In 2006 just before I started coaching school, I went to a luncheon where the keynote speaker was Alan Weiss. Alan is known to be the coach for entrepreneurs. He helps consultants from all walks of life get clear about their messaging, their marketing and their pricing, well everything. Later in the day the big question was asked “What should I charge in order to get clients”. His response was simple “How much do you need?” The room fell silent.
Whether you are surfing the internet or speaking to fellow coaches, there is a lot of information about what you should do. There are some that say charge 5,000 for a signature program, and others that feel coaching should be available to everyone and therefore a low cost. How do you choose? I ask you the same thing Alan asked “How much do you need?”
Now I know you want there to be some type of uniformity in pricing amongst coaches. But honestly how do you do that? Coaches are all over the world, in every niche imaginable with all sorts of skills and tools.
I’m sorry, I kind of disagree with the idea of price uniformity in coaching.
Let's start by talking about trees
When trees bear fruit, the fruit grows on all branches. Growing up, we had a tall Cherry tree in our backyard. Unfortunately it was never pruned by the previous owners and my mother was frustrated because there was never any low hanging fruit. The tree yielded cherries every year, and while some of them fell to the ground, the birds had a feast every season.
In order to set pricing, I suggest you first think of your coaching business like a fruit tree. The fruit are the products, services and TIME that you will offer. Yes, consider your time in all that you do. What you want is to have fruit available to people regardless what part of the tree they are able to reach when they are ready.
All of the low hanging fruit is for the folks who are a bit more casual. They may not be quite ready for coaching, but they definitely want to follow you, hang out, find out more. Low hanging fruit doesn’t require much effort to grab and eat. It’s usually not the ripest fruit on the tree either. So the people at this level are happy to receive any free and low cost products and services you offer. What you do not want is to spend a lot of time here. The products here are the freebies on your website, a blog, podcast, social media pages and maybe an introductory – low cost course. This course should only be a few lessons like a basic introduction to your signature program.
The fruit in the middle of the tree is a bit of a different story. The fruit here is ripe and bountiful and the tree is widest. The people at this level are willing to put in their effort (money and time) to get this fruit. We can consider this the premium category of your business. So this is where you will put a self-paced coaching program with an upcharge option for private coaching, This program could be the self paced, online version of your signature program if you like. Also at this level are your group coaching products because you maximize your time by coaching several people at one time.
Now, the fruit at the top is a whole different category. The fruit at the top of the very same tree has access to all of the sunlight and is often the best fruit on the tree. The people that are after this fruit are willing and READY to put in the work (and the money) to get the best you have to offer. They may have pulled fruit from your other levels or they may simply have come to you ready. Either way, this is where you will have your Premium products and services. This fruit is your signature program for your one-on-one client, who is paying top dollar in exchange for your time.I think you are beginning to get the idea I’m proposing.
Once you have decided where your product/service sits on the tree, you are well on your way to not only getting clients, but organizing your business. This helps you to determine where to spend the majority of your time as well.
Now that you have a good idea of what your business looks like, you can begin to determine prices for your products and services. This is still difficult for many because we are so emotionally invested and often undervaluing ourselves. Additionally we often assume that our target audience doesn’t have much money to spend on coaching. Here is what you have to ask yourself: How much would you pay someone if they could teach you how to solve your problems? (hmmm…) Clients are paying for value, not to hang out and talk to you. People always find the money for something they value.
Your Monthly Investment
Ok, we are at the home stretch. When setting my pricing, there are always two things that I consider no matter what. 1) My monthly Investment in my business and 2) What’s included in my package.
Coaches often have not looked at the total amount of money they spend to keep their business running each month. Complete this exercise for yourself. Add the cost of everything you pay for every month to run your business. This would include things like your internet cost, any office space (even if it’s your home), your phone, the cost of a website and, any services you use for your business. Let’s not forget any marketing products or services you have purchased. Once you have everything down to a monthly cost, add that number together. I hope it’s not much more than you thought! This is the amount of money you need in order to break even in your business every month. It is the cost of just being open. If you are not making this much money, you have a very expensive hobby!!!
What does your product/service include?
The next thing to think about is the cost of your product/service. This isn’t very complicated, however there are a few things to consider. Everything that is given to your client has value. You must consider what you are including with your product/service. As an example, I could have a package that included:
- Private FB Group
- At least 4 group sessions and maybe a private session or 2
- Entrance to a retreat or access to a private lunch at a retreat
- Access to my private Life Coach Office portal
2-3 month access to my membership group
E-book or journal
Each item on the list has a monetary value. I will take the cost for each of these and add them together. This is the number I need to consider for my program. Let’s say the items above have a total cost of $1200. This is the cost I can consider for my program. And if the monthly cost for running my business is $200, then I will net $1000 for the month.
It could be that you are not ready to charge that much for your program. That’s ok, because you can lower your pricing by choosing an item or 2 to offer for free. These would be added to your marketing piece as “bonus” items. So, let’s say, the private FB group, the private portal (with a 3-month membership) and the ticket to the private lunch (and a seat at my table) at my retreat are free. If the cost of this was another $200, then the cost of the program could be $799 with $200 in bonus items. It’s really that simple.
Once you have the number you are charging for your program, we can go back to the original question about money: “How much do you need?”. If your program is $799 and you need $2400 for the month, you need 3 people to pay in full. If you are doing monthly payments, you will need more people to get your $2400 number. So, with the numbers figured out, it’s now all about getting clients.
I realize that coaches get into coaching to coach. But this is a service-oriented BUSINESS and so you must treat it like one. True success means you will need to give as much attention to your numbers as your know-how. If you find that this portion of running your business is way too complicated and you simply are not interested, it’s better for you to outsource this portion than to ignore it. Hopefully you will master this and find that it’s actually fun to challenge yourself to get comfortable with setting your pricing and getting clients at that price.