How much should you charge, as a coach?

Conversations around coaching fees are a huge topic in the coaching industry. Many coaches stress themselves out over what to charge, making fees one of the hottest topics in the coaching field. Here is the thing, no one can tell you what the right fee is to charge your clients. As Reid Ready® Coaches know, it takes effort to build and set your fee structure. A good fee to charge is not arbitrarily crafted. And I do not recommend pulling numbers out of thin air because it sounds good or only because someone else is charging a particular price. Your fees must be intentionally and purposefully planned to meet your needs and appeal to your target audience. In this article, I will share some key considerations and a few tips to give you a starting point so that you can feel confident developing your coaching rates.

Where to start?

Think of your starting point as the foundation to build upon. There are several places you can start to build a fee structure, so consider your overall goal and the results you want to achieve. For example, are you seeking to work full-time as a business owner, or part-time? Is this for extra income as a retiree? Are you looking to get out of debt or gain financial freedom? Your goal is important because it serves as your "why" and what makes the outcome unique to you. It also determines how much you want to earn each month from your coaching practice, especially if you are a solo entrepreneur. Once you determine what you want, let's call it your "big goal," you can begin to figure out how your coaching business will help you get there, financially.

Next you must determine what factors will drive your fees. Fees can be based on many factors. One of those factors is the relationship between your fees and meeting your big goal. Another factor is the value your niche market and industry places on your style of coaching, and what field you want to offer coaching. These items are important because they help you identify need, interests and who you believe will pay for your coaching services.

Here are a few questions to answer and research:

• Who is your target demographic or ideal client?

• What is your ideal client’s pain-points or problem?

• What are they willing to pay for you to provide a solution?

• What are their spending habits and purchasing power?

Knowing about your niche market and industry helps build a foundation to support what your goals are, what you offer, and what you want to charge. Likewise understanding your ideal client's current spending habits, what keeps them up at night and what they value can help you place your services or products at a competitive price position.

How to build on your foundation?

Once you understand your niche market and industry, the next consideration is understanding your competitors. Who is working with your niche market already? Your competitors within your niche area have already done some of the leg work. They already know how much people are willing to pay for coaching. So, investigating what other coaches charge in your local area (e.g., your county or state where you do business) and in the broader region (e.g., tri-state area, coastal or time zone area, etc.) can give you an idea of how much people are willing to pay for coaching. Knowing what your competitors charge can also help you create a Price Index (read more about PIs here) to understand your specific market positioning and to set a goal towards potential fees to charge. And having this information can help you determine if your fees are competitive. Once you have the basis for a fee structure, you can then scale or fine-tune your fees.

NOTE: Fees vary from region to region, industry to industry, even state to state and country to country. I have seen fees as low as $25 per session and as high as $950 per session. Fees can depend on several factors, such as who is paying for the services, the target audience, your experience, and what you are offering and comfortable asking your clients to pay. So, do not get side-tracked by comparing your value with other coaches' value, experience or social media influence. The goal is understanding coaching fees in the market and determining how you can obtain a reasonable market share.

What’s the buyer’s benefit perception?

An important aspect to consider is your niche audience's (buyer) benefit perception. The Buyer's Benefit perception refers to what a consumer perceives as a benefit or value for exchanging their money to receive a service or product. The key term here to focus on is the buyer’s perception of benefit. Therefore, you must understand what value your ideal clients or buyer's will see or gain from giving you their money in exchange for hiring you as their coach. When it comes to benefit perception, people are more likely to buy or invest in services or products when they perceive it has great benefit to them directly. Therefore, your clients must believe your service or product meets a specific need (e.g., helps reach a weight or financial goal, gain an industry certification), alleviates a pain-point (e.g., feel motivated, find purpose, get unstuck), or solves an immediate problem (e.g., converting a dysfunctional team into a high-performing team). Likewise, they are more likely to hire a coach that they feel resonates with their core beliefs (e.g., shared cultural or social identity values, common work ethics, common industry knowledge). As such, people must develop a relationship with your brand to build trust with you to create a perception about your coaching services. Then they determine what benefit or value they will get. I will talk more about branding for coaches in a future blog article.

