Best Practices for Setting Your Prices as a Service-Based Business
- Marelize Bott
- Jan 17
- 2 min read
Most service businesses undercharge, not because their work isn’t worth more, but because they’ve never been shown how to price strategically.
They price based on feelings. Competitors. Gut instinct. Fear.
The result? Burnout. Resentment. Busy businesses with empty bank accounts.
In this article, we’ll show you the proven pricing principles we use inside Improving the Numbers™ to help service providers earn more, work less, and finally price with confidence.
1. Stop Pricing by the Hour
Hourly pricing makes sense when you’re an employee. But when you run a business? It becomes a trap.
Why?
It punishes speed and experience
It encourages clients to focus on time, not outcome
It caps your income and your team’s
Move to value-based pricing. Price the result, not the minutes.
2. Know Your Delivery Margin
Before you can price confidently, you need to understand:
What it costs you (time, tools, team) to deliver each service
How much margin you need to hit your profit goals
Too many service businesses don’t track this and end up with “profitable” services that actually bleed cash.
Inside our advisory sessions, we build a Delivery Margin model for every core offer.
It’s the foundation of profitable pricing.
3. Anchor Your Offers Strategically
Anchoring is the psychological principle where your first price sets the expectation for value.
If your first offer is £500, your £1,500 offer feels “expensive.” If your first offer is £3,000, that same £1,500 offer feels like a deal.
Use 3-tiered pricing:
Entry-level (low friction)
Mid-tier (core package)
Premium (high value, high margin)
This doesn’t confuse buyers, it gives them choice. And it positions you as a serious business.
4. Review Your Pricing Quarterly
Markets shift. Capacity changes. Your experience grows.
So should your pricing.
If you haven’t raised your prices in 12+ months, you’re probably overdue.
We recommend a light review every quarter:
Compare price to delivery time
Track effective hourly rate
Assess scope creep and client expectations
Pricing isn’t “set and forget.” It’s a strategic lever.
5. Build Confidence with Numbers
Most pricing fear comes from emotion “What if they say no?” “What if I lose the client?”
But when you know your numbers:
You can defend your price with confidence
You don’t discount out of fear
You build a business that works for you, not just the client
This is why we always tie pricing back to personal income goals, capacity, and desired margin.
When the math makes sense, the confidence follows.
If your pricing still feels like a guessing game or you know you’re undercharging but unsure what to change, let’s fix that.
Start with a Business Potential Review. We’ll map your pricing, capacity, and delivery margin together and show you where the opportunity really is.
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