How to Price Your Coaching in 3 Simple Steps

chances are if you've just started out coaching or maybe you've been coaching for a while that one of the things you'll be struggling with is how much to charge for your coaching services this is a really common question which I get asked about when I'm working with clients so in this video I'm going to explore three different ways that you can price your coaching products it's worthwhile me going into the reasons why sometimes coaches struggle to understand how much to charge so quite often the coaches which come into my world have come out of maybe a corporate environment or a job and they're looking to start up their coaching practice so they don't have a great deal of business experience and they don't understand the mechanics of things like supply and demand or profit and loss or things like that within their business and so you only have to know some really basic fundamentals around how businesses work in order to understand how to charge for your products or services but it can be quite daunting and don't forget as well there's quite a lot of mindset monkeys at play as well when it comes to pricing of products because a lot of people when they're trying to figure out how much to charge for their products or service they base it on their own selfworth or their own money relationship which they developed as they've been growing up or through parts of their adult life and unfortunately some of these could be slightly misguided representations around how much value you can actually deliver to clients as a coach so the first way is a really simple way to start to figure out how much it is that you want to set out in terms of charging for your clients it's called goal focused pricing and the idea behind this is exactly like it says on the Tim you want to start with the goal in mind so let's say for example in your first year of coaching or maybe your next 12 months of coaching you want to earn $60,000 as a coach which if you use some simple math that's only $5,000 a month and if we were to figure out how much you're charging for your coaching at the moment let's say for example you're charging $50 an hour well all we've got to do is we've got to take the goal and divide it by the amount we're currently charging and then let's see if that's a realistic figure in terms of the capacity that we have so 5,000 divided by 50 simple maths is 100 now if your coaching sessions are typically an hour long well that's only 100 hours that you've got to serve over the year you've probably got capacity to deliver that the typical month has somewhere between 160 to 200 working hours during the day if you're working on a basis of 9 to 5 Monday to Friday but that's 100 out of potentially 160 hours that's a lot of time spent coaching and it means that you constantly got to be selling more and more hours in order to increase and elevate your earnings potential so that's a clue that that's possibly not the best way to charge now what you want to think about is how could you go about packaging that up so we're going to fast forward a little bit imagine that if actually you're charging say $25,000 per client for your packages however you structure that that's something that we can go into for another video but now all of a sudden if we were to take $55,000 divide it by 2 1/2k as a package that means you only need to enroll two clients per month in order to achieve and meet your financial goal that's more than achievable more than realistic for most most coaches and if say for example your typical coaching program lasts for 6 months well the most number of clients you're going to have working concurrently any one particular point in time is going to be 12 unless of course some of those clients choose to go into what we call a continuation in which case you might have more than 12 clients but my recommendation is you never really want to work with any more than 20 clients concurrently otherwise your coaching practice starts to feel really fenetic really busy and it can get quite exhausting even managing just 20 clients so if we're working on the basis of say $1,000 per package that you're selling at the moment well now all of a sudden you need five clients per month in order to achieve your financial goal first of all do you have the capacity to work with five clients per month and imagine then all of a sudden we're at you know six months program you've got 30 clients working together concurrently that's a lot and also so that's on the capacity side of things but on the demand side of things are you doing enough Marketing in order to be able to attract enough consultations to enroll five clients per month and a lot of coaches just start out probably aren't don't have that luxury of being able to turn up the marketing flywheel and attract that many people into their coaching practice so at this point we can make an assumption that maybe $1,000 per client is just too low and really the optimal amount if you've got it if you can create enough demand in the marketplace to attract two to three clients per month well probably you got to be selling your packages somewhere between $2 and $6,000 roughly in order to achieve your financial goal for your business and what that does is it creates a little bit of buffer for you you must want to be overcharging when you're looking at goal focus pricing just in case you have a couple of months where there's a dip and you're not able to stimulate as much demand for consultations with prospects or perhaps you just want to have a bit of time out so you want to make sure that let's say for example if you were going to take 8 weeks holiday per year well you need to have enough clients and demand coming in to make up for that downtime when you're not enrolling clients so go Focus pricing gives us a really simple measure as to how much capacity we've got versus how much demand we can create out there in the marketplace for our coaching services and whether or not we're going to be able to achieve our goals or not obviously as things start to scale if you then want to move into 100 K per year or 200k per year you're going to have to start looking at do I have the capacity to be able to do as many consultations to enroll all of these clients or potentially face a prospect of gradually increasing your prices so that it makes it easier for you to achieve your financial goals now this can be quite an ethical line which a lot of coaches feel uncomfortable Crossing because one they might not feel that they're worth that much money and I can guarantee though the changes which a lot of coaches create for their clients is more than tantamount it's I can pretty much guarantee right now that you're underselling yourself as it stands at the moment and what's going on there is that you're basing your prices on your own money mindset your your own internal value system which might not be directly reflected by all of the people out there who could become prospective clients um within your coaching practice so so it's really dangerous to make assumptions like that and the best thing you can possibly do when you're focusing on go Focus pricing is to just get out there and test it