

• insurance

• admin support

• marketing

Divide your monthly overhead by the number of clients or projects you can realistically serve.
This gives you the cost of keeping the business alive per project or per client.

Most owners are shocked by how much they’ve been undercharging once they do this.

2. Calculate Your Target Margin

Your margin determines how much profit you generate above your costs.

Healthy targets for service businesses:

• 60–70% gross margin

• 20–30% net margin

Example:
If it costs you $400 to deliver the service and you want a 70% margin, your price should be around:

400 ÷ (1 – 0.70) = $1,333

This ensures your price supports a real, sustainable business—not just covering bills.

3. Determine Your Capacity (How Many Clients You Can Actually Handle)

Pricing is not just math—it’s tied to your time.

Ask yourself:

• How many clients/projects can I take each month?

• How many hours does each one require?

• Where are my bottlenecks?

• What’s my personal maximum capacity?

If you set your prices based solely on what feels “fair,” you may accidentally create a business that requires 40 hours of delivery for 20 hours of pay.

A profitable price protects your time and energy.

4. Factor in Your Desired Owner Compensation

Your prices should support:

• your salary for the work you do

• your benefits

• your taxes

• your owner's distribution

• your future goals

Not just your expenses.

A CFO-level pricing strategy includes your pay as a non-negotiable cost of doing business.

You’re not just pricing for the work—you’re pricing for the business and the owner behind it.

5. Compare Your Data-Driven Price to Market Reality

Once you’ve done the financial calculation, check your market:

• Are competitors charging significantly more or less?

• Are you underpricing compared to your skill level?

• Does your price align with your positioning?

• If you're high-ticket, is your offer structured to justify the price?

Market comparison should validate, not dictate, your pricing.

If everyone else is charging too little, that’s not your cue to join them in underpricing.

6. Raise Prices When Your Data Tells You To

Here’s when to raise your rates:

• you’re consistently booked out

• margins are too low

• your capacity is strained

• overhead increases

• demand rises

• you’ve improved your skill or client results

Good pricing is never a one-time decision—it’s an evolving strategy.

7. Communicate Your Pricing With Confidence

Your tone matters.

When your pricing is based on real numbers, it's no longer personal or emotional. It’s simply:

“This is the cost of delivering a high-quality service and maintaining a healthy business.”

Confident pricing attracts better clients, better projects, and better outcomes.

Final Thoughts

When you base your pricing on real financial data—not fear, competition, or emotion—you create a business that’s profitable, predictable, and sustainable. The right price is one that supports the work, supports you, and supports your long-term goals.

If you'd like help calculating your profitable price or reviewing your offer financials, let's schedule a call and build a pricing strategy that actually supports your business.

The Money-Smart Business Blog provides educational content designed to help small business owners make informed decisions. This content is not tax, legal, or financial advice and should not be used as a substitute for personalized guidance. Always consult with a licensed professional before taking action based on this information.