Many new coaches fail to realize purchasing services or products is psychologically driven and personal for the consumer. Simon Sinek is quoted to have said “People don't buy what you do; they buy why you do it. And what you do simply proves what you believe” I would further add, they are buying their perception of you and what they believe you can do for them. As such, your fees must clearly correlate to the buyer’s perceived benefit for investing in you as their coach.

The following items are worth identifying and reflecting on as you develop your fee structure:

• What do you want people to know about you—what perception do you want to build (i.e., your brand, your services, your offerings)?

• What is your mission, purpose, beliefs—what story are you sharing?

• What sets you apart from other coaches?

• What are you offering that your competitors do not offer—what makes you unique?

• What problem are you solving, pain-point you are removing or need you are meeting for your ideal clients?

• What are your ideal clients getting for the fees you are charging them—how will they benefit?

What’s your ROI to coach?

As a coach, you are an entrepreneur (at least that’s the assumption). You are responsible for generating income to support yourself. That means, your business objective is to make a profit, earn an income, or at minimum you do not experience a loss of income. You can do this through working as an employee or you can do this as a business owner. Therefore, your fees should reflect that end. Meaning, you must understand what it costs you to coach and how many clients at the rate you are charging do you need to cover those costs. Additionally, you need to consider your financial goals and how your coaching business will support you--remember, your big goal.

Here are two examples to conceptualize the point:

Example 1: Breakeven Costs to Coach

Let’s say it costs $100,000 to run your business on a full-time, shoestring budget. You will need to bring in what it costs you just to breakeven and not take a loss. If your capacity is 1000 clients a year, and you charged $100 per 30-minute session, you would need approximately 1,000 clients to purchase one session from you. This means you would facilitate 1,000 sessions for the year, too. However, with this information as a starting point, you can configure your fees based on your bandwidth, interests, and goals. For instance, if you opted to sell a coaching package that gave your clients six sessions for $1,000, you would need 100 clients for the year to breakeven, based on a $100,000 yearly cost to run your business. And you would only need to facilitate 600 instead of 1,000 sessions.

This does not account for other offerings that you may want to provide, such as facilitating workshops, selling books or products, or public speaking. But having a starting point will provide you direction so that you can make an informed decision about what to charge each offering to breakeven and not take a financial loss.

Example 2: Financial Goal.

Let’s imagine you want to be a seven-figure coach and make $1,000,000.00 a year as a goal. If your capacity is 1000 clients a year, then that means your fee will need to be approximately $1,000 per client, per session, to reach that goal. Or it could be $10,000 per client if your capacity was 100 clients per year.

In both examples, knowing your big goal, the buyer’s benefit, establishing your price index, and doing your niche market research will help you determine the most appropriate fees to charge. And as I mentioned earlier, the goal of a business is to capitalize on the market to make a profit. With a minimal breakeven starting point, and a clear financial goal, you can identify what you need to make a profit or earn income to sustain your business in the long-term.

In conclusion, this is the reason no one can tell you what to charge your clients, or why arbitrary numbers are unreliable. Only you can determine what price to charge or makes sense for your ROI and your buyer’s benefit. However, once you have implemented the appropriate steps to determine these deliverables. Then you can figure out what to charge. You must also continue to assess your fees against the average current coaching rate within the industry or your region to remain competitive and make a profit.

Final Thoughts

I believe you must navigate building your business like a marathon, not a sprint. If you want to be successful as a business owner, determining your fees and offers take research, effort, and patience. You must also be intentional and mindful of your market and industry, as well as your ideal clients spending power and habits. If you do not have the time to work on your business, then you may want to consider hiring someone to support you. Or, if you feel its economical for you to do it on your own, you may want to consider hiring a coach. Either way, this is not a quick activity---at least if you want to do it right, you will take your time and put in the work. By the way, we have workshops and masterclasses you can attend where we talk about how to create your coaching fees and offerings and you get yo build the framework for your offerings. So, this may be a great opportunity to get the accountability and structure to work on your coaching fees :)

Dr. Dawn C. Reid is a certified coach and holds ICF PCC, ICAgile ACC and ICAgile ATF credentials. She provides training, consulting, mentoring and coaching to new coaches and new leaders. Her mission is to help coaches and leaders THRIVE through professional development and capabilities building.

Contact our offices if you have questions or are interested in becoming Reid Ready®.