Most small businesses do not price. They guess, anchored on what a competitor charges or what the customer looks like they can afford, and then discover at the end of the year that the busy months did not leave much behind.

Pricing is not a personality trait. It is arithmetic you do once, properly, and then adjust.

Start with what an hour actually costs you

Not what you would like to earn an hour. What one hour of your working time costs the business to produce.

Add up everything the business must pay in a year whether or not you sell anything: your own drawings, rent, data and airtime, software, insurance, accounting fees, transport, equipment you will have to replace. That is your annual cost of being open.

Now count the hours you can actually sell. Not 2,000. Take the weeks you will genuinely work, allow for leave and public holidays and the days you are ill, and then accept that a large share of what is left goes on quoting, invoicing, travel, admin and chasing — work that is real but that nobody pays for directly. For most one-person businesses, half of the available hours are billable, and being optimistic here is the single most common reason a price is too low.

Annual cost divided by genuinely billable hours is your floor. Below it you are paying to work. Every price you set is that floor plus the profit the business needs to grow, plus whatever the market will bear on top.

Then decide whether to charge by the hour at all

Hourly billing is easy to explain and it punishes you for being good — the faster and more experienced you get, the less you earn for the same result. It suits work where the scope genuinely cannot be known up front.

A fixed price for a defined piece of work is usually better for both sides. The customer knows what they are committing to, and you keep the benefit of your own efficiency. It requires you to be strict about scope, which is a discipline worth building anyway.

A retainer — a fixed monthly amount for an agreed level of service — is the most valuable of the three, because it converts unpredictable income into something you can plan around. It is also the hardest to sell to a new customer, so it tends to be where a relationship ends up rather than where it starts.

What a quote has to contain

A quote is a commercial document, not a number in a WhatsApp message. At minimum:

  • What is included, in enough detail that "done" is not a matter of opinion.
  • What is excluded. This line prevents more arguments than any other. Name the things a reasonable person might assume are included and are not.
  • The price, with VAT shown separately if you are registered.
  • What it assumes — access, materials, information, sign-off times. If the assumption fails, the price changes, and you said so at the start.
  • How long it is valid. Thirty days is normal. Without it you are exposed to a customer accepting next year at this year's price.
  • Payment terms, including any deposit.
  • What happens if the scope changes, even if it is one sentence.

Send it as a document, not as a text message. It costs nothing extra and it changes how seriously the number is treated.

The mistake almost everyone makes

Quoting to win rather than to deliver. You want the job, you sense the number is above what they expected, and you shave it. Then you deliver at a price that does not cover the work, resent the customer for it, and cut corners you would not otherwise cut.

A price you cannot deliver at is not a low price. It is a future problem you have agreed to pay for. If a customer cannot afford the job, reduce the job — take something out of scope, offer a smaller version, phase it — rather than reducing the price for the same work. That keeps the rate intact and makes the trade-off visible, which customers respect more than a discount.

Raising your prices

Costs rise every year, so a price held flat for three years is a price that has fallen. Put them up annually, on a date, so it is a policy rather than a confrontation.

Tell existing customers in advance rather than surprising them on an invoice — a month's notice is enough, and a short explanation is better than a long one. Expect to lose a small number, and notice which ones: usually they are the customers who were least profitable and most demanding, and the business is better without them.

If you have never raised prices and the thought is uncomfortable, raise them for new customers first. You will find out very quickly whether the number was the problem.

Discounting

Give a discount for something, never for asking. Payment up front, a longer commitment, a bigger volume, work in a quiet month — all of these are worth something to you, so trade them. A discount given because somebody pushed teaches them that your first number is never real, and every quote after that becomes a negotiation.

General guidance on commercial practice, not financial advice. Your own numbers are the ones that matter — work them out rather than adopting anyone's rules of thumb, including these.