in the marketplace the ideal business in my mind is to have double the income with half the clients so you want to be elevating your prices so that it feels like it's easy and effortless to really serve those clients at a high level the second way to think about pricing your coaching packages is what I call productizing a service so I touched on this earlier on there's a lot of coaches when they first start out and therapists and consultants and Freelancers who will start out by charging an hourly rate or a day rate and unfortunately the dangers with that are that most coaches or Consultants don't typically tend to work for 20 days each and every month because there's other things that you've got to do within your business they include admin and finance and sales and marketing and networking meetings running your kids to school Christmas shows at school kids getting ill you getting ill holidays and the works and the reality is in terms of paid work days where you actually are focused on client fulfillment it's typically only about three four maybe five days per month where you can get paid for the amazing coaching work which you do so if you're only charging 50 bucks an hour and you can only work you know eight hours a day for four or five days of the month well the maximum earnings potential there which you can get is going to be somewhere in the order of about $2 to $33,000 which let's face it in this day and age it doesn't go particularly far unless you've got some other Investments or business interests or other are your partners earning money and and you kind of need a bit more of a hobby based business a lifestyle based business which is absolutely fine it's got to be something which is fulfilling for you then really you've got to think about it slightly differently so hourly ropes don't typically tend to serve you as a coach because if you want to earn more money you've got to figure out how to sell more hours and that's where you then have to spin up the marketing flywheel and you can lose a lot of energy spinning that fly wheel up and not make up a lot of ground so a better way to think of it is imagine if a client typically has let's say um they stay with you for 6 months they do a 2hour session with you once a month so what we're talking about here is 12 hours worth of coaching time over the course of that 6 months and you might deliver some wraparound support whether that's um maybe WhatsApp support or doing what I call Turbo calls little catch-ups with clients in between sessions so if we were just to do some basic maths and take those 12 hours times it by 50 bucks an hour well the basic package there is actually $600 so what I encourage new coaches to do is to first of all just get out there and start selling a package of coaching for the same price as effectively what they're selling it at at an hourly rate and the idea here is that we're thinking about three mechanisms so the first mechanism is what is the dream outcome which you're delivering for your client so for me as a business coach my goal is to help make my clients more profitable part of that might be to generate more Revenue but like I said the the ultimate goal is if you can have a business that H provides you with double the income with half the clients it might mean you can keep the same Revenue but make it much more profitable by having fewer clients within that business to service so but we want to think about what the dream outcome is for your client so if you're a fitness professional it might be to lose some weight if you're a a therapist it might be to increase somebody's confidence if you're a business coach obviously it's to increase turnover or profit think about what that dream outcome is the second thing is can that be delivered over a fixed period of time Rich litvin talks about this a lot in his book The prosperous coach I have a copy of it which sits over my shoulder on a very hallowed part of my library behind me but Rich litvin says that coach is starting out should probably do a three or six month program keep it really simple so can you deliver that dream outcome for a client within 3 or 6 months if the words it depends crop up that's something which we need to have a conversation about because where it depends Creeps in it means that there's too many variables within your business it could be that you work with two wide of variety of different types of clients or maybe you're doing too too many different things for those clients which starts to add conf Fusion it means that results are erratic and hard to get you can't really systematize the process of your from your coaching to deliver predictable results for clients but in a dream world you're able to deliver a dream outcome within 3 to six months and again ideally the third thing is then it needs to be delivered for a fixed fee so in this instance what I'm suggesting is whatever coaching you're already doing will package it up charge the similar amount but get comfortable saying that big number so if that's $600 just get comfortable pitching $600 $0000 now again dipping into Rich Lin's archive in the prosperous coach he talks about professional coaches selling a six Monon program for anywhere between 3 to 6K when they're first starting out and that is more than achievable you only need then 10 clients per year to earn somewhere between 30 and $60,000 which is a great first year for a coach just starting out or somebody who's maybe in the early formative years of their coaching running their coaching practice so where were we at dream outcome over a clearly delineated period of time and for a fixed fee now what you can do is if you start at $600 say the next 10 Prospects that come into your world and who you have a consultation with a powerful coaching conversation you can pitch them $600 and let's see how many of them say yes now from my experience I've been coaching for eight years I've been in business for 20 years I've worked with hundreds of clients now over the last eight years in my coaching practice and what we've discovered is that a typical good conversion rate for coaches is somewhere between 1 and 5 and 1 and three so let's round those numbers really badly but 20% to 40% is a good conversion rate so with those first 10 if you're closing somewhere but you know two three or four of those into clients or maybe even more it means that actually there's good product Market fit and you've got bandwidth there as your confidence starts to grow to gradually increment that price what the mistake a lot of people make is that they just ramp their prices up straight away with little experience from a business perspective or a sales perspective and they don't understand how to communicate and articulate their value to their customers and and so then they go out and do their first 10 pitches at 6K and it's 10 pitches no sales and they think that they're doing something wrong it's just that they haven't leared how to communicate the value of a 6K coaching program so what I normally recommend is pick a price point that pushes you ever so slightly outside your comfort zone so what you might choose to do is get your first couple of pitches under your belt selling a