So you have decided to provide a service what’s next? How to charge for your services – would you like to charge cash or kind? One thing I try to avoid is working for free – not because I am selfish or greedy but because folks never really appreciate what you do if you are willing to give it away for free or cheaply. We are suspicious of under priced services so here is how to charge for you services in cash.
If you were working full time annually how much would you earn? Let’s designate this as – X Million Naira (be realistic based on your level or education and actual work experience).
You work 48 weeks a year give or take when we factor in public holidays or vacation time
You are generally paid for 40 hours a week – even if you work slave hours at a Bank or another such institution, the official work week is 40 hours
So Bola would earn N5 million as an analyst after 5 years of working experience and she has an MBA and Undergraduate degree in Economics.
Bola’s hourly rate = (N5million/ 48 weeks)/ 40 Hours = N2604/ Hour
For Bola to price out her services, she has to consider the following
- number of hours required for the said task/ job (always get a good brief in writing from the client)
- Is there any travel required to perform the task?
- Do you need to purchase additional materials such as paper, printer or other working tools to complete the job?
- How quickly does the client want the job completed? Will it mean working more than literally 8 hours a day?
- What is a competitive price for the said job? While you cannot charge the same price as a KPMG for instance, neither can you charge the same as an Indigenous consulting firm, you can bench mark your prices as you don’t have the same overhead costs and reputation as they do. Example if KPMG charges N10 million for a particular service, and a local consulting firm charges N5 million – I see no reason why you should provide the same service for anything less than N1 million.
Based on these factors you can present a bill and mark it up by 25% – Nigerians like to negotiate. And if a client can negotiate a discount of more than 30% your work seems less valuable. The extra 25% gives you room to wiggle and make the client feel like they have accomplished some sort of feat.
So if you were ever wondering how to price out your services this is how I go about it. Feel free to add on things that I have ignored or omitted. Also feel free to ask questions.