How Your Clients Can Help You Price Your Services
Pricing Life Coaching, at least for me as a new coach, has been a bit of a challenge. I remember listening to a teleclass on this topic and hearing that life coaches should charge at least $200 USD an hour. In talking to fellow coaches, it appears that the price reflects a coach’s professional experience and the financial wherewithal of their clientele. I felt that some structure in pricing was lacking.
Being a banker, the notion of return on investment (ROI) is very close to me. This is a reason why I find pricing Business or Executive Coaching easier. In the context of business or leadership development, the impacts of coaching have a more visible impact on the bottom line and can be measured monetarily. An incremental improvement to bottom line can be divided by an investment made in coaching to calculate the ROI.
In Life Coaching, the “bottom line” could be a happier and more fulfilling life with greater peace and harmony. While these are great outcomes, they are usually documented via client self-reporting and aren’t measured monetarily. This makes measuring ROI more difficult.
The good news is that coaches are great at asking questions. Questions help clients clarify ideas, test assumptions, play with metaphors, and zoom in and out of situations. One of my favorite questions is, “What does an ideal future look like?” The word “ideal” opens the client’s mind to a variety of possibilities. Usually, after the client paints a picture of their ideal future, the coach follows up with a question that helps the client break down the steps to get close to it. I was aware of all the above for quite some time, and only recently I was able to connect the dots and decided to try the following during my recent discovery session. After the client went into a deep dive describing every possible detail of their ideal future, I asked, “What is that worth to you?”
Typically, we don’t think of our lives in term of financial worth. Unless we are faced with situations like a ransom or a life-saving surgery, we think twice before spending money on things that have a good chance of improving our lives. Buying vitamins or signing up for a gym is not on top of everyone’s list. Gym membership, one may argue, will require time and money, and that could be a deal breaker. A mound of evidence that has been collected for the past thirty or forty years showing the many benefits of regular exercise is of little help; gym membership is still a hard sell. The culture of instant gratification leaves little room for long-term thinking, let alone financial investment that requires time and effort and does not guarantee the outcome. Investing in a college education or a retirement fund has been around for a while longer than Life Coaching. Perhaps, in thinking how these investments are sold, we could see what life coaches do different when they sell their services. In that vein, I’d like to share the rest of my conversation with a prospect. Let’s call him John.
Me: What is the ideal future worth to you?
John: It’s priceless!
Me: Would you say then $1,000,000 would be a bargain?
John: Yes, but I don’t have that kind of money!
Me: We are not talking about cost, we are talking about value.
John: Oh, I see. Yes, $1,000,000 is a bargain.
Me: Let’s say that in the next 12 months you only get one fourth of the way towards your ideal future, that is a value of $250,000. Are you still with me?
John: Yes, I am.
Me: As I have explained to you before, in coaching, the client is doing most of the work. This is why I will only charge you 2 percent of $250,000.
John: 2 percent? That’s $5,000!
Me: Yes, $5,000 is 2 percent of 25 percent of something that is truly priceless!
John, after a pause: Well, when you put it this way, it makes sense…
Ultimately, this conversation resulted in me getting a 30 percent higher fee than I was charging before. It felt that I was on a right path with this particular prospect. In the ensuing weeks, I have come to realize that when the price of Life Coaching is being questioned by a client, inviting the client to value their own life may be the answer.