Pricing your services can feel like guesswork, especially for small business owners. Charge too much, and you worry about scaring clients away. Charge too little, and you’re working hard without making enough to actually grow (or even stay afloat).

The truth is, many service businesses underprice themselves, often because they base their rates on competitors instead of their own costs and goals. Let’s walk through how to set prices that work for your business—not just your competition.

Step 1: Know Your Costs

Your rate needs to cover more than your time — it has to account for:

• Overhead (rent, software, insurance)
• Supplies and tools
• Taxes (remember self-employment tax!)
• Profit (because you’re in business to earn)

If your rate doesn’t cover all of this plus profit, you’re working too hard for too little.

Step 2: Focus on Value, Not Just Time

Clients care about results — not how long it takes you to get there. If your service saves them $20,000, charging $1,500 is a bargain. Think about:

• What problem you solve
• How much time or money you save them
• How much expertise you bring to the table

Step 3: Research Competitors (but Don’t Copy)

See what others charge — but don’t assume their prices make sense for your business. They may have lower costs, different services, or they might be underpricing too.

Step 4: Don’t Fear Price Increases

If you haven’t raised your prices in years, you’re probably undercharging. Clients expect rates to rise — especially if you show how your service has improved.

• Pro Tip: Frame increases around added value, like faster service or expanded offerings.

Step 5: Review Pricing Regularly

Revisit your rates at least once a year, or whenever your costs change. Watch for:

• How many leads say “yes” — if nearly all do, you might be too cheap
• Clients surprised by your “low” rates — another red flag
• Projects that look profitable upfront but barely cover costs after expenses

The Bottom Line

The right price isn’t just about covering bills — it’s about building a business that thrives. When you price confidently, you:

• Deliver better service
• Pay yourself a real salary
• Invest in growth (tools, team, training)

If your prices only cover survival, you’ll always be stuck in survival mode. Set your rates with confidence—your future business (and your future self) will thank you.

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About the Author:

Joe Herskowitz, EA, is the President and CEO of Lionstone Bookkeeping+, where he helps small and medium-sized businesses take control of their finances with expert bookkeeping and financial insights. With years of experience in business finance, Joe is passionate about making numbers work for business owners—not against them.

Have a bookkeeping or business finance question?

Reach out to Joe at joe@lionstonebookkeeping.com or call/text 732-803-7793 (no WhatsApp).