In today’s world, we live in a society where education has become the norm. We are taught the importance of getting an education, getting a good job, and making money.
However, what they fail to teach us is how to manage that money once we make it. We are not taught the basics of money management or business finances, and this can be a huge disadvantage for entrepreneurs who are trying to make a living in the world of business.
As a coach, it is important to not only make an impact but also to make money. That is why in today’s blog post, I’ll be discussing how to price your coaching packages. This topic is crucial because knowing what influences your pricing and getting it right can make a huge difference in your sales.
So, what exactly is the right price for your coaching package? Unfortunately, there is no one-size-fits-all answer. The price of your coaching package will depend on several factors such as your level of experience, your niche, your target audience, and the value you provide to your clients.
However, one golden rule that you must follow is to ensure that the price you set matches the value you are delivering to your clients. This is a no-brainer, and it must always be a priority.
How To Structure Your Pricing
Let’s now talk about the different ways you can structure your pricing.
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Hourly Pricing
Many coaches use hourly packages, which is a pricing structure that charges clients based on the number of hours spent on coaching sessions. However, I am not a huge fan of this method, as it can lead clients to place more emphasis on the time spent rather than the value provided.
For example, if you’re a parenting coach, and you’re helping your clients train their children, the value you’re delivering goes beyond just the time spent. You’re shaping the future of an entire child, and that’s a priceless contribution to their lives. Therefore, it’s essential to structure your pricing in a way that reflects the value you provide.
One creative way to use hourly packages is through VIP days. These are intensive, one-day coaching sessions that involve previous meetings and requirements sent in by clients. During these VIP days, you can work on projects or goals that your clients have set for themselves, all within a limited timeframe. This is a great way to use hourly packages without undervaluing your services.
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Express Strategy Calls
Another pricing strategy you could use is through express strategy calls. Instead of offering free discovery calls for a short period of time, you could offer a 19-minute strategy call for a bare minimum price, which could be one of your introductory offers. This way, you can attract clients who may want to work with you for longer periods of time.
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Packages
Another effective pricing strategy is through packages. This pricing structure ties in very clearly with deliverables. Instead of charging by the hour, you can charge based on the results you will deliver to the client. You can also specify how long it may take to deliver those results, which helps to set realistic expectations.
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Retainerships
Retainerships are another pricing structure you can use, especially if you offer ongoing services that require maintenance. If you offer a service, you could call it a retainer, but if you offer coaching or knowledge, you could call it a membership. This pricing structure is common for memberships or communities, where you charge people on a monthly or quarterly basis. For example, if you build a funnel for a client, you could offer a monthly or quarterly retainer to keep optimizing the funnel or maintaining a website.
Pricing Strategies
Now that we’ve covered the basics, let’s dive into pricing strategies.
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Penetration Strategy
The first one we’ll explore is the penetration strategy. As the name suggests, this approach helps you penetrate the market by offering a low price point that is hard to resist. This is especially effective if you’re just starting out and looking to build your customer base.
But don’t be fooled into thinking that penetration strategy always means you have to drastically slash your prices. For example, in the coaching industry, the standard pricing for a coaching session can range from $1K to $2K. You can start with this benchmark pricing, and later, as you gain recognition and build your brand, you can increase your rates.
The key is to find a pricing point that is common in your industry and start from there, making your services accessible to potential clients. As your reputation grows, you can gradually raise your prices, but remember that the focus should always be on delivering high-quality services and building lasting relationships with your clients.
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Premium Strategy
I see this as the ultimate goal of building your dream lifestyle business, where you have nothing to fear. You’ve paid your dues, you’ve built your reputation, and now it’s time to charge what you’re worth. Premium pricing is not always about having a reason to justify the price, it’s just that you can charge that amount and people will pay it.
A clear indication that you should use the premium pricing strategy is if you have a track record of delivering exceptional results and have built a strong reputation in your industry. People will be willing to pay a premium for your services because they trust you and know that you can deliver.
Another good time to consider premium pricing is when you start feeling restless because you know the value you offer is worth more than what you’re currently charging. It’s a sign that you’re ready to take your business to the next level and charge what you’re worth.
Remember, premium pricing is not just about charging a high fee, but it’s about matching the pricing with the value you provide and the lifestyle you want to achieve.
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Decoy Strategy
The third pricing strategy is what I refer to as the decoy strategy. This is applicable when you have more than one pricing package for the same service. Let’s say you’re a website designer and you offer three packages. The decoy strategy helps you to direct people to the package that you want them to take.
For example, you could have a package for $500, which is just the bare minimum for a landing page. Then, you have two other packages for building an actual website. Your middle package is where you really want people to focus, but you put another package with a higher price tag to act as a decoy. This high pricing gets people to down-sell to the one in the middle, which is what you really want them to take.
With the decoy strategy, you’re being strategic with how you arrange the numbers. You can create a decoy either with your first two packages or with the last two. For instance, you could have a package that costs $500, another at $750, and the last at $1,500. The $500 package is less attractive and the $750 package offers more value, so people will likely choose the $750 package.
