Funmi is a freelance graphic designer in Lagos. She has been in business for three years. When a new client asks how much she charges, she thinks for a moment, considers what she thinks the client can afford, checks what a designer friend recently charged for something similar, and gives a number that feels reasonable.
She has no idea if that number is profitable.
This is how most Nigerian service businesses price their work — by feel, by market comparison, or by what clients seem willing to pay. All three of these approaches have the same flaw: they start from outside the business rather than from inside it.
The only approach that guarantees you are not losing money is to start with your costs.
The market rate for a service in Nigeria is set by whatever the average provider happens to be charging — including providers who are losing money, providers who have costs that are different from yours, and providers who priced their services years ago and have never updated.
Following the market rate is fine as a sanity check at the end of your pricing process. It is a disaster as a starting point.
Funmi's friend who charges ₦80,000 for a brand identity package might have zero overhead because she works from home. Funmi rents a co-working space and has subscriptions to Adobe and Canva. Their costs are different. Their floor prices are different. Funmi charging what her friend charges might mean losing money on every project.
For service businesses, the most useful starting unit is the hour. Once you know what it costs your business to run for one billable hour, every project quote becomes a calculation rather than a guess.
Step 1: Calculate your total monthly costs
Include everything:
Step 2: Determine your billable hours per month
This is not 160 hours (8 hours × 20 working days). Most service providers are realistically billable for 60-80% of their working time — the rest goes to admin, business development, client communication, and downtime.
Funmi works about 140 hours per month. Of those, roughly 100 are genuinely billable.
Step 3: Calculate your hourly cost rate
₦208,000 ÷ 100 billable hours = ₦2,080 per hour
This is Funmi's break-even cost rate. At this rate, she covers all her costs and pays herself the minimum. She makes no profit.
Step 4: Add your profit margin
If Funmi wants a 40% profit margin:
₦2,080 × 1.40 = ₦2,912 per hour
Round up to ₦3,000 per hour — this is her billable rate.
Most clients do not pay by the hour — they pay by project. But knowing your hourly rate allows you to price projects properly.
Example: Brand identity package
Funmi estimates this project takes:
Project price: 26 hours × ₦3,000 = ₦78,000
Add a 15% buffer for scope creep (clients almost always ask for more than originally discussed): ₦78,000 × 1.15 = ₦89,700 → ₦90,000
Now Funmi has a number that is grounded in her actual costs and target margin — not a guess. If a client pushes back on ₦90,000, she knows that ₦78,000 is the absolute minimum that covers her costs. She does not need to panic-discount below that.
Your pricing reflects expertise, not just time. Your hourly cost rate is a floor — your market positioning and demonstrated value determine the ceiling. Nigerian professional rates range from ₦15,000 to ₦150,000+ per hour depending on specialisation.
Add credibility premiums if you have certifications, track record, or specific industry expertise the client cannot easily find elsewhere.
Material costs must be included directly in project pricing, not just time. Build in a 10-15% materials contingency — prices at Nigerian markets and hardware stores fluctuate, and you are absorbing that risk if your quote is fixed.
Factor in rework costs — food that does not pass quality checks, damaged ingredients, trial batches. A 5-8% waste rate is realistic for most catering operations and should be built into pricing.
Equipment replacement is a major cost most creative professionals undervalue. A camera body costing ₦700,000 that lasts 5 years = ₦11,667/month in replacement costs. Include this. Your pricing must eventually fund buying your next camera.
Scope creep is the Nigerian MSME owner's silent profit killer. It goes like this:
You have now done ₦140,000 worth of work for ₦80,000. This happens because boundaries were not set at the start.
How to prevent it:
① Define the scope explicitly in your proposal: "This quote covers logo design (3 concept options, 2 revision rounds) and delivery of final files in PNG, SVG, and PDF."
② Price add-ons clearly: "Additional items such as stationery design, social media assets, and presentation templates are quoted separately."
③ Use a simple written agreement: even a WhatsApp message confirming scope protects you better than a verbal agreement.
④ When a client adds something mid-project, respond: "I can absolutely include that — let me send you a revised quote for the additional items."
This is not being difficult. This is running a business.
Before: Funmi charged ₦60,000 for a brand identity package. She thought this was fair because others charged similar amounts. She was working 100 hours a month and taking home roughly ₦50,000 after expenses — less than minimum wage per hour.
After: Using Lucrive's pricing calculator, Funmi calculated her floor price at ₦75,000 per package and her recommended price at ₦90,000. She raised her rates. She lost two clients who were price-shopping. She gained three new clients who valued her work at the higher price point.
She now works 80 hours a month, bills ₦270,000, takes home ₦130,000, and has three days a week free for personal development and rest.
The same skills. A different relationship with pricing.
Lucrive's pricing calculator handles everything in this guide:
From there, price every project with confidence — not instinct.
Calculate your service price for free at lucrive.io →
People and businesses in our examples are illustrative, not real Lucrive customers. Figures are worked examples: confirm your own position with a qualified tax adviser.