The problem with pricing calculators

I admit that when I started working as a developer I used a pricing calculator to try and figure out what I should charge because I didn’t have a clue how to handle this part of my business. While the one I used is no longer around, you don’t go to many weeks without finding a new one pop up.

Way too simple

The biggest problem with all of these pricing calculators is that they are too simplistic.

They’re designed with a one-size-fits-all approach, based only on the tangible aspects of offering a service. They aren’t designed to account for the valuable but intangibles, such as your value to a client. You simply plug in some basic information about your service (not you and your skill and experience), and the calculator spits out a number for you to charge.

Even the one I used way back when, which did include a savings goal and your expenses, failed to account for what a business owner provides day to day.

Let’s think for a moment about the pricing calculator I used. Yes, it did factor expenses into the calculator, which is important. But if you’re using, or tempted to use, a pricing calculator, ask yourself this: does your client care about your costs?

No they don’t. And justifying a price based purely on your costs is a waste of time. Your client could care less about your costs, but they do care about your value to them.

I understand

Out-of-the-box pricing calculators are attractive and enticing because they save us time, and they save us the headache of learning how to price properly.

You simply fill in a few details and then you’re off to the races, confident that you’ve got a price. And it must be a good one, because the fancy calculator gave you a number, right?

And of course, the Internet is never wrong.

I want to challenge you to skip the price calculators and take the time to learn how to price with these awesome resources.

Once you’ve got through those dig deeper with:

Sure the easy way out is…well, easier. But if you want a truly profitable business then dig in and start learning how to price your business properly for profitability.

Or, you know, stick with the pricing calculators to help you run your hobby.

photo credit: whatleydude cc