What’s the earliest job in your profession that you ever set your own price for? For me, it was writing business plans. I was just starting uni but knew enough to follow a bank-prescribed checklist. To my surprise, that was enough to get paid because many people needed to do that, but couldn’t.
It’s not like the checklist asked for hard things – general descriptions of facts and processes my clients used every day, and third-grade-level math.
So why did these mid-career adults feel the need to hire a student to do it for them? Because facts and math were not enough.
The whole business plan describes a balance between revenue and costs. Costs are easy, you call around and ask all suppliers for prices, then sum them up.
Revenue on the other hand has the simplest formula in the world_
[price per unit x quantity you sell].
So, how much will you sell for? This is where the clients started to _sweat. There are so very few sources of data about pricing non-commoditized goods and services, and none of them are reliable. And even if you have data, which you don’t, there are so many options for pricing strategy.
And what quantity can you sell? How the hell can you really know that without a crystal ball? Would you bet your house on that estimate?
Pricing is about math until you really try to do it. Then, it
becomes 15% about math and 85% about what you understand about the market.