How to Price a Service Business (Without Guessing)

Most service businesses underprice by 20–40% because they price off competitor websites instead of their own cost structure. Here's the four-step framework that fixes it.

1. Know your loaded hourly cost

Run the Employee Cost Calculator for every billable person. That's the floor.

2. Set a target utilization

Senior consultants: 60–70%. Junior: 75–85%. Anything above 85% sustained means people are about to burn out and quality is about to drop.

3. Pick a margin target

40–60% gross margin is healthy for boutique services. Below 30%, you're running a job, not a business.

4. Translate to a price

Loaded hourly cost ÷ (1 − target margin) ÷ utilization = effective billable rate. Run the break-even calculator with your finished number to sanity-check.