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    6 Replies Latest reply on Jan 28, 2010 12:25 PM by hammertyme

    How many employees constitutes a small business?

    pdmiller Adventurer
      I have a website design company. I offer affordable rates to small businesses and non-profit organizations. I don't want to price myself out of the larger company that needs my services. I'm thinking of offering $50/hour website services for larger companies. But, I don't know where I should draw the line to determine whether a company is big or small. I currently have a lot of mom and pop shops that have fewer than 10 employees that use my services. My pricing seems to fit that size company well. However I'm not sure if I should differientiate small from big at 10 employees or 20 employees, etc.

      Any feedback?

      Patty Miller, owner
      Affordable Web Design and Graphic Solutions
        • Re: How many employees constitutes a small business?
          Lighthouse24 Ranger
          There are several federal employment and labor laws that kick-in at 15 employees, so I think nearly all employers with 14 or fewer consider themselves to be small businesses -- so that could be a de-facto rationale for setting your number there (plus, it's between the 10 and 20 you mentioned).

          Of course, the SBA (and therefore the federal government) defines a small business in much larger terms (by annual revenues and/or number of employees) -- but any business that isn't a small business by their definition probably isn't your target. If you want to see their definition however, it's here:

          Hope that helps. Best wishes.
          • Re: How many employees constitutes a small business?
            Analysight Newbie

            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: 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:

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

            • Re: How many employees constitutes a small business?
              LUCKIEST Guide
              How many employees constitutes a small business??

              Good timing for this questions.
              On the front page of Saturday's March 14, New York Times, there is a story "Weary of Looking for Work". In the article it says "tiny companies are actually big employers. In 2008, 3.8 million companies had fewer than 10 workers and they employed 12.4 million people, or roughly 11 percent of the private sector work force".

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              • Re: How many employees constitutes a small business?
                hammertyme Newbie
                hmm sounds more like your having a ethical problem than anything else . but i think that after being self employed for over 25 yrs i may be able to shine some light on the matter.
                it is much better to decide on a published rate and stick to it across the board.and remember your not the only one with the same ability. the worst thing that can happen with your ideal is for two customers find out you have different rates that you attribute to the ability to pay then your done!!. you can tear down over night what you may have taken years to build. be fair and good at your craft.
                my rate increased only as my talent grew by the same token after i became a master carpenter with thousands of dollars worth of tool and equipment. then i could not long go out on 20 dollar service calls as i did when i first started out. so i guess what i am trying to say find a rate that works for both party's stick to it like the book of proverbs says hope i have helped.