Are you charging your clients enough?
Many factors go setting into the “right price” because it’s more of an art than a science (and certainly not a pat formula), so if this is a question that you can’t clearly answer at this time, that’s okay.
Setting up your pricing structure can be one of the most nerve wracking aspects of running a business.
You don’t want to price yourself “out of the market” by asking for more than potential clients are willing to pay. But you don’t want to sell yourself short either. After all, the experience of having a boss who didn’t appreciate our value is likely one of the reasons most of us went into business for ourselves in the first place.
Making pricing more complicated is the fact that there is no one right way to do it.
Taking a look at what others in your industry are doing is a great place to start (The ICF Global Study is a great place to find data on this), but don’t let this research limit your thinking because data never takes into account the unique value and client experience that you create.
When you are just starting your coaching business, you might feel you need to charge lower rates to make up for the fact that you are still learning. And if your practice isn’t full, it can be tempting to keep your rates low to make sure you get more “yeses” than “nos” from potential clients. However, I encourage you to embrace a more abundant mindset and think bigger (yes, even from the inception of your business).
Remember always that your clients are paying for your ability to support people like them and for their results. In other words, they are paying you because of your value, not your time.
Here are a few ideas to keep in mind when navigating your pricing:
- Avoid trading time for money. Coaching is about more than the time you spend directly working with your client. You do prep work outside of the sessions and your client invests time and energy incorporating what you discuss between coaching sessions. All of this time contributes to the value the client receives from their coaching experience. If you do even more for your clients in between sessions, such as be available by email, text or phone for “lifelines” or feedback, this also can create tremendous value to your clients.
- Invest in building experience to justify your rates. Create a pilot program to gain experience in a new technique or process. Offer a discount/special rate to participants in exchange for participating in your learning experience, offering feedback, and sharing their experience with you afterwards (You can use positive statements as testimonials that showcase the value of your work).
- Hire a business mentor. If you are unsure of what direction is right for you and need more support navigating your choices, working with a mentor can help simply because they can share many different points of view and can more easily see your blind spots. In particular, a mentor can help you to better understand your value, what you bring to the table, and how that compares to the market.
- Charge for your Intellectual Property. What is easiest for you is often what brings the most value to your client. It’s what I often call your “zone of brilliance.” When we are in our brilliance, it doesn’t take as much effort, but the value is actually higher. This is particularly important to remember if retreats, team/leadership development, training, consulting or other project work are part of your business model.
Tips for Project Pricing
According to the ICF, 80% of coaches offer some sort of services outside their coaching services. Most of my clients do Team Development/Coaching and work with Leadership teams as an extension of their coaching practices.
It can be tempting to price this kind of work as “time and materials,” where you simply bill your time by the hour for every hour you spend on the project. However, as your experience grows, the amount of prep, or non-coaching time, you’d need to invest to make the project successful will progressively decrease. As a result, if you charged for your time vs. your value, you’d end up charging the client MORE when you were just getting started than you would later when you are more experienced.
The more experienced you get, the more valuable your expertise and Intellectual Property become.
This is why I recommend my clients utilize a project fee instead for these types of services. To make this work successfully and profitably, you do need a clear scope of the project from the outset. Clearly defining the scope is key to keeping a project on time and on budget. You also need to have a clear process on how to add additional requests to your initial proposal (usually with a work order or addendum) to use with clients who want to add meetings or additional scope after you start working together. Without a clear process and boundaries, you can easily see your time add up and your profitability go down (aka Scope Creep).
If you are still charging by the hour for this type of work, consider charging a project fee for your key offerings that encompasses the value of the work, and save time/materials for projects like pilot programs whose scope may shift as you move through the project.
In the end, the ideal pricing model is the one that feels light and right to YOU, keeping in mind the needs of your market and your ideal client.
How is your approach to pricing working for you? Do you have any other tips to share? I’d love to hear from you.
Tara Butler Floch