How to structure pricing & payment for your business
Fee structure has a big impact on your service-based business.
How do you structure the fees for your services? And do so in a way that covers you and supports your business?
This topic comes up frequently in conversations I have with women business owners. Landing on your pricing is the first (big!) step. I covered this in a previous post where I addressed the tendency I see in female founders to undervalue their services and how to shift your approach to set pricing based on the value you deliver to your clients. The first step being to move away from hourly rate fees and retainers tied to a number of hours.
Here’s the TL;DR:
Stop looking at what everyone else is charging.
Get clear on the outcome you deliver, not the hours it takes.
Anchor your pricing to the results you create — not the time and effort it requires.
Start with the income you want, then reverse engineer the math to get to your pricing.
Price to build a sustainable business and a life you want to live.
If you’re still working to get to the sweet spot with your pricing you’ll find the full article here.
You know your pricing, now what?
You know what you want to charge. The next step is to refine the structure to work for you as the owner of a service-based business.
You’ve figured out the numbers that reflect the value of what you’re delivering to your ideal client, maybe even stretched beyond your comfort zone doing so – this is good! But you may have neglected to address the structure of the payments.
You may have:
Inconsistent terms.
Vague scopes of work.
Overly accommodating payment schedules.
Any or all of which can lead to late payments, awkward follow-up emails, and unpredictable revenue.
Here’s how to fix that.
1. Choose the right pricing model for the engagement: project vs. retainer
If your work has a clear beginning, middle, and end (e.g., a rebrand, a strategy sprint, a specific creative deliverable, etc.), a project fee is the way to go. Anchor it to the deliverables and outcomes — not to the time you think it will take.
If your work is ongoing or advisory in nature (e.g., fractional CMO, coaching, retained consulting, ongoing creative services), a monthly retainer is your best bet. This gives you and your client consistency. The key here is not to tie your retainer to a fixed number of hours. Instead, anchor it to access, outcomes, and scope.
2. Strategically break up payment of your project fee
I recommend a 50/25/25 structure:
50% deposit to kick off (upon signing of the agreement, before work commences)
25% midway through the project (or tied to a new phase or an interim set of project deliverables)
25% upon final delivery
This structure has the two significant benefits:
It ensures you’re not doing the bulk of the work without being paid.
Your client isn’t scrambling to write a big check at the end.
You can adapt the percentages, but always lead with a sizable deposit as this has a direct impact on your cash flow and your ability to sustain the work (and your business).
3. Get paid at the top of the month when you have a retainer
When you go the retainer route, make sure to structure payments so they land in your account at the beginning of the month in which the services are rendered (or 30-day period if not starting on the first of the month).
The key here is to invoice at least two weeks out from the desired payment date, which is the start of the new month. Not at the start of the month, as the funds won’t arrive in time. Not after the work is done. You’re not a bank. Learn your client’s payment terms, invoice accordingly.
This shift in the timing of when you receive payment from your clients is yet another reason to move away from hourly rate pricing, which by its very nature means accounting and invoicing for your time AFTER the work is done.
Setting up your payment terms in this manner helps with cash flow (see 2. above) and it keeps you from having to chase payments.
If this is an area you struggle with, consider moving to automated recurring invoicing. Both Quickbooks Online and Xero have this feature, along with sending automated reminders to get paid.
Clear payment terms also help clients respect your time and commitment. They give your business predictable revenue. You need this when you’re trying to grow and eventually hire. It’s an integral component of scaling with savvy.
4. Clearly address expenses
If your work requires travel, materials, or other reimbursable costs, outline this upfront. In your proposal and contract, make it explicit that:
You’ll invoice for actual travel, material, or miscellaneous expenses, if needed with receipts
You’ll cap travel costs or get pre-approval. if needed
These costs are in addition to your fee
Another option — you can go the flat fee route, where these are included for a project-based contract of that best serves both parties
It shows you’re professional and avoids awkward surprise charges down the line.
5. Confidence is part of your pricing strategy
Another key to scaling with savvy is having confidence. Confidence throughout the business development process, confidence in your pricing, and confidence in your interactions with clients.
You’re not just setting a price, you’re setting expectations. And when you present your structure clearly, directly, and without apology, clients will mirror that energy. It builds trust. And it reinforces the desired nature of the business relationship.
Your business is about delivering results. And doing so, means running a smooth, thoughtful, sustainable operation. Pricing is part of that. Fee structure is too.
And in case that little voice in your head is telling you you’re being rigid. Reframe that thought… you’re being intentional.
Where does this land for you?
Let me know what resonated. And if this made you want to revisit how your pricing is set up, you’re not alone. Most of my clients start here.
Until next time.
Katherine
#ICYMI
