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Do you want to know how to price your services as a coach or consultant? If so, you are in the right place.
There is no hard and fast rule when it comes to setting your prices and that can make it tricky. You’ve probably seen others in your industry charging anything from £50 per hour to £500,000 for a year. You know you want to be somewhere in between, but where?
Well, keep on reading as I’m going to show you how to price your services as a coach or consultant.
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How to price your services as a coach or consultant
Before you set your price(s) you’ll need to first think about your pricing model(s).
3 common pricing models for coaches and consultants
Before you set your price(s) you’ll need to first think about your pricing model(s). The most common pricing models used in coaching and consulting are hourly, retainer and packages.
HOURLY/DAILY PRICING
This pricing model is pretty self-explanatory. You charge a fixed rate for a unit of time whether that be at an hourly or daily rate. In this relationship, it is a simple time for money exchange. You and the client are both clear of what is being offered. This model also makes it easy for you to calculate what you can earn on a monthly or annual basis. This pricing model can make your services be seen as a commodity though. By presenting your services as an exchange of time your potential client could compare your prices to others and go for someone cheaper. You might see a lot of experts that you shouldn’t charge per hour or per day but lots of business owners run successful businesses using this model. You just need to work out if you are comfortable charging in this way.
MONTHLY RETAINER
Another common pricing model in coaching and consulting is a monthly retainer. This is where you have an agreement to work with the client on a rolling basis. They pay you a fixed monthly fee and you can set out what they get in return.
PACKAGES
An increasingly popular way of coaches and consultants to price their services in by creating packages. Creating packages allows potential clients to view you differently. Whereas in the hourly/daily pricing model you can become a commodity and your rate is scrutinised, a package puts the emphasis less on how much of your time they are getting and instead on the result they’ll get from working with you.
Which pricing model do you think is best for you right now?
To be clear there is no right or wrong pricing model. You can build a successful and profitable business using any model or even a mixture of models. Take some time to think what makes sense for you and your business. Also, just because you choose a certain model now doesn’t mean you can’t change in the future.
Hopefully by now you’ve chosen what pricing model(s) you are going to use and you are now ready to start working out what to charge.
Choosing the right pricing strategy for your coaching or consulting business
When it comes to pricing there are numerous strategies that you can use. I share 10 different pricing strategies you could consider at Pricing strategies for small businesses. However, to keep things simple I’m just going to discuss three different strategies that all take your competitors pricing into consideration.
PRICING STRATEGY 1: PENETRATION PRICING
Penetration pricing is where you set your pricing to deliberately undercut the competition. This pricing strategy is often used by businesses that want to gain traction quickly. On the whole, this isn’t a method I recommend to service-based business owners. This strategy works well in the product world that has large profit margins, however, since you are providng a service and that requires your time (time is your most precious resource) you don’t want to end up working 24/7 and not being paid properly. The only time it may be suitable to use this strategy is if you are a new coach or consultant and are trying to get your first clients. If you do decide to use this pricing model be sure to have a plan in place for when you’ll increase your prices. This should be a temporary pricing strategy and you don’t get stuck in it.
PRICING STRATEGY 2: COMPETITION-BASED PRICING
Competition-based pricing is where you set your prices at a similar price to your competitors. The purpose of this pricing strategy is to ensure you are competitive within the marketplace. A potential client will have numerous ways of solving their problems. Your services are just one option that they can buy. Competition-based pricing should help ensure that you are considered amongst the other solutions. There are two things you need to consider when using this model. Firstly, if your pricing is the same as your competitors what are you doing to differentiate yourself. Secondly, if you just copy your competitors’ pricing you need to ensure it actually works for your business. Your competitor might be willing to work more hours or take home less money. You have no idea if that pricing is allowing them to have a successful, profitable business. If you decide to use this strategy to be sure to ensure the pricing works for your business and your personal needs.
PRICING STRATEGY 3: PREMIUM PRICING
Premium pricing is where you purposefully set your prices at an inflated rate. Premium pricing is used to position your services as premium and usually be used alongside premium branding. If you use this strategy, you’ll have to ensure that the service you deliver is high-quality and still provides value to your clients.
That is is just three possible pricing strategies. If you don’t like the sound of those pricing strategies you can find out about some other pricing strategies here – Pricing strategies for small businesses.
Also, you aren’t forced to follow a strategy. It is your business so you can do what you want. You can pay no attention to your competition and pluck a number out of thin air.
