How to price your services: floor, market and value

Time: about 20 min reading + 30 min exercise

This is educational material, not personal financial, tax or legal advice. The numbers in this lesson are made up and are only here so you can practice the math.

The gist

Most beginners set their price in one of two ways: "the same as everyone else" or "low enough not to scare anyone off." Neither one answers the main question: is this price enough to keep the business alive?

It's easiest to look for your price between two limits:

• The floor: below this price, you're working at a loss.
• The ceiling: above this price, buying stops making sense for the client, because they get less than they pay.

The market (what others charge) shows where between the floor and the ceiling sellers and buyers usually meet.

🎨 Picture this: you're selling a used car. The floor is the amount below which selling isn't worth it; you'd rather keep the car. The ceiling is what the same car costs brand new: nobody will pay more than that. Listings for similar cars in your area show what they actually sell for. Your price lands somewhere between the floor and the ceiling, and the better the car's condition and your listing, the closer you get to the ceiling.

Key terms

How it works: running the numbers

The situation

You manage social media for a small café with the help of AI: post copy, photo captions, answers to common questions in the comments, a monthly posting plan. How much should you charge?

Step 1. The floor: don't go below it

We'll use the math from the unit economics lesson.

Below $210, you're either working for less than you decided your hour is worth, or paying for the client out of your own pocket.

Step 2. The market: what others charge

Say you found 6 offers from freelancers and small agencies in your city for a similar service. Prices run from $250 to $600 a month, most often $300–400.

Where to collect prices like these:

• freelancers' and agencies' websites and price lists;
• freelance marketplaces such as Upwork, and local listings;
• asking business owners you know directly: "How much do you pay for social media?"

An AI assistant can suggest where to look and how to compare offers, but don't trust any prices it names on its own: it can make them up or pull outdated ones. Open every price and check it on the seller's own website.

Step 3. The ceiling: value to the client

Right now one of the café's employees handles social media: 6 hours a week, about 26 hours a month. An hour of that employee's time costs the café $15. That's $390 a month in time alone. On top of that, posts go out irregularly, and the owner believes it's costing the café orders.

The value to the client is at least $390 a month, and counting the lost orders, probably more. Say the owner puts it at $450.

Step 4. Choosing the price

Floor          $210  ─── below this, you work at a loss
Market         $300–400  ─── where deals usually land
Value          $450  ─── above this, the client loses out

A reasonable price: $300 a month. It's $90 above the floor, inside the market range and below the value to the client. The client saves money and the employee's time; you get more than your minimum.

If the floor had come out above the ceiling (say you need $500, but the deal only makes sense for the client up to $300), that's a signal: work faster, look for clients who get more value from the service, or change the service itself.

Step 5. Three packages instead of one price

One price puts the client in front of a "yes or no" choice. Three packages turn it into "which one?"

The Basic package is still above the floor. Premium includes more work, so its floor is higher too; check it separately. When clients see three options, many pick the middle one. More on packages later in the course: the lesson on packaging your services.

Why not charge by the hour

With AI you do the same work faster. If you charge by the hour, every speedup cuts your income: you learned to write a post in 15 minutes instead of 40, and you earned less. A flat price for a result ("20 posts a month") keeps the benefit of speed for you and gives the client a clear outcome.

How a discount eats your earnings

A discount looks small until you measure it against your margin instead of the price.

A 20% discount off the price took two-thirds of your earnings. To make the same $30, you now need three sales instead of one. So instead of a discount, it's better to take part of the work out of the package or add something that costs you nothing.

How to raise your price

• Quote the new price to new clients right away.
• Give current clients notice, for example a month ahead, and explain what changed: more experience, more work in the package, higher costs.
• Raise your price when most clients say yes without haggling. That's a sign your price is below the value you deliver.

Common mistakes

❌ Pricing "like everyone else" without working out your floor. Others may have different costs and work at a different speed. Their price could lose you money.

❌ Going below the floor to land your first client, and then staying there forever. If you're offering a portfolio-building price, set the time frame and scope up front: "the first two months at $200, then $300."

❌ Charging by the hour when AI speeds up your work. You're penalizing yourself for being efficient.

❌ Not spelling out what the price includes. Without clear limits, "just one more revision" turns into twice the work for the same money.

❌ Discounting without checking your margin. A discount off the price hits your earnings several times harder than it seems.

❌ Apologizing for your price. State the price together with what the client gets for it, then stop talking. The client is thinking it over; that's normal.

Practice

Exercise: a price for your service (30 minutes)

Step 1. The floor. Calculate: hours per client × the rate you want + costs per client + a share of your fixed costs. The numbers from the unit economics lesson will come in handy.

Step 2. The market. Find 5 real prices for a similar service. Write down the source of each one. Only prices you've checked with your own eyes.

Step 3. The value. Answer in writing: what will the client gain or save in a month? Put it in dollars, even roughly.

Step 4. Price and packages. Choose a price between the floor and the value, and split it into 2–3 packages. Check that each package is above its own floor. The Calculators make it easy to compare the options.

Step 5. Check it with AI. A sample prompt:

I sell [service] to [type of client].
My price floor is [amount], and here's what it's made of: [calculation].
Market prices I've checked myself: [list].
The value to the client, by my estimate: [amount and how I got it].
Suggest a price and three packages. For each package, list
what's included and what isn't.
Show me where my math is weak. Don't make up new market prices.

Step 6. Write one sentence you'll use to tell a client your price: the price plus the main result. For example: "$300 a month: 20 posts, a posting plan and answers to common questions."

Key takeaways

Your price lives between the floor (your costs and your time) and the ceiling (the value to the client). The market shows where inside that range deals usually land.

With AI, it pays to charge for results, not hours: the time you save stays yours.

Measure a discount against your margin, not against the price. A small discount can take most of your earnings.

Next lesson

→ Break-even and cash flow: how many clients you need to break even, and why profit on paper isn't the same as money in your bank account.

Later in the course, pricing continues with Value-based pricing (pricing from the value you create) and Pricing an AI product (plans and tiers for AI products).