The Don’ts of Pricing Your Coaching
In traditional brick-and-mortar businesses, this how prices are set.
If the cost of my time, materials, and overhead is $X, I’ll charge that plus a little bit more to make a profit.
Sometimes businesses want to set an hourly rate for their services. They anticipate what their time costs and then divide it into hourly chunks.
Think of it like selling a book. How much did the book cost you to write and print it? Let’s say that cost is $30 per book. If your goal is to make a million dollars, selling $30 books is a very slow way to do it.
Cost Plus and Commodity pricing are both based on the cost of goods and time so it doesn’t translate well for coaching services. Not only are they difficult to scale, but the focus is on the cost to you, instead of the value you bring to clients.
Third, you don’t want to set your prices based on what the crowd is charging. Just because another coach in your market is charging $1,000 per month doesn’t mean you should. It’s completely irrelevant.
When you compare your prices to others, you’ll lower your price to try to match. The thing is, you don’t want to be average, and you certainly don’t want to be cheap. Being cheap can cause clients not to choose you. They don’t want cheap, they want the best.
You want your prices to be premium, and you won’t get that by matching the market average.
The Do’s of Pricing Your Coaching
You’ve probably seen this in a seminar or infomercial. The salesperson lists out everything in their package and tells you the price of each item. They then tell you the total – what it would cost if you bought each item individually. Then, they give you a ‘discounted price’ if you buy it all together. It’s also referred to as value stacking or bundling.
An apples-to-oranges comparison is often used to related your program to something similar, but much more expensive.
To get an MBA at one of the world’s most prestigious universities would cost you $____, and you would just be learning theory. My coaching program is more than theory. When you work with me, we’ll be working on your actual business every week together and it only costs $____.
Stacking and Apples-to-Oranges comparisons work best when selling from stage or through a webinar. While they can work, there are two other pricing methods that are even better – especially when selling one-on-one.
Cost of Problem:
To set prices with this method, you need to figure out how much it costs someone not to work with you.
For example, I know that if a coach is running a stable business bringing in between $10K per month in revenue, it’s costing them around $30K per month not to work with me in my Mastermind program.
How do I know this? For starters, I’ve worked with enough people in my standard Business Coaching Workshop and $30K per month is a number that we see our clients reach consistently.
I’m able to feel bulletproof about my Mastermind prices because I know that not being in the program is costing prospects that much money.
I want you to have the same confidence. The way you do that is by figuring out what the cost is for the prospect if they do nothing and just stick with their current problems.
What’s the client’s return on investment? In other words, if they work with you, how much revenue will they get in return? This is similar to Cost of Problem, but focuses more on potential returns from using your program than costs of not using it.
Setting your fees based on time or expertise won’t reward you or bring your clients added value. If you want use a time model, sell using a retainer – a three-month, six-month, or one-year package – but don’t price your coaching based on hourly or session rate.
Remember, the right pricing isn’t based on the cost of your deliverables, but on the Value of your outcome.
If you are really interested how to alleviate and increase your VALUE in Coaching Programs, Services & Products then hop on to my Live Workshop