One of the biggest hurdles for a new coach is how to price your coaching. There are several variables involved that can complicate this endeavor. So I want to give you some guidelines to follow.
By the Hour
Many coaches start out by pricing by the hour. But let’s take a look at why that’s not the best choice. Let’s say you figure your time is worth $50 an hour and your monthly income goal is $3000. If you are giving each client 2 1-hour coaching sessions a month, you’re receiving $100 per client and that means you need 30 clients a month to reach your income goal.
That’s a lot of clients to handle every month and it’s not counting the time you need to do the marketing to get those clients. Think about it this way: if your conversion rate is 33%, you need to do 90 free consultations a month to get those 30 clients—not very practical…
But here’s another more important reason why you shouldn’t be charging by the hour. Your clients are not just paying for your time. They are paying for your expertise. Think about how many hours you have spent taking coach training, certification programs, and other courses to hone your coaching skills. Most coaches have already lost track of that number.
Look at it this way: when you go to the doctor and he spends 10 minutes with you, gives you a diagnosis and perhaps a prescription, and you get charged $100, you don’t complain that he’s getting $600 an hour. You know that you aren’t paying for his time. You’re paying for his expertise, training, and experience.
The same is true for other professionals. You are a professional coach and people come to you with a problem. They are paying you to diagnose the problem and provide a solution. So that’s why they aren’t paying you just for your time.
A final reason for not charging by the hour is that if you do, people will have a way to compare you to other coaches who charge by the hour, which is an unfair way to decide which coach to hire. We don’t want people shopping around for coaches as they would the best price for a TV, for example. We want them to select a coach based on who can best help them.
Now that you are hopefully convinced that you can’t charge by the hour, how do you price your coaching?
By the Package
You price your coaching by the package. That can be as simple as a 3 or 6-month package of 1-4 coaching sessions a month. Or you can create an 8 to 12 week course that people purchase.
If you’re just starting out, you shouldn’t be creating a course. Do it the other way around. Start getting clients with a 3-6 month package of sessions, coach them, and then down the road, create a course out of the process you developed along the way with that coaching.
Ironically, to get a base point for pricing a package, you need to begin with what you think your time is worth. So let’s say you think your time is worth $50 an hour. If your 3-month package includes 2 1-hour sessions, that’s $100/month or $300 for the package. But that’s just for time and when we look at it like that, $300 doesn’t sound like enough for a major transformation in someone’s life. (And frankly, any professionally trained professional is worth a minimum of $100 an hour anyway.)
But we also need to figure in that they are paying for your expertise, training, and experience, which means you could add $500-3000 to the package, depending on your industry and your experience.
Another variable you need to think about is the concept of what it’s costing your clients not to have the solution you offer. Maybe you’re a career coach and the client wants a better paying job—say $500 more a month. Well, every month they put off solving that problem, it’s costing them $500 a month. That means that your program is worth at least $500 a month to them.
But what it’s costing a client to not solve a problem isn’t always monetary—the cost could be emotional anxiety, chronic stress, or relationship tension. What would someone be willing to pay you to overcome those things?
I hope you can now see that even a simple 3-month coaching package can easily be worth between $1000 and $5000. Now you want to pick a price that’s high enough to make you feel like you are charging what you’re worth, taking into consideration all of the above, but also make the customer feel like they’re getting a great deal—so somewhere in the middle is best.
One more thing to consider is to start low until you have some experience with paying clients under your belt. You can always raise your price as you get more experience.