The biggest pricing mistake coaches, consultants and online service providers make

Want to know what the biggest pricing mistake coaches, consultants and online service providers make? There is no doubt that pricing services is difficult, but getting it right is vital. When you price your services incorrectly it can have a detrimental impact on your business and your life. Incorrect pricing can hurt the amount of profit you make, the amount of money you can pay yourself and it can even impact whether your business survives or not. Keep on reading to find out what the biggest pricing mistake coaches, consultants and online service providers make is.

 

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THE BIGGEST PRICING MISTAKE COACHES, CONSULTANTS AND ONLINE SERVICE PROVIDERS MAKE

 

What the biggest pricing mistake is

 

The biggest pricing mistake coaches, consultants and online service providers make is setting their prices so they can never achieve their financial goals.

 

You might have read that and be thinking “Really Charelle? Does that happen and is that the biggest pricing mistake coaches, consultants or online service providers make?

 

Firstly, whilst it might sound crazy it happens more often than you would think. Between my Pricing Power Hour, Strategy Days and 1:1 mentoring I’ve worked with a lot of coaches, consultants and online service providers and I’m shocked by how many have a financial goal that their current services and pricing couldn’t achieve.

 

Secondly, it is the biggest mistake. If you are running a commercial business (rather than a charity or not-for-profit) then achieving a certain amount of profit is key. I’m not stipulating what that level of profit should be or even how much revenue a business should be aiming to make.  I don’t care if you want to have a 2K, 5K, 10K or 20K month. That is down to you as a business owner to decide, but if you’re setting a financial goal it should be achievable. Otherwise you are essentially setting yourself up to fail and why would you want to do that? In some circumstances not achieving a financial goal might mean a bruised ego, but it can be much worse than that. It could mean you’ve spent more money in your business than you could afford to do. It could mean you are unable to pay suppliers, contractors or freelancers. It can in the worst case scenario result in you having to shut your business down.

 

Why put yourself in that situation when it is so easy to avoid making the pricing mistake in the first place.

 

Why coaches, consultant and online service providers make this pricing mistake

 

Before I share how you can avoid making this mistake I want to share WHY coaches, consultants and online service providers make this mistake in the first place. With most of the business owners I work with it isn’t intentional. I mean who wants to set themselves up to fail? It happens because they haven’t properly looked at the figures.

 

Overestimating how many hours you can be actively delivering a service

The first reason that coaches, consultants and online service providers make this pricing mistake is because they overestimate how many hours they can actively deliver a service. If you are running your business by yourself (or with a very small team) you will have to be doing more in your business than just working with clients. For ease I’ll give an example.

 

Imagine there is an accountant. They want to work a maximum of 25 hours per week in their business. They charge £75 per hour and plan on taking 6 weeks of holiday. They have set themselves a financial goal (gross revenue) of £100,000 (They’d spent a bit too much time online and wanted to hit the 6-figures milestone 😉)

They do the maths as follows:

25 hours x £100 per hour = £2,500 per week

£2,500 per week x 46 weeks = £115,000

 

They think they have an extra £15,000 of wiggle room so they’ll definitely hit 6-figures this year. But the reality is they probably won’t.

 

As an accountant you can’t bill for every hour you work. There are hours you need to set aside for marketing your business, communicating with leads, onboarding new clients and other admin tasks.

 

Now even if that only takes up 20% of the working week it will mean that financial goal is unachievable.

 

20 hours x £100 per hour = £2,000 per week

£2,000 per week x 46 weeks = £92,000

 

Assuming you’ll be fully  booked all the time
Another reason why coaches, consultants and online services providers make this pricing mistake is they assume they will be fully booked all the time. It is rare when you are providing a service that you will be fully booked for the entire year. This happens for a number of reasons. One reason this can happen is because when you are fully booked you stop marketing your business then it is easy to find yourself in a situation where once you’ve finished with your clients you take a moment to breathe again and realise no one is interested in working with you. This is a reason why service providers will often find themselves in a feast or famine cycle. Find out how to avoid the feast or famine cycle here.

