The Coaching Pricing Model

The Coaching Pricing Model

by necoaching

Many people new to the profession of coaching often find themselves, from the outset, unprepared for the challenge of how much to charge clients. This is largely due to the intangible nature of the service and whether one should use the traditional “Cost Plus” or the “Value Added” model of pricing. Let’s explore both.

Cost Plus

This is very much the model that is used based on the costs incurred by the provider, in this case the coach. Traditionally the legal, consulting and accounting profession, calculate an hourly rate based on the direct costs of labor consumed in addition to some calculated overhead allocation. The trouble is within the coaching profession you could hear anything from $50 to $500 per hour. With such a disparity it is small wonder that new coaches are very unsure what to charge because there really is no benchmark. In addition this can be very limiting relative to what a client might actually be willing to pay; aka leaving money on the table. The client might feel they got a good deal but leaves a bitter taste in the mouth of the coach which is never good in the long term.

Value Added

A more favorable model that is emerging is using pricing based on the potential value to the client. This of course begs the question as to how one might determine value. The answer lies in putting considerably more effort in up front to determining what the client wants or what success might look like. In pursuit of this information, one’s coaching abilities will be clearly demonstrated, affordability of client will be better understood and relationships get developed thus aiding the overall selling process. All of this leads to being able to make a better assessment of how the individual / organization could truly benefit from the coaching service. The consequence of this approach is that, more often than not, a price is arrived at that very adequately compensates the coach while at the same time providing the client with a clearer sense of value for money.

So the next time you, as a coach, are faced with a quandary of how much to charge, spend more time upfront coaching them, better understanding the need, building the relationship, demonstrating your abilities and ultimately closing the deal.