Questions to ask yourself once you’ve set your prices
Regardless of how you decide to price your services as a coach or consultant once you’ve chosen your prices here are some question to ask yourself.
1. Does my pricing allow me to achieve the business financial goal and my personal income goal?
The first thing you need to check is that your pricing means is physically possible for you to hit your financial goals. I’m passionate about helping business owners to grow a business that enables them to pay themselves properly (whatever that means to the business owner). You ideally should have an overall revenue goal for the business and then a goal around how much you are able to take home personally. If you don’t then please do that work before you make any decisions about your pricing.
Once you’ve got your goal you’ll need to sit down with your proposed prices and work out whether that pricing will allow you to achieve your goals.
Here are three examples to show how it can work.
EXAMPLE 1: FINANCIAL COACH WITH A £110,000 REVENUE GOAL
Hourly Price = £200 per hour
Available hours to work with clients per week =15
Maximum income per week = £3,000
Maximum income per year (based on working 40 weeks) = £120,000
Financial Target = £110,000
The financial target can technically be achieved.
EXAMPLE 2: PR CONSULTANT WITH A £50,000 REVENUE GOAL
Retainer = £500 per month
Number of clients they can have at the same time = 8
Maximum income per month = £4,000
Maximum income per year = £48,000
Financial Target = £50,000
The financial target can’t technically be achieved. Pricing needs to be reconsidered.
EXAMPLE 3: BRAND STRATEGIST WITH A £75,000 REVENUE GOAL
3-month packages = £2,000
Maximum number of clients at the same time = 8
Maximum clients across the year = 32
Maximum income per year = £64,000
Financial Target = £75,000
The financial target can’t technically be achieved. Pricing needs to be reconsidered.
Hopefully, those examples give you a feel of what you need to work through in your business.
Have you finished that section and thought my pricing isn’t right and I don’t know what to do? If so, book a call with me. I absolutely love numbers and am passionate about helping small business owners set the right prices to ensure they can achieve their financial goals and have a successful business (based on your version of success).
Book a free discovery call with me today.
2. How does the pricing of my services work alongside each other?
If you just have one service, then obviously you don’t have to answer this question. However, if you’ve already got the plans for additional services in the pipeline then it might be good to consider.
When you have multiple services and / or products you can’t think of your pricing in isolation. You need to think about how the pricing works alongside each other.
Lots of successful coaching and consulting businesses will build a value ladder. A value ladder is where you have a range of products or service that increase in value and price. For example, you might have an introductory service, your main service and then a premium or VIP service. Having this range of services enables you to maximise the amount you can work with someone and therefore increase your customer or client lifetime value. You can find out more about what a value ladder is and how you can build one for your business here.
3. Do I intend on running any discounts or promotions in the future?
Some business sowners set their prices knowing that they won’t always achieve the full price. For example, it may be that sell via webinars and offer a fast action discount to this who sign up whilst still on the webinar. Another example is you may take part in Black Friday. If you know that part of your marketing strategy involves you offering a discount on your services then you should be taking that into consideration when doing your calculations. You need to ensure that your current price enables you to stick to your discounting plans and still reach your financial goals.
Discounting is a major part of some businesses’ marketing strategy and there is no doubt it can work, but you should think very carefully before discounting your services. You can find out more about the dangers of discounting here.
4. Can my ideal client afford my prices?
I’ve left this question till last for a reason. Too often business owners set their prices on what they think they ideal client can afford and that is the wrong way to think about it. However, to be successful you do need to ensure that you haven’t priced yourself out of the market. If you are a career coach for the long-term unemployed and charging £500 per hour then you are likely to be outpricing your clients.
When you are asking yourself this question be very careful not to make assumptions about what people can afford. Often when I’m working with clients they’ll say their potential client can’t afford a price but have no real evidence. Be sure to be coming from a place of fact, not opinion.
There you have it! You now know how to price your services as a coach or consultant
Pricing your services as a coach or consultant can be difficult. There are lots of things to consider in order to set your prices and I didn’t even mention anything about how your money mindset and your self-worth can impact pricing.
Hopefully you now feel as if you can make an informed decision when setting your prices. In the comments do share what pricing model or strategy you decided to go with.
Pricing plays a pivotal role in the long-term success of a business and often it can be hard when delivering a service to really be objective enough. If you would like help setting your prices and then having the right marketing strategy to attracts clients who will pay those prices, then let’s talk.
Drop me a message here or if you would prefer to discuss your situation (I love a good chat) then you can book a call here.
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