Short answer: work out what an hour of your time actually costs once unpaid hours, tools, travel and tax are in it, then price the job rather than the hour. Do not start cheap hoping to raise it later, because cheap attracts the customers who care most about price and they are the ones who leave when you put it up. If you have never lost a job on price, you are too cheap.
This is the decision new owners agonise over most and research least. It is also the one that quietly determines whether the business survives, because a price set badly in month one is very hard to undo in year two.
This is general business guidance rather than accountancy or tax advice. For anything to do with your own tax position, talk to an accountant.
Why is being cheap the hardest way to trade?
Because of the arithmetic, which is worse than it looks.
Say a job takes you three hours and you charge £150. Drop your price by 20% to win more work and you are on £120. To earn what you were earning before, you now need to do one extra job for every four. Except each of those jobs also costs you three hours, plus travel, plus the quote, plus the invoice chasing. You have not won a discount war. You have given yourself a fifth more work for the same money.
Now add the part people miss. Discounting attracts a different customer, not more of the same one. The person who chose you because you were £30 cheaper will leave for somebody £30 cheaper than you, and in the meantime they will be your most demanding client, because a customer who buys on price alone has nothing else invested.
Meanwhile the higher price you were nervous about would have been paid without comment by somebody who was choosing on whether you seemed like the right person for the job.
What are you actually competing against?
Almost never the business down the road. Usually it is one of three things, and each has a different answer.
Doing nothing. The biggest competitor most small businesses have. The garden stays overgrown, the accounts stay in a carrier bag. You do not beat doing nothing on price, because doing nothing is free. You beat it on consequence: what it costs them to keep putting it off. Knowing who you are actually selling to is what tells you which consequence lands.
Doing it themselves. You beat this on time, risk and finish, not cost.
A bigger, cheaper operator. The only one where price is genuinely the battleground, and the only sane response is not to fight there. Whatever you are that they are not is the reason somebody pays more, which is why finding a real difference is a pricing exercise as much as a marketing one.
How do you actually set the number?
Three methods. Most businesses need the third but start with the first.
1. Cost plus, to find your floor
This does not give you your price. It gives you the number below which you are losing money, which is worth knowing precisely.
Add up what you need the business to produce in a year: what you want to earn, plus tools, insurance, fuel, phone, software, accountant, and a realistic allowance for tax. Then divide by the hours you can actually bill.
That last number is where people go badly wrong. A full-time week is not 40 billable hours. Quoting, travel, invoicing, chasing, admin and marketing are all unpaid, and for most trades and services the honest figure is somewhere between half and two thirds of your working time. Use the real number, not the flattering one, and remember to subtract holiday and the weeks you will be ill.
Whatever comes out is your floor. Do not price at your floor.
2. Market rate, to find the range
Find out what the going rate is locally, from real quotes rather than published price lists. The range matters more than the average. If local prices run from £40 to £90 an hour, that spread is not noise, it is the difference between the bottom and the top of the market, and you get to choose which one you are in.
Being at the top of a local range is a perfectly viable position. Being 20% above the top of it needs a reason a customer can see.
3. Price the job, not the hour
Once you know your floor and the range, quote for the work rather than the clock. This is better for you and better for the customer.
For you, hourly pricing punishes you for getting good. The faster and more skilled you become, the less you earn per job, which is the wrong incentive built directly into your business model.
For the customer, an hourly rate is an open cheque and they know it. A price for the job is a decision they can make today.
If the work is genuinely open-ended, price in stages rather than by the hour. A fixed price for the first stage, then a price for the next once you both know what is involved.
What do new owners consistently forget?
Six things, in rough order of how much damage they do.
- Unpaid hours. Covered above and worth repeating, because it is the single most common reason a business is busy and broke at the same time.
- Tax. Money in your account is not money you have earned. Put a proportion aside as it arrives rather than discovering the position in January.
