Charging the proper amount for your coaching services is an important part of growing your business.
It can be tricky to strike the perfect balance, but once you do, it’s easier to charge your clients fairly and get paid according to the value you’re delivering.
The problem with the incorrect pricing structure is if you charge too much, you risk scaring clients away during the sales process. If you charge too little, you could be spread too thin trying to deliver all that you’ve promised.
At IMPACT, we train business coaches with our Certified Coaching Program. One of the questions we often get asked by these coaches upon graduation is “What should I charge for my coaching services?”
The short answer is it depends on a few different factors.
We’re going to show you how to figure out the best pricing structure for your coaching business so you can gain more clients and get paid according to your level of expertise.
We will share:
How to zero in on the ideal pricing structure for your coaching business.
The different pricing structures you can choose from, including the pros and cons of each.
You will know how to set your pricing and when — while also having the room to adjust as you need to.
Here’s how to set rates that will enable you to remain profitable but also fair to your clients.
How to choose the best pricing structure for your coaching business
Pricing your services appropriately for your market and your level of expertise will help your business grow.
The right pricing will keep clients coming in the door and will also make it easier to reduce client churn. Your current clients will feel good about the value you’re providing, and you’ll have an easier time getting positive client testimonials and recommendations.
There is a risk when you charge too much or too little for your services, but the nice thing about setting your rates is that you can change them at any time.
To set the proper pricing for your coaching business, you first need to know the following:
Common coaching rates in your industry and location.
How much value you can provide to clients with your services and experience.
How much your right-fit clients are willing to spend.
For example, according to a recent report by ICF, coaches in North America who had over 10 years of experience coaching charge $300 per hour, on average. Furthermore, those who served a niche industry, such as business coaches who work with executive leaders, made on average $200 more than coaches who led a generic coaching business, such as life coaching.
Once you have an idea of these factors and what your competition is charging, ask yourself the following questions based on your findings:
What is my revenue goal for the year?
How many clients would I be able to serve?
Does the price point make sense for the value I can provide and the market?
Though these questions can feel a bit abstract and difficult to pinpoint, much of what you’re charging might be a gut feeling at first. Once you’re charging clients and getting feedback about their experience working with you, you will be able to better gauge if what you’re charging is fair or needs to be adjusted.
You may need to start off at a lower rate while building your clientele until you have enough testimonials and positive feedback to raise your rates confidently. But once you have a well full of happy customers and are able to build up your expertise, you will be able to raise your rates.
This could happen quickly — sometimes in a matter of months — so don’t be afraid to experiment at first and settle into the pricing structure that feels right for you at the time, even if it may change down the road.
Different structures to consider (including pros and cons)
Now that you understand how to figure out where you want to be — according to your value and market — here are some of the different pricing structures you can choose between and the pros and cons of each.
Charging an hourly rate
Charging by the hour might seem to be the simplest pricing structure since you’re getting paid for the time you put into a project and that’s that — but there are some caveats:
Pros of charging hourly
Hourly rates are great for newer coaches who don’t yet know how much time their services take. Imagine if you were charging per project, and something you thought would take about five hours ended up taking you 55. This does happen! And you can’t work all those extra hours for free.
Hourly rates give you the ability to get paid for the time you put into working with your clients — and no more or less.
Cons of charging hourly
While charging hourly can ensure you are getting paid for your time, it can also signal to your clients that your time is the commodity, instead of the value you’re providing. This can present a difficult scenario when suddenly your client wants to know why a project took more time than it should have. This puts you in a position where you’re constantly seeking your client’s approval.
While you might start out charging clients hourly, most coaches will advise you to move away from this pricing structure quickly so you have more control over the time you spend on your work.
Charging monthly rates and retainer fees
Some coaches charge a monthly retainer fee for their services. If you go this route, here’s what to consider.
Pros of charging monthly
This option is great for both the clients and the coach since you’re able to know exactly how much money you’ll be making, and your clients know how much they’ll be spending. You will always have a set amount of money coming in, and you can focus on providing value for your client instead of worrying about where your next paycheck is coming from.
Cons of charging monthly
If you’re not clear about the value your clients will be getting for the set price, this option can be dicey. No client wants to pay for a service that doesn’t match up with their expectations. Make sure everything is spelled out for your client up front so they know exactly what they’re getting for your monthly charge.
According to the Harvard Business Review, about 20% of coaches out there use a tiered pricing package. This is where you figure out which services you offer and create differently priced bundles on those offerings.
For example, you might want to offer four coaching sessions and a set of resources for your top-paying clients, but three coaching sessions and a simpler set of resources for the lower tier.
If you choose to charge based on packages, keep the following in mind:
Pros of charging by package
One of the benefits of charging your clients based on packages is that you can let clients choose how to work with you. Your clients would have the ability to upgrade their services while they’re working with you if they want to get more value from your services, or you can provide them with the ability to add one-off services, such as an extra coaching session, or upsell your offerings with extra value.
It also gives your clients the flexibility to downgrade your services without forgoing them altogether, which means you won’t be completely losing their business.
Cons of charging by package
One con for setting up your business in packages is that your services might take longer to get your clients to the results they need than you expect — and if it’s a fixed price, you might be undercharging your clients for the work you’ve promised to deliver. Again, this comes back to knowing how long it will take to do the work.
Make sure to be extremely clear about the differences in the packages you’re offering and what your clients should expect from each. Each tier should have a specific reason for the jump in pricing.
Does it come with extra coaching sessions? More PDFs, presentations, or resources? Does it help your clients reach their goals faster? The more clear you are about the value, the easier it is for your clients to choose the package that’s right for them.
Your pricing structure should be about value
At the end of the day, the pricing structure you choose should be about providing a valuable service to your clients.
Over time, you’ll gain more skills and become a better coach. You’ll be able to raise your rates and feel confident that the services you’re providing match up with what you charge.
As long as your clients feel like they are getting what they’ve paid for and they’re happy with the results, they will feel comfortable paying you what you ask.