package doesn't matter forget about the effective hourly rate for now but get comfortable selling packages and then what you might do is jump to $900 or $1,200 or $1,500 for the next 10 to 20 pitches gradually then as you start to find that that's easier and you're better able to articulate your value then what you might do is increment it again so we'll jump from $1,500 to $1,800 or maybe $25,000 or hopefully we'll get somewhere close to 3 to 6K sooner rather than later but pitch 10 clients raise your prices pitch 10 clients raise your prices and keep going through that process again one of the mistakes a lot of people make is they feel that they can only increment their prices once a year and maybe by 5 or 10% that's quite frankly you can raise your prices a dozen times a year if you want to if Sarah Jane said yes to your package yesterday and Dave says yes to your package at a higher price tomorrow that doesn't matter cuz that's two separate agreements um to get product Market fit and you can gradually increment your prices to a point whereby economically it starts to match up with the goals that you set out for your coaching practice when you first started out so there we go what have we done we've done go Focus pricing and we've done productizing your your service the third methodology and this requires quite a lot of confidence is around value based pricing so how value based pricing works is that essentially when you're working with a client depending on the result which they want to get and typically value based pricing is attached to some Financial or monetary benefit that the client receives from your coaching you might then want to get paid a commensurate percentage of The Upside so let's say for example as a if you work in startup businesses as a coach and you're helping them to get their first round of investment well what might you might choose to do is charge for a percentage a fixed percentage based on how much of an investment you get so let's say for example if you choose to do 10% of the investment and their first invest round investment raises a million dollars well then you would get paid $100,000 almost as like a commission based on the work which you do with that client now there might be quite an element of work involved with that it might be require you to dip into your black book and make introductions you might have to give people pitch deck templates a lot of training when it comes to pitching investors and various things like that understanding how the financial World works when it comes to SAS startups and so forth but what it means is at that point as a coach you've got a skin in the game you want to see that client have that positive outcome and to receive that investment otherwise you don't get paid so the the more work which you do and the less friction you introduce into things for the client then the the better the chances are that they're going to get that positive result and it might be you might just be playing the numbers it might be that you only expect maybe one two or three of those deals to come off every year maybe you work with 15 20 30 startups it could be whether that's on a onetoone or a group framework maybe that's something I can talk about in another video but it could be just playing a bit of a numbers game that you work with lots of clients essentially for free knowing that a vast majority that may not get their series a funding but over the course of the year one two or three of those deals are going to come off and you're then going to get paid your commission you'll then have those as case studies testimonials and reviews those success stories which hopefully you can then use to leverage attracting more prospects into your world um as you're spinning up your marketing flywheel the value based pricing is a very difficult one again for a lot of coaches to comprehend because it means that they have to work with very similar clients get very predictable outcomes and have everything very systemized and process driven otherwise the chances of the deals coming off is going to start to reduce there are some coaches out there who work almost on a pay as you feel type basis they work with a variety of different clients for example perhaps in different countries so a client in Ghana may not be able to afford the same level of coaching as a client in the US for example so they may have even different rates depending on which countries they're working with that's also another variation on value based pricing depending on who it is that you serve I find that confuses things I think there's a successful and M Small coaching practice that only requires 20 30 or 40 clients a year typically can have one very clearly identifiable Nation specific country or types of countries in order to run a successful coaching practice and then the clients which you want to work with Elsewhere for example you may create other resources to help them such as books free courses YouTube videos and podcasts and that's a a a neat way to be able to give back into those communities that otherwise you might not be able to serve I think there's a danger when you're coaching to want to help absolutely everyone and the challenge with that is it means that you spread yourself very thinly and you're not able able to serve the clients that you've got at a really high level so that they get exceptional results it's the clients that get exceptional results that are the ones that go out there and beat the drum in terms of promoting you from a referral perspective they're out there telling everybody how amazing their coaches and sharing your content when you post it out there and tagging you into things of note so you know almost because they're just so proud to call you their coach and I would rather have far fewer clients and get much better results and serve them at a really high level and then other people in my world I can still serve them but using some of the other resources marketing assets you know to make your coaching and your whatever advice you're giving people that much more accessible so those are the three ways just to summarize we've got goal focus pricing is the first way to price up your coaching packages we've got productizing a service and then gradually incrementing your prices once you've packaged everything up and then the final way is value based pricing if you're interested to know more please do go and hit the link in the description where you can book a free coaching session with me be more than happy to discuss your coaching practice and your goals for your practice and where you would like to take it and if there's anything we can do to increase your prices and help you get a bit more confident in sales that's the way to get in touch with me and also you can request a free copy of my book take your shot which I outlined some of these principles in as well the best place to get that and we'll share a link below in the description as as well but head on over to fearless. biz tys for take your shot and that's on me we'll send you out a free signed copy of the book and that's a great way for you to get started around all of the pricing principles which we teach at Fearless business