Coaches: How to Price Your Services
One of the most common questions we get in our mentoring sessions for coaches is how to price coaching services. Without centralized marketplaces or standardized service offerings, it can be a challenge to price at a level that maximizes your compensation without turning away clients or setting unrealistic expectations.
While pricing is a very individualized process, these five best practices have been proven successful for different types of coaches in the past.
Coaching Pricing Tip #1: Survey Your Competition
The most obvious place to start is by looking at what coaches like you are charging. To this end, Paul Chittenden recommends that new coaches “spy on and copy your competition” to find rates that reflect current market dynamics.
The key point here is around “market dynamics". As Paul Dillon of Dillon Consulting Services emphasizes,
“it’s the market that’s going to determine what your services are worth. Or, to put it another way, it’s the value that your clients place on your services, irrespective of what you think.”
Getting competitive data can be a challenge, since there are few transparent marketplaces. A couple of options that coaches have used in the past include:
- Pose as a potential customer or have a contact pose as a potential customer
- Derive an hourly rate based on salary data from a site like Payscale, Glass Door, or Indeed. To account for the difference between salaried and hourly labor, add 40%. (Hat tip Melanie Cook of Suite Conversation)
- Keep in mind that prices between coaches and engagements may not be transferable - the greater your expertise and the greater your impact on the client, the more you can charge. Kevin Geary of Digital Ambition gives this example:
"If I’m coaching a client doing 10 million in revenue, trying to get them to 50 million in revenue, then my advice is far more valuable than if I’m helping a client get from 100,000 to 500,000. There are also far fewer people qualified to help a company get to 50 million, which means my expertise is much more scarce (and thus more valuable)."
Coaching Pricing Tip #2: Don’t Underprice
One common issue we see with new coaches is that they are so eager to start working and start getting paying clients, and/or who might lack the confidence or track record to avoid underpricing. The motivation is understandable. As Breanna Gunn of Breanna Gunn Enterprises points out:
"Most business owners (especially those just starting out) want to offer their services as a deal. Something so low-ball that a customer couldn’t help but try them out “just to see.”
While that might get you a few clients in the beginning, the end result will always be total resentment. Resentment for the client for making you work so much for so little, and resentment for yourself for agreeing to an imbalanced client-consultant partnership.
A separate problem with underpricing is highlighted by Sylvia Laurence of Trevero Consulting:
“Keep in mind that pricing too low can cheapen your services. I'd recommend going slightly lower than the competition without making people wonder if your low prices mean it's a cheaper value.”
Coaching Pricing Tip #3: Go Beyond Hourly Options
It’s easy to understand why many coaches gravitate to hourly rates. They are easy to understand and they create alignment between the size of the engagement and your compensation.
However, many successful coaches such as Angela Mastrogiacomo of Muddy Paw PR advise against broadly using hourly rates:
"You always want to charge a project rate - never hourly. Pick a number that feels good to you based on your experience level both in getting clients results or, if you're new, getting yourself results, and go up or down from there. Then, estimate how long it will take you to do the project (IE: 5 hours) and then add another 2-3 hours because I promise, it's always going to take longer than you think, and you'll be grateful for that buffer.*
On the other hand, sometimes hourly rates are appropriate. For example:
- When the scope of the work is unclear so you need a pricing structure that will work whether it’s a 5-hour or a 25-hour project.
- When the client is given to “scope creep”, changing or adding to the project definition or using a significant amount of your time with questions, updates, and/or revisions.
- When you are doing multiple small projects for a client and it’s simply not efficient to come up with per-project rates on all of them.
Coaching Pricing Tip #4: Give Options and Be Creative
Some coaches like to provide their clients with a small number of pricing options. This helps clients feel comfortable, more in control, and more able to create alignment with their needs. We caution coaches against providing too many options - three is generally a good limit - since people who are overwhelmed by too many options often end up choosing none of them. This is known as the Paradox of Choice.
Coach Samuna KC offers a simple but effective framework:
“Give options - like in the coffee shop you can get small, medium, or large. Decide on your three levels of pricing - basic, premium, and gold; name them in the way you want - and go from there.”
Erico Franco of the Agencia de Marketing Digital uses a simple but flexible approach that puts the power in the client’s hands:
"We use tokens to bill our customers. Tokens represent a kind of man-hour but the value varies according to the level of service. If it is a simple support by phone to talk the price is 10 tokens per hour... more advanced support can cost 15 tokens... and 30 tokens per hour for an executive to make some kind of business strategy. The customer pays for a certain number of monthly tokens and can use them as he or she likes."
Coaching Pricing Tip #5: The Power of Numbers
Finally, one tactical suggestion with your pricing strategy - use psychology. As a general rule, humans tend to be attracted to numbers with 3s and 7s in them. In addition, even though people know that $0.99 is essentially the same as $1, the former strategy is still successful across industries.
As a coach, charging (e.g.) $499.99 for an engagement might make you seem cheap or sales-y. That said, pricing at $970 will generally be perceived as significantly lower and more attractive than $1000.
Samuna KC offers a further insight to
“offer an unusual number. For example, your premium offer could be $1478; this way, your clients will think you have considered different costs before pricing and it's not just a random number.”
Coaching pricing does not lend itself to a one-size-fits-all approach. Coaches need to consider the competitive dynamics of their marketplace, their experience and credentials, and the client’s willingness to pay, among other factors. That said, the above principles and tactics should help you make the most of your coaching engagements.