Having met and gotten to know hundreds of coaches, I’ve come to believe that many of us suck at valuing ourselves. Personally, I find myself alternating, in equal measure, between the belief that I should be charging more and the belief that I’m charging too much already! And idea of talking to other coaches about how much they charge for coaching just feels so taboo.
My belief that I should be charging more comes from my experience of just how challenging it can be to make a living coaching. (BTW, a huge percentage of coaches don’t make a living coaching. According to the 2016 ICF Global Coaching Study, on average, US coaches made $61,800/year. And unless you live in South Dakota, that’s simply not enough to thrive on.) I’ve coached full time (meaning as a focus for my career, not coaching 40 hours/week) for almost 15 years, have logged over 5,000 hours of paid coaching, completed three coaching programs, (two through Invite Change and one through Adler) and attained the PCC coaching credential (MCC proves to be elusive for me), and though I’m making a living, I feel that in any other profession (attorney, accountant, consultant), I’d be making a LOT more money for my level of experience/education/ability.
My belief that I’m charging too much already comes from this horridly guilty feeling that “OMG, what could I do in an hour that would be worth that?!” (Yup, I’m one of those coaches that sucks at valuing myself.) Logically I know that the value I create for my clients can be significant and meaningful and is, in essence, priceless. And that doesn’t keep me from having some emotional baggage around my pricing.
I had the good fortune to take a class on pricing during my MBA program at University of Chicago, from Nobel Laureate, George Stigler. He was a sweetheart of a guy and made pricing a subject that wasn’t just theoretical, but also logical. Even now, as I think about raising my prices and how I get my head around it, I’m grateful to have a framework for thinking about pricing that takes the emotion out of it for me, and gives me the distance to make a logical choice I can feel good about.
Obviously, there is no one answer to how all coaches should price. That said, there are a set of factors each of us can consider and use as guideposts in creating our own framework for determining pricing we can feel good about, or at least support logically. Below I offer up a way to think about pricing, examples of my own pricing, and other ways of pricing that coaches have shared with me. To be clear, I’m not presenting myself as an authority on this topic. My sincere intention is to help as many coaches as possible value themselves appropriately, make a living coaching, and capture more of the value they create for others.
For most services, who’s paying doesn’t matter when it comes to pricing. For landscaping, legal, cleaning, accounting, haircutting services, most everyone pays pretty much the same price (unless, of course someone has buying power that allows them to negotiate the price down). Not so true much for coaching. With coaching, who’s paying really matters in determining pricing (whether it should or not).
In general, companies will pay more (much more) for coaching than an individual will. By way of example, my target market is CEOs/Entrepreneurs/Owners. I like to coach where business meets personal. So both the individual and the company are paying, as they are the same. A few years ago, I had a C.E.O. client that I was charging the rough equivalent of $250/hour. At the same time, I was coaching his wife (who worked for a Fortune 500 company who paid for coaching) and charging $500/hour. What I offered was the same and what the buyer was willing to pay was quite different. And I did not feel guilty about it, though sometimes I think I should. 🙂
While target market is similar to who pays, it’s not the same. For example, the C.E.O. client’s wife I mention above, referred me to her best friend who worked at the same company in a similar role. Her friend didn’t ask or couldn’t get her company to pay for coaching. She couldn’t afford to pay personally the rate I charged the company, but could afford the rate I charged my C.E.O. clients, so that’s what I charged.
While I don’t have the data to prove it, I’m confident in saying that the 70% of coaches who identify as leadership, executive, business or career coaches make substantially more money than the 30% of coaches who identify as life, vision, health, wellness or spirituality coaches. (To be clear, I’m not in any way suggesting that is deserved or related to quality or ability.) It’s simply, IMO, related to target market and who’s paying.
Targeting individuals (or teams) at higher levels at companies with greater revenues will yield (in general) more than targeting individuals at mid-levels or at privately held companies or outside of a company setting. The more money people have access to, the more money they’ll pay for coaching. (I know, obvious, right? And sometimes it needs to be said.)
Years ago, I coached a woman who was a coach herself, had a best-selling book, and was a keynote speaker for Global 1000 companies. Her target market was Global 1000 CEOs and she charged them $95,000 for an annual coaching contract. (Yup and I was coaching her for $250/hr, 2 hours/month. Definitely something wrong there!).
Even though the telephone was identified as the delivery method 68% of US coaches use in the 2016 ICF Global Coaching Study, geography still matters, even if the coaching isn’t in person. There remains a relationship between coach pricing and the cost of living of the location in which the client resides/works. On average, clients in New York, DC, and LA will pay more for coaching than clients in Texas, Nebraska, or Colorado.
A senior coach who works with high level executives at Big Pharma companies in NY recently shared that she charges $18,000 for a six month coaching assignment. She works with her clients about one hour every other week. (Of course, it’s never that simple. There’s always discovery and development of the coaching plan and maybe a 360. And $18,000 for one client for six months doesn’t suck.) BTW, most senior coaches I talk with in the DC area charge $12,000 – 18,000 for similar six month coaching packages.
