The majority of coaches still use hourly rates for their services. Not just that. They use average market prices.
The result?
81% of coaches give up by year three because they cannot get sustainable monthly income to pay their bills.
Well, it’s time to change that.
Without going into too much theory on pricing, here are five key factors to consider if you want to use a better pricing strategy:
1. Focus on value (outcome) vs. number of hours
Instead of selling your sessions, create coaching packages focusing on your ideal client's desired outcome. Do not price time; price results based on the value they represent to your clients.
Remember, your client does not care if it takes 3 sessions or 5 sessions to get the desired result. Actually, they’ll be super happy if it takes them faster. So when you charge per session, your goals conflict with your client’s goals. You’re interested in having more hours when you charge by the hour.
Does your client want to lose weight, get more clients, or start dating? Find out what your clients want and price that. One of the easiest ways is to ask that question during the discovery call.
I often do that.
Now, you might be saying, how do I know how many sessions it will take me to get this result? Wouldn’t it be different for different clients?
Yes and no.
This is when experience and mastery come in. When you come to an experienced surgeon, and he diagnoses the problem, he will be able to tell you how much this surgery will cost. When you come to an experienced consultant, he can offer you a quote to solve your issue. The same applies to a coach.
That means, in the beginning, you might take more risks by naming a fixed price and ending up giving more sessions than expected. I still believe it is going to be easier to sell. Also, if you manage to build a great relationship, you can always go back and say that it took longer than you expected and offer them to pay more.
Some of my clients offered me to pay more because of the value they got from me exceeded their expectations.
2. Choose your story
“Price tells a story”–Tara McMullin.
What’s your story?
You expect to pay $30 for a Zara bag, $300 for a Coach bag, and $30000 for a Hermes bag. To own a Hermes bag, you’ll have to jump through the hoops, find a back door, build relationships with the right people, or wait for a long, long time.
Why is that?
Quality? Yes!
But not just that. Honestly, I don’t think that a Hermes bag is that much better quality than a Coach bag—maybe slightly.
When you’re buying a super-luxury product, you’re buying their story: association with a brand, a status, and a feeling of possessing something extraordinary. You want to feel extraordinary.
Let’s look at the coaching world.
As reported by the ICF Global Study, the average rate per one-hour coaching session is $244 (ranging from $144 in Latin America to $277 in Western Europe. (Source)
Coaches certified by Tony Robbins have a rate of about $900 per hourly session. (Source)
Finally, to be coaches by Tony Robbins himself, you’ll need to pay tens of thousands of dollars for each session if not more, and it’s probably not so easy to get there, and it will be a long wait.
Now, you can’t become Hermes or Tony Robbins from the get-go. But this should prove that every market segment has customers who can afford premium prices.
And not just afford. They want them.
Badly.
3. Avoid the middle
The worst choice you could make in your pricing strategy is to stay with the average. People who stay in the middle are the first to go out of business.
You’re much better off either going to the lower end of the spectrum and outcompeting on price but recovering it through the volume.
Or going to the higher end and telling a different story.
4. Give options
Any SAAS business these days offers you at least three payment plans.
Why not do the same?!
It should not be too difficult to come up with 3 ways to work with you. The more expensive option could include more sessions in a shorter period of time, templates, video lessons, or even done-for-you services.
Offering three options (the lowest, the middle, and the expensive one) creates price anchoring - giving your clients a higher price point to help them make the decision.
When you offer several options, it changes the question from “Should I work with this coach” to “Which option is the best for me”?
5. Be creative
Again, I get it. When you are just starting out, you feel you must offer lower prices.
Here's what you signal to the market when you decide to go that route:
- The quality of your services is low(er) than other coaches who charge more either because you don’t have enough experience or confidence;
- You are not going to build relationships with your customers; you are purely transactional. Not because you are bad, but because you simply can’t afford it with your pricing strategy;
- There are a lot of other coaches on the market that are way better than you;
- You are desperate to get clients.
Believe me, none of these signals are great.
What if there is a better way?
If you have zero to limited coaching experience, instead of offering low prices, you should offer free coaching. Alex Hormozi calls it the "first 5 clients framework".
Here are some more creative ways to get clients and not underprice yourself:
- Offer more. You can offer extra sessions, chat-based accountability coaching, templates, and done-for-you services as part of your coaching package.
- Success fees. Give your clients an option to pay once they get the result. You must trust your clients and have confidence in your ability to deliver on your promise. I used this a few times and never regretted it.
- 100% money-back guarantee. If you're uncomfortable with the success fee option, go for this one. It is still a risk-free option for your clients.
Actions for this week:
1.Stop thinking that your clients make their buying decision on price and price only.
To help you do that, here’s the question I want you to answer: Think about what products or services you've bought in the last 30 days that you could have bought cheaper but decided to go for a more expensive option. After you list those items, consider why you made that choice. Was it time, convenience, guarantee, experience, extra bonuses, or even the status (brand)?
2. Look at your pricing and consider switching to coaching packages vs. selling coaching sessions.
3. If you are just starting out, craft your coaching packages and decide on their pricing, but offer them for free to at least 5 people.
And that's all for today.
Until next Sunday.
Stay awesome,
Lidia