Use this service pricing worksheet to calculate a defensible price floor and then choose a price that fits the customer, offer, capacity, and market context.
The worksheet is designed for consulting, freelance, productized service, project, and retainer offers. It does not prescribe one pricing model. Read how to price services for guidance on hourly, project, value-based, and tiered approaches.
Price Floor vs Final Price
The price floor is the minimum revenue required for the work to contribute adequately after direct costs and protected capacity. The final price may be higher because of customer value, urgency, scarcity, complexity, risk, intellectual property, or alternatives.
Do not present the internal floor as the customer-facing reason for price. Customers buy an outcome and risk allocation, not the owner’s private income target.
Keep Units and Periods Consistent
State currency, tax treatment, annual or monthly period, hours, number of clients or projects, and whether owner compensation is included as a cost. Separate cash received from revenue earned where timing matters.
Inputs to Gather
- Desired owner compensation and paid time off.
- Annual fixed business overhead and professional costs.
- Tax, retirement, emergency, and reinvestment reserves.
- Real working weeks and total available hours.
- Non-billable time for sales, administration, learning, and recovery.
- Direct delivery costs and expected scope variation.
- Customer alternatives, value evidence, and willingness-to-pay evidence.
Copy the Service Pricing Worksheet
Use annual figures for the capacity calculation, then convert the result into the billing unit of the offer. Verify tax and accounting treatment for your situation.
Pricing identity
Offer: [Offer being priced]
Currency and tax basis: [Currency; tax inclusive or exclusive]
Pricing period: [Year or other planning period]
Owner: [Decision owner]
Review date: [Date]
1. Required owner compensation
Owner pay target: [Annual amount before or after personal tax—state basis]
Retirement and benefit funding: [Annual business-funded amount]
Paid time off provision: [Weeks and how compensation is covered]
Total owner compensation requirement: [Sum on a consistent basis]
2. Annual business overhead
Software and hosting: [Annual total]
Accounting, legal, insurance, and compliance: [Annual total]
Marketing and sales: [Annual total]
Equipment, workspace, education, and travel: [Annual total]
Other fixed costs: [Annual total]
Total overhead: [Annual sum]
3. Business reserves
Tax reserve: [Planning amount or percentage; verify locally]
Emergency and continuity reserve: [Annual contribution]
Reinvestment and replacement: [Annual contribution]
Profit buffer: [Amount required beyond compensation and costs]
Total reserve requirement: [Annual sum]
4. Protected billable capacity
Working weeks: [52 minus time off, holidays, illness, and development]
Hours per working week: [Sustainable average, not maximum]
Total working hours: [Weeks × hours]
Sales and marketing hours: [Annual estimate]
Administration and finance hours: [Annual estimate]
Product development and learning hours: [Annual estimate]
Disruption buffer: [Annual hours protected]
Billable or delivery hours: [Remaining annual capacity]
5. Internal price floor
Required annual revenue before direct costs: [Owner compensation + overhead + reserves]
Hourly revenue floor: [Required annual revenue ÷ billable hours]
Expected delivery hours per unit: [Project, month, sprint, or package]
Direct cost per unit: [Contractors, fees, materials, travel, or usage]
Scope and risk buffer: [Percentage or amount with reason]
Unit price floor: [Delivery hours × hourly floor + direct cost + buffer]
6. Customer value and alternatives
Current alternative: [What the customer uses now]
Cost of current state: [Money, time, risk, or missed outcome]
Value the offer can influence: [Quantified range with assumptions]
Comparable alternatives: [Internal hire, competitor, software, delay, or doing nothing]
Willingness-to-pay evidence: [Purchases, proposals, interviews, tests, or renewals]
7. Final price and packages
Pricing model: [Hourly, project, retainer, subscription, value-based, or hybrid]
Final price: [Amount, currency, tax basis, and billing unit]
Payment schedule: [Deposit, milestones, recurring date, or payment term]
Package differences: [Customer outcomes, scope, access, speed, or risk—not artificial feature padding]
Discount rule: [Allowed reason, amount, authority, and exchange received]
Change-order rate or rule: [How additional scope is priced]
8. Capacity and review
Units required for annual target: [Required annual revenue ÷ average realized unit revenue]
Units possible within capacity: [Protected delivery capacity ÷ average unit hours]
Capacity result: [Feasible, constrained, or dependent on change]
Review triggers: [Cost, demand, scope, capacity, tax, or value changes]
Next action, owner, and date: [Decision and deadline]
Completed Service Pricing Worksheet Example
This fictional example prices the Northstar email sprint. Amounts are illustrative and exclude jurisdiction-specific tax advice.
Show the completed example
Pricing identity
Offer: Northstar Trial-to-Customer Email Sprint
Currency and tax basis: EUR; all internal calculations and the quoted price exclude applicable tax.
Pricing period: 2027 planning year
Owner: Alex Morgan
Review date: 30 September 2026
1. Required owner compensation
Owner pay target: €72,000 annual gross owner compensation before personal tax.
Retirement and benefit funding: €6,000 annual business-funded provision, subject to local tax and legal advice.
Paid time off provision: Six non-delivery weeks are protected inside annual capacity; owner compensation continues through the annual target.
