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Patty,

There is no concrete definition of what constitutes a small business. In fact, my company targets small to midsize companies, and I construe that to mean those with up to 250 employees!

One way you can get a handle on your definition of "small" businesses is by determining the distribution of firms in the geographical area you serve by employee size. You can obtain this through County Business Patterns, published by the U.S. Bureau of the Census, at: http://www.census.gov/epcd/cbp/index.html. County Business Patterns enables you to find such distributions by industry at the county, ZIP code, metropolitan area, state, and national levels. So, for instance, if many of your clients are new car dealers, and you serve mostly companies with in your metropolitan area, you can go to County Business Patterns and find the number of new car dealers with 1-5 employees, 6-10 employees, and so on. Once you see the distribution of new car dealers by employment size, you might establish the threshold for your definition of "small." You can then adjust your pricing for your services to that industry, based on the threshold you determined.

Interestingly, Patty, you mention your concern about pricing yourself out of the market, and I am familiar with (and responded to) your earlier post, "Can you charge too much for your services?" Just the other day on my blog, I wrote in more detail about how to determine the optimal price point for a product or service. You might find that post helpful. You can obtain it at: http://analysights.wordpress.com/2009/03/12/pricing-demystified-part-ii-the-van-westendorp-price-sensitivity-meter/.

Patty, if there are any more questions I can answer for you, please let me know. Good luck!

Alex

Thank you for your replay Lighthouse. It was very helpful.