What is the average profit for providing a service?

You're not far off. The general rule of thumb is a third for direct costs (labour and materials), a third for the overhead (admin, utilities etc) and a third for profit.

Of course there are always exceptions to that rule. For example, Italian restaurants serving pasta make a much bigger mark up on that than on anything else they serve. They base their pasta dishes prices on an average main course price.

Work your profit out based on the thirds rule and decide whether your market will stand that price.

There are several ways you can arrive at an answer to this.

1. What is the normal market rate for this service? If its £200 then you can charge somewhere around that and make a nice big profit. If its £75 then you will have to charge around that and work on reducing your costs to increase the profit margin. If your service is a "premium" service then you may be able to charge more than average. If it is "value" then you would have to charge less.

2. How much do you want to make? Say you want to make £10,000 a year from this service. Assume 200 working days per year (after holidays etc) means you need a profit of £50 per day. So you need to charge £120.

3. What is a reasonable margin? Take a percentage that seems reasonable (33% or 50% etc) and apply that regardless.

At the end of the day no-one will use your services if your prices are too high, and they may not use them if they are too low. So you will probably have to use method 1.

Sometimes your profits will be less than 10%. It might even be as little as $1.00.

Large profits are only necessary when you have very little business activity. If you have lots of business coming in.. a small profit is all you need. If you make $2,000 sales of a product or service in one week and your profit for each is $2.00... you just made $4,000 in one week. That's $16,000 in one month and $192,000 in one year.

Still... the bigger the profit the better. But don't go for big profits in exchange for less business.

Yes you are around the right mark. !!