Clients and pricing: who you serve and what you charge

Know your floor before you set a price

Your price floor is the lowest price where a job still makes sense. Work it out from the real cost of doing the work, including your time at a fair hourly value, plus your share of overhead, plus the profit margin you need. Anything below the floor is a donation, not a sale.

Three ways to price

• Cost-plus: your cost plus a markup. Simple and safe, but it ignores what the work is worth to the client.
• Market-based: what others charge for similar work. Useful as a check, but copying competitors puts you in a race to the bottom.
• Value-based: priced on the result the client gets. Harder to set, but it's how experienced service businesses earn strong margins. If your work saves a client $20,000, a $3,000 fee is easy to justify.

Most owners start with cost-plus to find the floor, check the market, then move toward value-based as they get confident.

Don't compete on being the cheapest

There's always someone willing to charge less. Clients who choose you only for price will leave for the next lower price. Compete on reliability, speed, expertise and how easy you are to work with. Those are harder to copy.

Raise prices on a schedule

Your costs rise every year. If your prices don't, your margin shrinks quietly. Review prices at least once a year, give existing clients clear notice, and expect a few to leave. That's often the clients you were losing money on anyway.

Stop scope creep before it starts

Scope creep is the slow addition of "one more small thing" until a profitable job becomes a losing one. The fix is a tight-ship habit: write down what's included before work starts, and treat anything outside it as a change with its own price and timeline. Clients usually respect clear boundaries more than you'd expect.

Handling difficult clients

• Set expectations at the start. Response times, what's included, how payment works. Most conflicts come from expectations nobody said out loud.
• Put important things in writing. A short follow-up email after every key conversation protects both sides.
• Respond to the problem, not the tone. Stay calm and specific. You're the professional in the room.
• Investigate before you react. Like a detective, ask what's really behind the complaint. Sometimes it's your mistake, sometimes it's pressure on their side.

Watch your concentration risk

If one client brings in a large share of your revenue, they effectively control your business. Losing them could put you under, and they know they have leverage on price. Many advisors get uneasy once a single client passes about a quarter of revenue. If you're there, make growing other clients a priority.

How to let a client go

Sometimes the best business decision is ending a relationship. Do it professionally: finish what you promised, give fair notice, hand over their files cleanly, and if you can, recommend someone who'd be a better fit. Leaving on good terms protects your reputation. For the wording, see Clear at Work.