Coaches package their services in many different ways, and those differences have some significant implications for long term revenue. Below are a few different ways I’ve learned that coaching is packaged. I’d love to hear from you what I’m missing.
I would call this a traditional ICF coaching packaging. It’s basically a single price (paid upfront or maybe in two parts, half as a deposit and the remainder at the three month mark) for the completion of the six month coaching plan. Coaching sessions are typically every other week.
The upside of this arrangement is that payment is made upfront for services performed over time. A downside is in six months you’ll be looking for another client, or your client has a big decision to make as to whether or not to spend that big lump sum again.
When I was at the Institute of Coaching Leadership Forum last month, I met the CEO of a coaching business in Colorado. He has a staff of 30 employees, all coaches. Borrowing a pricing model from the oil and gas industry, he “sells” coaches to companies for a certain number of days or weeks per month. Those companies can use those coaches for whatever they want – coaching, facilitation, training, interviewing. And they are willing to pay a healthy price to have that coach “on staff.” (I didn’t get the pricing, but he told me his business was thriving and all 30 of this employee coaches were engaged and making good money). Of course, the coaches he employed were like Swiss Army knives, with a number of different tools for a myriad of applications. (That sounds pretty awesome to me.)
About 4 years ago, taking a song from the Vistage hymnal, I made the switch to a membership model for my coaching. My clients pay a flat amount every month (like a gym membership, which is drawn automatically each month using PayPal) for a package of benefits that includes a certain amount of coaching time. The benefits include: 1) invitation to a quarterly dinner/ workshop series – and they still pay for dinner, 2) 360 feedback every six months, and 3) one EQ Profile assessment per quarter (for them or one of their people, and it’s free to me since I own the company).
Coaching time within the membership is typically one or two 55 minute sessions. Most of my coaching sessions are conducted via Skype or phone. If my client prefers to see me in person, they come to me, either at a coffee shop ten minutes from my home or a Regus office suite that is 15 minutes from my home, which I rent by the hour.
The benefits of the membership model include: 1) keeping clients for long, long periods of time because there’s no big decision to make at the completion of a coaching package. (Of the clients on my current client roster, I’ve worked with them on average for four years.) 2) a steady, predictable income stream (I get paid whether I meet with my clients or not. My clients cancel A LOT. And I’m ok with that because I don’t have to pay the price for it) 3) coaching becomes for my clients, less of an event, and more of a habit/lifestyle.
While this model wouldn’t be attractive to some coaches, I love it. My client roster is always full and I have long term, meaningful relationships with my clients. Oh, BTW, I charge $399/month for a package that includes one hour of coaching and $699/month for a package that includes two hours of coaching. Sure, it’s a pittance compared with what I could make if I were working with executives in Corporate America. And having spent decades working in a series of Fortune 500 companies, ending up an SVP at Bank of America, I find working in that environment to be soul-usurping. That said, as I noted before, I am contemplating a price increase. What do you think? (BTW, if you have significant, first-hand experience coaching CEO/Owner/Entrepreneurs I’d love to get your thoughts.)
Marshall Goldsmith is well-known for his performance-based model of pricing. When I met Marshall last month at the IOC Leadership Forum, he shared a bit of his approach. He does some benchmarking work with his clients upfront, which includes a 360 to determine where they are in terms of their performance. Then he contracts to improve the performance of his clients, on the agreed upon benchmarks. If his clients don’t improve, he doesn’t get paid. Also worth noting is that his contract requires his clients to do what he tells them to do. And when they do, and they improve, he gets $250,000. From every client, every time. (This is where the mic drops.)
Some coaches, usually newly certified, charge by the hour for coaching time, usually for the duration of a contract. Most senior coaches don’t ostensibly price by the hour, but any contract eventually comes down to price for time spent coaching. A direct (and perhaps obvious) correlation exists between how much a coach charges per hour and how much they make annually.
The ICF Global Coaching Study found that coaches making greater than $150,000/year charge an average of $607/hour. Coaches making $100,000 – $150,000 per year coaching, charge an average of $365/hour. That’s a huge difference! So you CAN make a thriving living coaching, depending upon who pays, what your target market is, where they are located and how you package it. (And of course, it helps a lot if you’ve written a best-selling book, have developed your own coaching model and/or have tons of relevant experience.)
We can package our coaching in lots of different ways. At the end of the day, the price for coaching is whatever the client will pay. And the more value we bring as coaches, the more a client is likely to find the experience of coaching and what they get from it, indispensable. What’s important is that we coaches value ourselves and respect the value we are creating for our clients. That way, we can all thrive, making a sustainable, bountiful living doing what we love. (I’ll keep you posted on whatever I decide to do with my pricing)
Would you like to know more about how comparable your pricing is? How other coaches like you price? (Yeah, maybe it’s taboo to talk about money – and hey if it means that all of us can begin to make a better living as a result, let’s get rebellious!)
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We’d love your thoughts on all of this and anything else you’d like to share. Let’s keep the conversation going.
Posted in: Learning in Action