Total owner compensation requirement: €78,000 per year: €72,000 owner pay plus €6,000 retirement and benefit provision.
2. Annual business overhead
Software and hosting: €5,400 per year.
Accounting, legal, insurance, and compliance: €4,800 per year.
Marketing and sales: €3,600 per year.
Equipment, workspace, education, and travel: €3,000 per year.
Other fixed costs: €1,200 per year.
Total overhead: €18,000 per year.
3. Business reserves
Tax reserve: Transfer 25% of taxable operating profit to a restricted account; the exact percentage is reviewed with the accountant.
Emergency and continuity reserve: €4,000 annual contribution until six months of essential operating costs are held.
Reinvestment and replacement: €3,000 annual contribution for equipment, research, and essential system replacement.
Profit buffer: €5,000 required beyond compensation and overhead.
Total reserve requirement: €12,000 annual emergency, reinvestment, and profit provision; the tax reserve is calculated and transferred separately.
4. Protected billable capacity
Working weeks: 46 weeks after vacation, holidays, illness allowance, and professional development.
Hours per working week: 36 sustainable hours.
Total working hours: 46 × 36 = 1,656 hours.
Sales and marketing hours: 280 hours per year.
Administration and finance hours: 190 hours per year.
Product development and learning hours: 126 hours per year.
Disruption buffer: 160 hours per year.
Billable or delivery hours: 1,656 − 280 − 190 − 126 − 160 = 900 protected hours.
5. Internal price floor
Required annual revenue before direct costs: €78,000 owner compensation + €18,000 overhead + €12,000 reserves = €108,000.
Hourly revenue floor: €108,000 ÷ 900 protected delivery hours = €120 per hour before unit-level direct costs.
Expected delivery hours per unit: 32 expected hours plus 10 hours of approved contingency = 42 protected hours per sprint.
Direct cost per unit: €600 for transcription, testing, and specialist review.
Scope and risk buffer: 10 protected contingency hours are included because interview scheduling, implementation, and QA vary by client.
Unit price floor: 42 × €120 + €600 = €5,640 excluding applicable tax.
6. Customer value and alternatives
Current alternative: Founder-written emails, generic automation templates, a generalist provider, delayed action, or internal delivery.
Cost of current state: New trial users do not reliably reach activation, increasing acquisition cost, manual follow-up, and uncertainty about the next growth decision.
Value the offer can influence: Northstar Trial-to-Customer Email Sprint
Comparable alternatives: Founder-written emails, generic automation templates, a generalist provider, delayed action, or internal delivery.
Willingness-to-pay evidence: Two related projects, one paid pilot, six interviews, proposal records, delivery-time data, and a dated source log.
7. Final price and packages
Pricing model: Fixed-fee project with a written change-order rule.
Final price: €5,900 excluding applicable tax per three-week sprint.
Payment schedule: 50% before kickoff and 50% before implementation; invoices are due within seven calendar days.
Package differences: One validated package only; narrower diagnostics or ongoing optimization require separately designed offers rather than artificial tiers.
Discount rule: No discretionary discount; a lower price requires narrower scope, faster payment, or another documented economic exchange approved by the owner.
Change-order rate or rule: Additional scope is estimated in writing at the €120 internal floor plus direct costs and risk, then approved before scheduling.
8. Capacity and review
Units required for annual target: €108,000 ÷ €5,900 = 18.31, so at least 19 sprints before allowing for direct-cost treatment and variation.
Units possible within capacity: 900 protected hours ÷ 42 hours = 21 complete sprints at the planning assumption.
Capacity result: Mathematically feasible but narrow; price, revenue mix, or efficiency must improve before committing the full theoretical capacity.
Review triggers: Trial volume increased while activation remained flat, making the cost of delay visible in the latest monthly review.
Next action, owner, and date: 30 September 2026
Quality Check
- Currency, tax basis, billing unit, and period are explicit.
- Owner pay is distinguished from business profit and reserves.
- Billable capacity excludes sales, administration, learning, time off, and disruption buffer.
- Direct costs are included at the correct unit level.
- Scope variation has a reasoned allowance.
- The calculated floor is not confused with customer-facing value.
- Value claims expose their assumptions and limits.
- Package differences correspond to meaningful outcomes or service conditions.
- Required sales volume fits protected capacity.
- The price has a testing plan and review trigger.
Common Service Pricing Mistakes
Dividing an income goal by all working hours
Not every working hour can be sold. Sales, administration, learning, leave, and recovery require capacity.
Forgetting direct costs
Payment fees, contractors, materials, travel, and usage can make apparently strong revenue unprofitable.
Copying competitor prices
A competitor may have different scope, proof, costs, capacity, geography, and strategic goals.
Using value-based language without value evidence
Value requires a credible connection to the customer’s situation, not an arbitrary multiple.
Discounting without receiving anything
Exchange a discount for narrower scope, faster payment, lower risk, volume, or another defined benefit.
Related Guides and Templates
- Check delivery limits with the client capacity calculator.
- Model project scope with the project pricing calculator.
- Compare approaches in the project pricing and value-based pricing guides.
- Connect the price to a complete offer with the Offer Design Worksheet.