Business – The real costs of business

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This is another installment of my Business posts, geared towards those of us who are business owners or working for ourselves.

I’ve noticed that a lot of young entrepreneurs and business starters, especially in the IT field, get shy about pricing. Whether it’s their hourly rate or the equipment they recommend / sell, they’re always leery about giving the price to the client.

I’ll be honest, I was not immune to this either. In my early days of owning and operating my 3rd party IT support services business, I often did quotes for prospective clients that I was shy to give because I thought it was a lot of money. After all, when all you’ve been is an employee, when you suddenly start handing out $10,000.00 and $20,000.00 quotes, they can seem like huge numbers. You need to realize this golden rule: your numbers are not huge. Unless you’re making 8000% markup, your costs aren’t going to be that dramatic as you think they are.

Case in point, I was dealing with a bank the other day and working on a financing package. The “processing fee” for applying to the bank and working with an account manager was $1500.00, up front non-refundable. The application processing fee. At that point I hadn’t even gotten approved yet. Even worse, this bank wanted audited financials for the last 3 years of the business. That’s going to cost over $15,000.00 for an accounting firm to do. But these scenarios are extremely common. The larger a business gets, the higher the fees go. This is just one example of what the REAL cost of doing business is.

So when you’re doing quotes and trying to sell your products and services, remember, as long as you’re comfortable with what you’re charging and the profit margin you’re going to make, don’t worry about your costs appearing to be too high. Remember, be confident in yourself and your business, and others will confide in you.

Author

Martin Lehner

Martin Lehner is an technology professional working for an IT services firm in Whitehorse, Yukon (Canada). He has been working in the technology field for over a decade. With a degree in Business Admin and numerous industry certifications, Martin leads a team of IT professionals that provide third party support for clients. Originally starting a company to offer web development services, Martin quickly realized that clients wanted the entire spectrum of technology services. When Martin is not at work (which is not often, since his company offers 24/7 support), he is busy at home spending time with his family.

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1 Comment

  1. Eli Etherton July 9, 2014 at 2:21 pm

    I completely agree. I remember thinking $10K quotes were big, until one of the my client CEO’s told me his burn rate was $10K a DAY. Puts everything into perspective…

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