Updated: Jan 29, 2021
Decide how much to charge—and stick by it
It is exceptionally easy to fall into the trap of charging what we think we are worth rather than charging what the client will pay. When the client-to-be is asking what we charge, there’s that moment when our heart skips a beat. We really want the business, but more than that, we know the potential client could really benefit from our coaching. All of a sudden, we’ve let our discomfort lead us by the nose, and we are lowering our hourly rate. We retreat, and we question ourselves and what we do.
This discussion is meant to help us stop ourselves from minimizing the gift of coaching.
Getting clear now about our pricing strategy will help us step out of those in-the-moment, “Well, for you, I can lower my rate,” decisions.
There are many different pricing strategies, and there are some that are best suited for coaching. Below, I cover three that we need to stop using and five that can be used together to create a powerful pricing strategy.
Three pricing strategies to stop using:
1. Market penetration: You decide to compete at a reduced rate to get clients. This can get you many clients in the beginning, though the clients you get may not be invested in making lasting change. You may find yourself scrambling to meet the needs of the clients, feeling drained after coaching someone who is not moving forward, and not making enough money to support yourself through coaching.
2. Economy: When a company has particularly low overheads, they can charge less. Do not fall into this trap. Coaching is not a bargain basement activity even when we coach from our homes. See Market Penetration above.
3. Hourly-based: Charge an hourly rate. You can base this on your own needs, though the focus for the client when we charge this way is on the cost rather than the value, which can lead to issues around haggling. I do not recommend that coaches use the hourly rate except in the bundled example below.
Five pricing strategies to combine for success:
1. Value-based: It is essential that we charge based on the value it delivers to the client. When we coach others, what are we really giving them with the service? Peace of mind? A new life? A rewarding career? Think back to when you were first coached. What did it bring you? What was the value to you then? What is the value to the people you coach?
2. Psychological: People like to pay $299 rather than $300. They look at the big number and neglect the $99 after it. This really does work, and I see some coaches use it, though not exclusively. Psychological pricing is combined with other strategies.
3. Tiered: Different levels of service. Coaches use this often. We charge one price for one session and charge slightly more for what we really want the client to choose. Offering coaching to an executive is one level, offering to the whole team is the next level. The key here is the client-to-be needs to see that it is a better deal to pay for the next level of service. If you coach one executive for 10 weeks, for example, and you charge $20,000 for the one person, the next tier offer could be to coach the team of five people. Make the next tier a bit above the original of $20,000. Charge something like $30,000 (or $19,999/$29,999). It makes financial sense to hire you to coach the team. The key here is to set the aspiration number (what you would LOVE to make) as the initial number and decrease from there. In the above example, you are wanting the $30K. The $20K is what you are using to get a yes to the $30K.
4. Premium: Charge more than competitors because you offer something they do not. If your Subject Matter Expertise, for example, is in the area they need coaching, you can charge a premium for that. An executive will be willing to pay more for coaching from another executive, for example.
5. Bundled: Here is where most coaches plan their pricing. Bundling is offering packages such as masterminds, homework, Positive Intelligence courses, 6 sessions for the price of 5, and reading resumes in addition to coaching. The bundled coaching is cheaper than individual sessions. Bundling is similar to tiered pricing. If your hourly rate would be $300, you may say that someone who signs up for six sessions will be billed at the five-session rate, getting a session for free. The problem with that is you are discounting what you need to make. If you really do need to make $300/hour, then price at $360/hour.
Decide on a strategy and try it out. Track the success of your pricing strategy and make minor adjustments along the way. The key thing to remember is that competing on price can only be successful when price is the major factor in the decision to purchase—and competing on price can drive companies out of business quickly if they are not careful.
Coaching is a premium service, and there is no reason to compete on price.
What you charge needs to be based on the premium life-changing value the client will receive. Bundle your services, create tiered pricing, and use psychological methods.
And as always, get coached on it!