Alternatively, you could have a $500 package and then another one that offers a full website, where one is $2,500 and the other is $4,000. People will likely choose the $2,500 package, which is what you want them to take. This strategy is commonly used in software subscriptions, where you see three, four, or five tiers with a decoy package that is labeled as the most popular plan.
Factors to Consider When Calculating Your Price
Before we dive into the nitty-gritty of pricing, let’s talk about some factors you should consider.
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Your Experience Level
First and foremost, your level of experience plays a significant role in your pricing strategy. Experience is invaluable and cannot be bought in the market. So, you need to consider the years of experience you have in your industry and how that translates into the level of results you provide for your clients.
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Your Resources and Investments
Next, think about the time, resources, and equipment that you’ll need to deliver your services. For instance, if you’re a coach, consider the length of your coaching program, whether you’re providing any physical materials like worksheets, and the software you’ll use to deliver your services.
Additionally, you need to factor in the cost of running your business. This includes overhead costs such as rent, utilities, internet, software, staff salaries, and any other miscellaneous expenses. Even if you work from home, you need to consider the cost of your home office.
Also, don’t forget to factor in the add-on services or resources you provide to your clients. These can include anything from physical materials to exclusive online communities. Think about the cost and time associated with delivering these add-ons to your clients.
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Your Clients’ Perspective
Another important factor to consider when calculating your pricing – is your client’s perspective. Understanding your client’s pain points and the solutions you provide is crucial. Ask yourself, how badly does your client need to solve this problem? What’s the impact of the solution you’re providing? This information will help you determine the value of your service.
For instance, as a marketer or strategist, the work you do may bring more money to your client’s table. In such cases, you could base your pricing on the expected results you’re confident of delivering. Similarly, if you’re a fitness coach helping someone overcome heartbreak or lose weight, the value of your service may be more than just monetary.
Do a survey and find out from your clients what value they place on the solution you’re offering. This will help you set a benchmark for your pricing. Another factor to consider is your ideal customer’s disposable income. Get to know your clientele inside out and identify their life stage, geography, age, and occupation.
Based on this information, you can determine the likely disposable income they have, which will help you set the right pricing. For instance, if you’re serving recent college graduates, you may not be able to charge them $5,000 for your services.
Taking into account your client’s perspective is essential when calculating your pricing. Understanding their pain points and the solutions you provide will help you determine the value of your service. By identifying your ideal customer and their disposable income, you can set the right pricing for your business.
How to Calculate Your Pricing
Before we dive into an example of how to calculate pricing for your coaching package, let me walk you through the steps we’ll be taking.
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Determine Your Service Value
First and foremost, you need to determine the value of the service you provide. This entails assigning a number to it. If you’re a fitness coach, for instance, what value do you bring to your clients? What price point would you set, and how does that compare to the market benchmark?
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Identify Your Annual Income Goal
Once you’ve established the value, move on to identifying your annual income goal (insert blog link of how to hit your sales goals) and breaking it down into monthly targets. The next step is to decide on your pricing strategy. Will you opt for a penetrative pricing approach, go premium, or offer various packages? Jot down your packages and identify your target audience.
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Determine Your Business Cost
Thirdly, you need to determine the cost of running your business, which includes expenses such as software, rent, utility bills, and salaries, including your own. Be sure to calculate your annual and monthly costs accurately. Take note of whether you pay certain expenses annually or monthly and adjust your calculations accordingly.
Let’s take a real-life example of Coach Anita, a parenting coach who helps parents raise wholesome children. She values the service she provides as priceless because shaping a child’s life is invaluable. However, after conducting a survey, she was able to assign a tangible figure to the value of her services. Although she has had testimonials in the past, she is now in the beginning stages of scaling her business and wants to see what comes with that.
Coach Anita has set an annual income goal of $100k, which breaks down to about $8,300 per month. Her monthly running costs are approximately $1,700. To make $8,300 in profit every month, she needs a total revenue of $10,000 each month, taking into account her running costs of $1,700. This raises the question of how Coach Anita should package her products to meet her goal, which will influence how she mixes up her packages.
For example, as a one-person team with a capacity for only two new clients, she could offer one-on-one coaching for two clients at $5k each or one-on-one coaching for three clients at $3.5k each. If she already has a coaching program or an online course recorded, she could price it at $2k and aim for five enrollments per month to meet her goal.
If Coach Anita has some low-ticket price products, such as a $20 eBook, she could use them to bring in clients and then upsell those clients to her high-ticket product later on. However, if she were to rely solely on selling low-ticket products to meet her monthly goal of $10,000, she would have to sell 5,000 eBooks, incurring significant marketing expenses. This would be the same amount of marketing spend needed to bring in two or three high-ticket clients, where she could meet her goal with less effort.
You need to carefully consider which strategy to use when deciding on your coaching package or product. Are you correctly pricing your coaching package, or can you identify with any of these strategies? Let me know in the comments.
If you want to work with me to create a system that ensures you hit your income goals every single month, we can hop on a discovery call to discuss your business needs.