- The VAT cliff edge. In the UK you must register for VAT once taxable turnover passes £90,000 in any rolling 12 months, and that threshold stays at £90,000 from 1 April 2026. It is not the tax year, it is any 12 months in a row. If most of your customers are households rather than VAT-registered businesses, crossing it effectively means a 20% price rise you cannot pass on, so it wants planning for before you get near it rather than after.
- Materials at the price you will pay, not the price you paid last year.
- The cost of being wrong. Redoing a job, a return visit, a refund. If that happens on one job in ten, it is a real cost and it belongs in every price.
- Getting paid late. Not a pricing problem exactly, but it is a cash problem that people try to solve by taking on more low-margin work, which makes it worse.
How do you raise prices without losing everybody?
You will lose some. Losing some is the point, and the ones who leave are usually the ones who were costing you the most attention for the least money.
What works in practice:
- New customers first. Quote the new price to everybody enquiring from today. No announcement, no drama, and within a few months most of your book is at the new rate anyway.
- Give existing customers notice and a date. One short message, no apology and no lengthy justification. Explaining at length invites negotiation.
- Change what is included at the same time. A price rise on an identical service invites comparison. A price rise alongside a small genuine improvement is a different conversation.
- Do it in one clear step rather than repeatedly nibbling. Frequent small rises are more annoying than one honest one.
- Expect the reaction to be smaller than you fear. Most people do not react at all. The ones who do tend to be the loudest, which distorts your sense of how it went.
A useful benchmark: if you never lose a job on price, your price is too low. Losing perhaps one enquiry in five on price is a sign you are positioned about right. Losing none means you are the cheap option whether you meant to be or not.
Should you put prices on your website?
Usually yes, or at least a range or a starting figure.
The fear is that publishing prices scares people off. What it actually does is filter, and filtering is the thing you want, because the enquiry you never receive from somebody who was never going to pay costs you nothing, whereas the quote you spend an hour preparing for them costs you an hour.
It also removes a specific friction that hurts small businesses more than large ones. People will not message to ask a price. They assume it is too much and move on. A number, or even “most jobs are between £X and £Y”, converts the browsers who were already close. The same is true of a price posted on social: it is one of the things any business can always post, and it consistently earns more enquiries than it loses.
There is a real exception. If every job is genuinely bespoke, publish a starting point and what drives the number up rather than a false single figure.
Frequently asked questions
How much should I charge as a new business? Work out your floor from your real costs and your genuinely billable hours, find the local range from actual quotes, then position yourself within that range on purpose. Do not open at the bottom to buy your first customers, because the customers you buy that way are the hardest to keep and the hardest to raise prices on later.
Should I charge hourly or per job? Per job wherever you can. Hourly pricing penalises you for being quick and gives the customer an open-ended commitment they will be wary of. If the work is genuinely unpredictable, price in stages rather than reverting to the clock.
How do I know if I am charging too little? Three signs. You are busy and still short of money. You feel resentful about specific jobs. And you never lose an enquiry on price. The last one is the clearest single test.
When do I have to register for VAT in the UK? Once your taxable turnover exceeds £90,000 in any rolling 12 month period, or if you expect to exceed it within the next 30 days alone. The threshold remains £90,000 from April 2026. Check the current position on GOV.UK, since thresholds do change, and talk to an accountant about your own situation.
Should I offer discounts to get started? Prefer a smaller scope at full price over the same scope at a discount. Discounting sets an anchor that follows you around, and the customer remembers the low number as your real price. Doing less for less protects the rate.
How often should I review my prices? Once a year at minimum, with a note in the calendar so it happens. Costs rise every year whether or not you raise your price, so standing still is a pay cut taken quietly.
Where does SocialPostxr fit into this? Once you know what you charge and why, saying it consistently is what turns it from a number into a position. SocialPostxr builds posts from your own business and schedules them, so the message stays the same whether or not you have had a good week. You approve every post first. See how it works or compare the plans.
SocialPostxr turns your business into finished posts, captions and visuals included, then schedules and publishes them for you. The free Starter plan is £0 with no card required, and includes unlimited scheduling plus 5 starter posts. Start free.
