Introduction
Are you a life coach who just started his/her business and is having trouble pricing your services? Are you competing with other providers and can’t afford to give your services for a lower price? You’re in luck! This article is meant to illustrate how to price coaching packages so you can attract your perfect clients while remaining competitive. Keep on reading to learn about pricing strategies!
Before we dive into the different pricing options and strategies, first we have to ask ourselves, why are pricing strategies important? It has been observed that pricing can affect the amount of revenue a company generates. A study done by Mckinsey found that a one percent increase in price contributed to an 8 percent increase in total revenue. Pricing properly can also make your life easier, as it can affect your perceived value. According to a study conducted, the higher the price of a product or service, the higher the perception of the value. Therefore, better pricing, not lower pricing, makes the sale easier. Another study was done by the University of Texas at Arlington that found that consumers base the quality of the product on its price. There is also the added benefit of working less for the same income. Having your pricing right is an art form that takes time to master, and the more you perfect it, the more it can impact your business. We will discuss here the different strategies you can use to price your packages including the hourly option, the monthly option, and the packaging option.
Pricing Options
Hourly Rate Option
One of the pricing options we will go over is charging by the hour. Using this strategy, you charge only for the time that the client utilizes your services. The benefit of using this option is that you only have to put in the work when the client pays for it. That makes it easier on a coach to separate their work and free time, and for those who have other priorities to attend to. The established terms are also easier to comprehend. You spend a certain amount of time coaching, and your client pays a certain amount of cash.
The drawback is that the value is put more on time spent together rather than results achieved, which could backfire for several reasons. For example, if other competitors offer cheaper rates. You might be one of the best life coaches there is, but if you base your worth on the dollar amount per hour, people might flock to other coaches who offer cheaper rates. Another issue with hourly pricing is that it can also make it difficult to scale and increase your revenue once you become more established.
Monthly Retainer Option
Our second pricing model is charging a recurring monthly retainer fee. This makes it easier to retain clients, as they will have to make an active decision to cancel any appointments coming up. Your client feels more committed to show up to the coaching sessions to get their dollar’s worth each month. The drawback to this strategy can become the amount of time you dedicate to some clients if you fail to set good boundaries (something we teach in our program). Some may need more coaching than others and the line between work and free time might get blurred. While you are contributing to the overall success of somebody else, you may get burnout. Life-Coach Directory has an excellent article about experiencing burnout as a life coach.
Package Option
Our third, and probably the best pricing option would be the package option. Here, clients are charged for a certain timespan such as 3 months, and will get a set number of sessions per package. This option takes the value away from time spent and focuses it on something better: results. Results is what you want to focus on in the long term when setting up your pricing. Doing so, it will leave clients satisfied with what they are paying.
Pricing Strategies
Market Penetration Strategy
Our first pricing strategy is the penetration pricing strategy. Here, you offer an initial lower amount for your service, and increase it once you have acquired customers. This can be in the form of discounts or promotional offers. It is great to use it when celebrating a special occasion such as your company’s founding date or a major milestone such as the number of customers acquired. This increases your brand’s awareness among new consumers in the hopes that they will increase market share and convert them into advocates for your product. Of course, if you feel that your price is either too high or too low, you can always change it to a higher or lower price.
Value-Based Strategy
Our second strategy is called the value-based strategy. Here, you price your packages based on what you think they are worth. To do an evaluation, check out your competitors and how much they are charging. Then calculate the average to see what would be the ideal price to charge. We did the math for you so you don’t have to, and ideally you want to start at around 1,500 dollars for 3 months of coaching if you are using the package-pricing option. It can become more profitable and allows for easier scaling.
Figure out how to price coaching packages using a value-based strategy to examine your competitor's pricing and calculate an average
When can you set your own price?
Once you become more established, you can choose to raise your prices. For that, you would have to build a reputation and have enough clients who advocate for your services. It’s been said that accomplishing that stage may take only months instead of years. Once you get great results, you can feel more confident in raising your prices because you will have demonstrated that your clients will get the most value for their money.
IMPORTANT: Create your own coaching contract
Ok, so now you have decided on your type of option pricing and your strategy. Before you do anything else, make sure that you create a contract for you and your client that goes over the terms of the price. In this contract, make your terms clear and concise. For example, state, “John Doe is to pay 600 US dollars on a certain day every month, and in exchange, he will receive 12 coaching sessions lasting no more than 1 hour.” By doing so, you set expectations clearly and avoid confusion later on. Read our article on managing the legal risks of your coaching business to find out more about contracts and other legal aspects. We also provide legal templates as part of our Business Empowerment Program.
Should you list your price on your website?
Listing your coaching pricing on your website might not be an advisable strategy if you want to lure in customers and are just beginning your business. You might risk going into a bidding war with your competitors, and they will gravitate towards the cheapest option. Instead, you want to make your price something that the consumer has to make an effort to find out. You do that by first showcasing what you are all about, and the results that you can bring, and lure them using that instead. Once they book a consultation with you is when you then reveal the price of your services and determine whether that would be a great fit or not.
Final Word on How to Price Coaching Packages
Your pricing strategy should be something that should not be overlooked. Setting your price options and strategies will determine your greatest value and should be proportional to the type of service you provide. Set your price at a high point if you feel confident that your services are superb, or lower them if you need to get more experience. We hope this guide was useful for you to pick the prices for your coaching packages. If you need any more Life Coaching tips, make sure to check out our other articles here: coach.today/blog. Have a good one!
