The Business Bulletin
Nishi Patel N-Accounting Nishi started N-Accounting in 2014 after a successful career in corporate finance. He has been a Chartered Management Accountant (CIMA) since 2007. Nishi is known for the high standard of tax planning he provides to his clients and his ability to communicate effectively. He has a knack for identifying what the real
When you run a small business,
common types of pricing model.
there are really two types of pricing
However, one of the pricing strategies
strategies that you can implement
that’s becoming more and more
when you’re trying to work out how
common now, and especially when
much to charge for your product
you talk to business coaches and
or service. Traditionally, a lot of
financial coaches is something called
businesses have used something
value-based pricing.
called cost-based pricing which is about looking at your costs in the business in terms of employee time, in terms of your overheads, and any specific materials that you need to actually provide that product or service. Then it’s about adding a certain markup or to create a margin on what you charge to make sure
issues are and creating actions to deal
that you recover those costs, plus
with them.
make enough to cover your profit
07735 501251 nishi@n-accounting.co.uk n-accounting.co.uk
36 | Issue 17 – Finance
requirement. In the past, it’s always been about
Instead of thinking about what a product and service are costing you to deliver, you actually need to think about what that product or service is worth to the client, and then charge a proportion of that so you'll share that benefit. For example, in one scenario where you’re going down a cost-based route, you might have to buy a bit of software for a client which costs £10 a month. The staff hours that go into supporting that client costs another £30 a month, and then
cost-based or cost-plus pricing, and
you’ve got a share of your overheads
that’s probably one of the most
which go into supporting that client,