Another reason this happens is because there is a seasonal nature in demand. For example, a financial coach that specialises in supporting Mums might find that potential clients don’t want to sign up and work with them in the summer holidays as they are busy with their children. This means there could be a 6 week period where they have no paying clients.

 

Struggling to forecast when providing multiple services

Trying to forecast what you can generate in revenue when you offer one service at an hourly rate is one thing. However, as soon as you start to add in more services and packaged rates it becomes even more complicated.  For example, you could be a copywriter that offers a number of services. You have a day service where you’ll rewrite someone’s website copy. Then you also have  2 different ongoing packages where you write people’s email newsletters and blog post. One is 1 newsletter and 2 blog posts a month and one is 4 newsletters and 4 blog posts a month. Oh and to make it extra fun you also offer a sales page writing service. You sit down to work out how many of each you could manage in a week or month and it is all too much so you give up. You decide to pick your financial goal based on what you want to achieve and hope it works out.

 

Hopefully you can see how it is actually quite easy to end up making this pricing mistake and having your services priced at a rate that will you mean you never could hit your financial goal. Whilst it is an easy mistake to make it is also easy to rectify when you know how.

 

WANT HELP WITH PRICING YOUR SERVICES? I run Pricing Power Hours so that coaches, consultants and online service providers can quickly get expert pricing advice and be confident that their pricing has been set properly. Whether you are setting your prices for the first time or want your current prices reviewed I  can help you – and fast!   To book, or find out more about, the Pricing Power Hour click here.

 

How you can avoid making this pricing mistake in your own business

 

Properly think about how many hours you can commit to client delivery

The first thing you need to do is make sure you properly think about how many hours you can commit to client delivery in your business. The best way to do this is by listing all of the other responsibilities you have in your business and how much time you need to commit to those. Don’t have an idea how long it takes you to do other activities in your business – start timing yourself! Until you properly understand how long other tasks take you won’t be able to properly know what you can commit to working with clients. It is also a handy exercise if you are planning as outsourcing as you can see how much time you’d get back.

 

Don’t assume you’ll be fully booked all year

The marketer in me wants to shout from the rooftop “always be marketing” and yes even when you are fully booked you should still be marketing your business. That way you can be driving people to a waitlist so as you finish with one client you can start with the next. Find out more about making and creating a waitlist here. However, the reality is that being booked for the whole year is unlikely. So price your services in a way that you don’t have to be at 100% capacity all year to achieve your financial goals (and also give you the opportunity to exceed your financial goal – and who doesn’t love that?)

 

Carefully plan how you can deliver multiple services. 

In order to successfully deliver, and estimate how much revenue you can generate from,  multiple services you need to do a few things. Firstly, you need to look at the structure of your week or month and see how you can simultaneously deliver different types of services. Then based on that plan you’ll need to look at your current pricing and see if that allows you to achieve your financial goal. Finally, you’ll need to stay strong with your boundaries rather than letting your clients boss you around.

 

That’s it. You know now what the biggest pricing mistake coaches, consultants and online service providers make, and how you can avoid making it in your business. 

 

Pricing your services correctly is key for long-term business success so I really hope you take the time to make sure you aren’t making this pricing mistake in your business and if you are that you rectify it sooner rather than later.

 

Let me know in the comments what your biggest takeaway is.

 

WANT TO BUILD A ONLINE SERVICE-BASED BUSINESS THAT YOU LOVE AND THAT SUPPORTS THE LIFESTYLE YOUR TRULY DESIRE? Getting your pricing right is just 1 of the 5 things you need to do in order to successfully design and run a thriving online business on your terms.  I specialise in supporting coaches, consultants and online service providers who are small in terms of team, but big in terms of ambition to build thriving businesses. Whether you’re looking to quickly get a strategy in place or want ongoing training, support and accountability I can help. You can check out all of my current services here.  You can book a free, no-obligation, introduction call to discuss your precise needs here.