If you are providing services based on time and skill, how would you work out profit?

Because to my mind, there is no profit unless someone happens to buy a book or something from me. I have brainstormed some other monetizing solutions as well; one of them is a membership offer for self-publishers. It is so hard to sell a membership and I never realised this before.

Cathryn Mahon

Cathryn Mahon, Innovative Business Strategist at Wild Dynamics

Look at what is the value the client receives by purchasing your product or service. Show them the value by showcasing your expertise and experience in the area. Think of how much they receive from your information that will save them time/money/stress/over whelm by learning from you. 
Then assess your target market who are they and what is their capacity to pay for your service/product. 
Lots of areas to consider but go with your gut feeling of what you think it's worth then educate your market why it's valuable to them to overcome the problem they are having. 

 

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Stephanie Mellick

Stephanie Mellick, Accountant, Consultant & Strategist at

Hi Jennifer!  There are 2 schools of thought on this topics.  Firstly, some believe 'value billing' is the best approach.  i.e. what would a third party be willing to pay for the service (regardless of the cost it takes to conduct the service).  Or you could look at how much the client would save by implementing your service.  If a client were to save $10,000 per year, lets say, from your recommendations, they might be willing to pay you $3,000 for that advice, regardless of how long it takes you to provide the advice.  
The second school of thought is the 'working back from your profit margin' method.  Work out exactly how much profit you want to make, then calculate all the overheads and direct costs that contribute to your business leaving you with the sales figure.  Divide that number by the number of hours you are willing to work and you will arrive at a possible hourly rate.  
Other factors to consider are: is the business model efficient and does it work well?  Who else in the market provides these services and how much to they sell them for? What's my point of difference and what is that worth to the market?  
Happy to chat further about it with you if you wish to 

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Gill Walker

Gill Walker, Owner Director, Principal CRM Business Consultant at

Are you talking about client's profit, or your profit as the supplier?

If the former (client), work out, with the client, how much time or money, your service saves.  Then, if time, convert this to a monetary amount.  Use these numbers to work out the value of your services to this client.

Remember, when converting time today monetary amount, that the cost Yan employee 

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Gill Walker

Gill Walker, Owner Director, Principal CRM Business Consultant at

Continued - the cost of an employee is roughly three times their wage or salary - and this number should be used.

If you are talking about your profit, what are your costs in providing the services and subtract this from revenue.  Again, use the real cost of employees, not the eage cost.

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