As you soon as you decide to set up your coaching business, you will immediately come face to face with a very touchy subject (for you and your clients). That subject is the matter of the price of your services.
You are offering professional services and therefore need to be compensated for those services. Broadly speaking, there are two main models that you can choose from when pricing your services. First, you can charge by the hour or you can charge per package.
Hourly or Package Pricing?
An hourly or per-session rate may immediately strike you as the right way to go, and you may be right to an extent. This is because hourly rates aren’t new to your prospective clients since they already pay for other professional services, such as legal and accounting services, in this way. However, an hourly rate for coaching services has two main drawbacks.
First, it keeps the issue of cost on a client’s mind (Gosh, I have to pay for another session!) and that isn’t good for you since the client can pull the plug on the coaching relationship at any time. Secondly, you can never predict your income with a high degree of certainty if you are pricing your services by the hour (or per session) since the only income you are sure of is the one derived from the session conducted rather than the list of clients in your database.
This now brings us to pricing your services on the basis of a package. The package can be monthly, quarterly or cover even longer durations. This package still has a session element (for example one session a week for the duration of the package), but it brings several advantages. First, the client has to be highly motivated to do what it takes to improve before they sign up for the package, and this is a good thing because you stand a higher chance of helping that client as well as building the reputation of your business as one that produces results.
Secondly, you have a greater chance to build strong relationships with your clients, and with strong relationships comes a higher chance to achieve the desired objectives as well as getting more referrals or purchase of other packages offered. Needless to say, a package brings predictability to your income since different clients will join the program at different times.
You can therefore appreciate why you need to start charging on the basis of coaching packages rather than hourly or per session. If you must, only charge per session or hourly at the very start of your career as a coach and then switch to packaging your services as you get surer about your offerings.
Results-Based or Ongoing Coaching Packages?
Another critical distinction that you need to know before you design and price your packages is that packages can be results-based or be ongoing support.
Results-based packages, such as “learn piano and play your favorite songs in a month” or “get three new clients for your business in 30 days” promise to help your coaching clients to attain a specific objective within a specified duration.
On the other hand, ongoing coaching packages offer broader help to clients for extended durations. For example, grow your business skills and watch your business hit new highs every six months. Such a coaching relationship will entail addressing different business issues as they arise.
Those issues could include how to hire managers, dealing with cash flow problems, marketing and sales, or even how to expand into new markets. In this model, you can deal with a different issue each week depending on what the evolving challenges in your client’s business are.
Now, it is very important for you to know the difference between these two kinds of packages because it will help you and your coaching clients to set realistic expectations.
For instance, imagine how disappointed a client will be if they come expecting to get ongoing support regarding the different issues that come up in the course of the coaching relationship but you (the coach) covers topic after topic on a subject that the client has no interest in at that moment.
Conversely, a client may come with a specific pain point they want help with (such as overcoming interview nerves) but you begin each coaching session by asking them what they have on their mind (as though you expect a different issue each week).
Clarity in the nature of the package prevents such confusion and sets you up for success with your clients.
Which way should you go? We believe that you need to design packages that address both types of needs. For example, you can start off which packages that cover a specific issue which can be dealt with in a short time (three months, for example) and then have ongoing support for those who complete the shorter coaching programs.
Alternatively, you can primarily focus on ongoing support and then periodically open short high-impact coaching programs focused on just one pain point each.
Factors Determining Coaching Program Price Points
Your Experience and Track Record. It goes without saying that if you are just starting out, you will not have any success charging as much for your coaching packages as the most experienced coaches at the top of their niches. Your prices are therefore likely to start a little lower than ideal and then keep rising as you build your reputation and experience.
What Your Target Market Can Afford. A coach targeting single mothers who wish to rejoin the workforce may not successfully charge as much as another coach who targets executives at Fortune 500 companies, so you need to price your services in accordance with what your clients are able to pay for. Do your research!
Your Objectives. There are other things that may matter besides money, so think of them as you set the price of your coaching package. For example, if you are a new coach who wants to build a portfolio or get great testimonials for your new business, then a lower price will be palatable since it will enable you to attain that objective faster. Other objectives could be trying out a new niche, boosting your income during a low-spell, boosting your confidence regarding your abilities, and so many others. Weigh all those objectives and price your package accordingly.
The Prevailing Rates in Your Area. Do the research and learn what other coaches in your area are charging. That going rate can give you a ballpark number to think around but don’t be hampered by the existing rates because you can charge absolutely anything you want as long as you make clients believe that they will get great value from your coaching package. This brings us to the next factor below.
How Well You Have Packaged the Product. Poor packaging can kill a great product, so price your coaching package based on how well you have put it together. For example, does it have a catchy name that evokes emotions in clients, addresses a significant problem they want fixed, and has great materials (workbook, step-by-step guide, etc.)? Excellent packaging will make the program more attractive and clients will be willing to pay a higher price.
Have a Tiered Pricing Policy
The best coaching businesses have a tiered pricing system for a good reason. People are different and you want to make it possible for as many members of your target clientele as possible to enroll for your coaching programs. Tiered systems make that possible and the following suggestions will illustrate how you can do it.
The first tier can be a group coaching package that you price at about $1,000 for the 3-month package. Note that the numbers here are only indicative and you can adjust them based on the information shared earlier in the blog post. This package will work great for prospective clients who are price-sensitive or those who want to try out coaching for the first time.
The second tier can be the medium package in which you offer one-on-one coaching for about $3,500 for a package covering three months. Most of your clients are likely to select this option since they feel that they will get more individualized attention about their specific problems.
The third tier is the premium or VIP package priced at $4,000 for a month. This package differs because you offer a more accelerated way to attain results and it comes with many perks (printed materials, email follow-up, weekly phone calls, etc.) You pull all the stops for these clients to give them a true premium experience, at a fee!
Remember, the dollar amounts indicated are just intended to give you an idea, so don’t be lazy by simply adopting them as your fees. Also, nothing is set in stone, so “just do it” as Nike says and then keep tweaking based on your outcomes. Now is the time to go and get paid what you are worth as a coach!
To Your Success,
Jairek Robbins and Team PCU
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