How should I price my service business?

by RedactedPineapple. Posted on Sep 14, 2020    45    29

Just seeing what reddit's input is as pricing a service business is super important.

Business: Group SAT classes through Zoom

I am 18 and going to a good university and got a 1540 on the SATs. I am starting a group class SAT prep thing.

For reference the local teacher charges $95/class and she is baaaaad but also older and an actual teacher. But I know my product is better...

I have a convincing webpage made (which is really just a pdf that people can click and read. I market it as a "course" of 6 classes and also will try to get each kid to pay for more expensive private classes.

I am thinking between $30 and $80 per class somewhere... But where exactly???



As a former ETS grader, I would encourage you to seek another business. With California almost certainly dumping SAT scores, it's gonna be a worthless industry soon.

Also the SATs are a scam.

  RedactedPineapple 5

Will there not always be aptitude tests to gauge college readiness??


Given that major studies repeatedly demonstrate the tests' poor ability to predict student success, I think they'll be heavily deprecated soon.

And having been on the scoring side, I personally think they are extremely problematic and grossly biased.


Majority of studies show what? WTF are you babbling about? You cite no evidence save for the fact that you were an entry level drone for a testing company. Your level of argument is embarrassing.

Do you know why the MCAT was implemented, for instance, or what problems the Flexnor report indicated? Like, genuinely, do you have any idea about the history? Do you know how many countless lives this test has saved relative to what existed before?

Do you know what happens when standardized tests are replaced with "local assessments" and the massive level of corruption, completely untied to merit, it invites? Do you wonder why places like Singapore, Korea, the United States ... the most competitive and productive places in the world, all have standardized tests?

Do you have any idea why these things came to exist in the first place?

Oh wait, you were asked to grade some documents for a particular standardized test so you're an expert.


The MCAT is a graduate level exam; the OP asked about testing for college readiness.

Shall I score your reading comprehension skills?


Your lack of evidence and incompetence in argument remain. I can see why you were let go from the entry level position and now you're hateful.

Perhaps instead of arrogantly declaring that "the majority of studies!" declare X, as if you've read 3 studies in your life, you could cite some evidence?

P.S. If you learn to cite evidence properly, you can acquire better than entry level jobs!!!

blatheringasphalt 6

I own a successful business, so I'm happily done with applying for jobs. I employ people now.

I offered the OP some advice based on personal experience in the field; they can easily find the recent LA Times articles about California doing away with standardized testing as a criterion for admission. Admittedly, I question how many parents are gonna pay an 18 y/o with a 1500ish score to coach their kids on how to take the SAT, given they haven't even finished college yet. But who knows?

Working as a grader was one of multiple jobs I held at the time to make ends meet after a personal catastrophe. It was that or Burger King, and I liked being able to work from home. Not sure what's wrong with having any job, especially an entry level one — sort of the point of a healthy society, isn't it, to have jobs for people?

You seem to have a palpable disdain for people. Do you yell at everyone working entry level jobs in this world?

vorsky92 2

Don't listen to him. If you're interested in business, what you'll learn from taking on clients is valuable. Your business cost is time only and requires $0 startup capital which is perfect for an 18 year old.

Predicting market changes is only useful for making a move into those markets (Uber is the famous example) and there's no better way to break into a upcoming market than to break into the current market and get an inside look on what problems people are facing.

Ranperre_Goldpiece 1

While it's important to understand your competitors' fees, I don't believe you should take their rates and adjust them. Instead, find what they are doing wrong and right, how to do better, and how to sell it to customers.

Consider looking at your business plan. What's your goal in years 5? Back into what you need to do each year to reach that goal.

Consider what you need to charge each of these years and number of customers you need.

Calculate your marketing, sales, and production necessary to obtain and assist the number of customers. Reevaluate your figures as you progress.

bpetersonlaw 1

$60 for the first visit -- money back satisfaction guarantee. 10 class package for $500

BigBalli 1

Pricing needs to be tested just like anything else.

OddGib 1

How much interest do you have so far? This is one of the few times a price special can work well... "Normal price is $200 for the newest methods for SAT prep, first 10 people will get half off to help me launch my business." or something like that.

novasoline 1

You should be charging around double that. $$160-200 You ideally want rhe families that are willing/can afford to invest more in sat prep, as they will have kids that do better on the test, which will make it easier for you to get teatimonials.

rmarte3 1

It depends, business model, target audience, the industry, the competition. But.........

When you deliver a far greater value the price is not a issue. You could charge $300 dollars and people will pay it because the value that you are providing far surpass that price.

Please don't fall in the race to the bottom model of charging less than the competition to attract the customers. Or you will be working more for less!

You said that your product is good right? Market to the right people and you can charge $200-$300 people that see the value you're delivering will pay it happily 😊

Just market to the right audience.

Good luck 👍

Gas_Pumper 1

You could at least charge what it would cost to retake the test. You could even advertise with that.

Scorpionwins23 1

Competition analysis and perceptual mapping using cost (high vs low) and quality of service axis. Some qualitative research with potential customers will help find the right price point too.

rgtong 1

People will compare your price with competitors. Learn aboit their pricing and position yourself according to how you position your service relative to them.

Note: as a new business with no established history and success (im guessing) you will probably want to go on the more aggressive side on price, because the risk of going with you is higher for a decision maker.


You can legit charge whatever price you want as long as the perceived value is high. 👍

jaaareeed 2

Google Van Westendorp study and see if you can figure out a way to that.

simple_peacock 5

Just charge what the market will bear. You want to have more potential clients than you have capacity to fulfill then you can keep raising to whatever you want as long as there's demand. Keep in mind that a lower price can be taken as a signal of lower quality and vice versa. This is sometimes counter intuitive - depending on the market sometimes you can actually get more business by having higher prices than lower.

I'd also throw in, figure out who the actual buyers are and tune everything for what they look for - is it the actual kids or the parents?

uxmalakumal 14

As much as you possibly can

mister_brian 10

Honestly this. I know at 18 time may seem infinite but you will never get the time spent back. Make sure you’re well compensated for it. If you get results and word gets around you’re gonna have to fight them off with a stick. Keep raising your value.

Realbigwingboy 6

Run a test group to validate the value you’re providing.

IncognitoMosquito911 23

Check out what Kaplan and Princeton Review charge and price accordingly. Those are your main competitors

SpectralCadence 2

Those are not even in his league right now. Sure, if he checks what they charged like 15 years ago, then it'd make sense.

optimus_maximus2 21

Demand determines what price you can charge. Create demand. Market. Advertise.

Until then you can either 1) go cheap to get more business or 2) have higher prices that means less business, but also less work for you. 1) going cheap means you have to fight to raise prices, but you get cash flow sooner. 2) means you have to stay lean for the beginning.

I have confidence in my service at $200/hr and I don't mind going down to $100/hr (after all overhead). Under that I'd rather spend time with my kids. But I have a marketing machine of websites, social media, and 15 years of experience (and a perfect reputation) to back up that price.

mr_asadshah 1

This is the best answer. Stop looking at competitors and listen to this human

msitty1 34

Charge a low introductory rate for the “intro class” and high for extra 1-on-1 help. Consider the class to be qualified lead gen.