Set a price for a new service

A price you can explain is a price you can say with confidence.

By Rich Thurman, who spent about 15 years at Microsoft as an application-development consultant and has helped about 1,500 small businesses automate the busywork that eats their week. He still builds real software, AI and data systems today.

What it is

This free NextGen Business Community guide helps you think through a price for something new you want to sell. A free AI tool asks you questions and makes a short list of what goes into the job. Then you pick the number. The AI does not set your price.

Why it matters for your business

When you add a new service, it's easy to guess at a price. Some owners price too low because they feel nervous. Then they work hard and barely cover their costs. Others price too high with no reason they can explain, and people say no.

A price you can explain is easier to say out loud. When someone asks, "Why does it cost that?" you can answer with calm.

Here is a made-up example. Tia runs a small house cleaning business. Customers keep asking if she cleans ovens. She wants to add it, but she has no idea what to charge. So she lists what the job takes: her time, the supplies, the drive, and the extra work on very dirty ovens. She asks a few regulars what they would expect to pay. She looks at what others nearby charge. Then she picks a price she can stand behind and tries it for a while.

Try it with AI

Open a free AI tool, like ChatGPT, Gemini or Copilot. Leave out customer names and anything private. Copy this prompt, fill in the brackets, and paste it in.

I run a small business: [what you do].
I want to add a new service: [the new service].
Ask me questions one at a time to help me list everything that goes into this job: my time, supplies, travel, and anything else.
Then give me a short checklist of what to think about when I set the price, like who the customer is and what others charge.
Do not tell me what price to charge. Do not make up numbers.

What a good answer looks like: a few short questions, then a plain checklist. If it gives you a price anyway, type "Please don't pick a number. Just help me list what the job takes."

A few things to watch for:

• The price is your call. The AI doesn't know your town, your costs or your customers.
• Check what others charge yourself. The AI can be out of date or wrong about prices.
• If you want help with the numbers, a bookkeeper can help. If you're not sure whether to add sales tax, check with your state's tax office or a pro.

5-minute exercise

1. Pick one new service you want to offer.
2. Run the prompt and answer the questions.
3. Write down the price you would pick and one reason for it.

Done when: you have a price written down, and you can say why in one sentence.

Takeaway

A price you can explain is a price you can say with confidence.

The NextGen team

Questions

Does the AI set the price?

The AI does not set your price.

Is the price my call?

The price is your call. The AI doesn't know your town, your costs or your customers.

What if I'm not sure about sales tax?

If you're not sure whether to add sales tax, check with your state's tax office or a pro.

Related: Simple one-page business plan · All guides.

Watch AI used on real jobs, live and free

I feed it the actual copy of the post and then I get back from it the response to that Facebook post and I've gone from getting no likes on those to getting about 10 or 15 likes on people that have read those posts [...]

Every Tuesday at 5:30 pm Arizona time, Rich teaches a free 30-minute AI training on everyday business jobs like the one on this page, then Q&A for the rest of the hour. Online, on Zoom, open to everyone.

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Practical help, not legal, tax or financial advice. Check anything important with a pro.