Recently, an upcoming entrepreneur approached me for help price her services. I receive so many such people in my private mentorship and it is always good providing a simple formula to help determine the price of your goods and services. At the risk of sounding theoretical, it is recommended start by asking: how much does it cost me to produce the service or product which I offer? For example, if you are in the business of selling chapati, you need to know the cost of producing the chapati which include one-off costs like the baking table and saucepans to use for cooking. Then the material costs, cooking and distribution costs. You must buy wheat-floor, milk, labor and water. Then you need cooking oil and some salt. Then you need a warmer and packing materials. And if you want a station by the road side, you may pay KCCA license or stage fee. If when you add up all these costs you find it goes up to Ugx 50,000 to make 100 chapatis per day. It means each chapati costs you Ugx. 50,000 divided by 100 chapatis to make. That is Ugx. 500 per chapati. If you sell each chapati at Ugx. 500, you will not make any profit. Your business will never grow.
Likewise, you have completed University, and now you are looking for a job. The question is what is your selling price or desired salary? At your level, you need to keep reading, networking and investing in yourself to look good, not withstanding living in a reasonable apartment, paying transport and eating well. Such costs represent to cost of living. If on average, it costs you about Ugx. 500,000 to live a reasonable life considering your level of education, you need a job that pays you at least Ugx. 800,000 net to live comfortably. That is the salary you need to ask the employer when they ask you how much you would like to be paid. Better be honest and explain your cost of living than getting a job at a very small pay and you instead start stealing from your employer in terms of laziness, missing work because you are part-timing somewhere else or you deliberately cheating by committing fraud.
If you are an upcoming consultant, use the World Bank standard. You estimate the time it will take you to complete the job, and charge for man-days. Unlike the normal days, man-days refer to the actual number of working days you will spend on the job. It is like man-hours. Instead of days, you use hours. A day has 24 hours. But you only work six hours. In that case your man-hours are six. You can then charge Ugx. 200,000 per man-hour. If you estimate a total of 20 man-hours on project implementation, you should bill Ugx. 200,000 x 20 man-hours = Ugx. 4,000,000. In the next article, we explore alternative billing approaching based on value and not man-hours or man-days.
Bernabas M. Mugisa, Mr. Strategy, helps plant the seed of transformation. Visit www.summitcl.com/boardtools to become a better Board member TODAY.