Jamie, a follower of our weekly show, Coach’s Corner, asks: “I saw you talk about raising prices in the previous episode. Can you elaborate on how I could raise my prices as a business coach?”
Here’s my answer to Jamie:
There are a few things here I need to say about this question. First of all, a “business coach” is a very broad term. I usually make fun of “business coaches”, because being a “business coach” usually means that either you haven’t had really a business or that you’ve read a few books and that you decided to coach people on business. I hope that’s not your case and that you actually have experience running and building businesses.
Of course, there are a lot of great business coaches too. Regarding this matter, what I always talk about on Instagram, Twitter, Facebook and on these live shows is you need to have the chops, the goods and the skills. Usually, business coaches and consultants charge by the hour, and I think that’s the biggest mistake you can make for several reasons. One reason is: what happens when you’re sick?
Let’s say you’re seeing 20 clients a week and you get sick for 2 weeks. Let’s say you lose your voice for a couple of weeks, what happens then? You can’t coach them and you can’t deliver value. You’re dependent on your time and that’s one of the main things about charging by the hour. You are always charging by the hour so you need to put in the hours to get money.
You need to step out of conventional wisdom or conventional business practices of charging by the hour and start charging by value and services provided. Change your business model and start charging by “business packages” and by value you bring to your clients.
What do I mean by business packages? Well, it could be services rendered or marketing campaigns or create a cool e-mail campaign. Instead of charging for the amount of hours you’ve spent in creating that campaign, charge by the campaign. For example: if you’re writing a 10 or 20 e-mail sequence, put a fee on the whole package rather than on the hours.
The way to sell it is to sell the results in advance. If you’re creating a campaign, the business that’s paying you for your services doesn’t care about the hours you put in. It doesn’t matter about how much you actually work. The reason why they’re paying you is because the people who hired you don’t care about the hours, they only care about the OUTCOME and the RESULTS you can get for them. If you can get someone better results in half the time, they’re fine paying the fee.
Like I said last week, Eric, who was charging by the hour asks how to double his income and the fastest way he can do it is to double his prices. It’s a simple math, of course, you’ll lose some clients but it’s fine because if you want to create a solid coaching and consulting business, you need to work with clients who understand the value you provide.
I would stop charging by the hour and I would charge by campaign. Maybe you provide direct mail campaigns; maybe you provide operations and management but whatever you do, charge by the package. Create packages in your businesses rather than creating hourly based fees because if you’re sick and you’re charging by the hour, you lose the income. In conclusion, here are the two main things that I would tell you do: forget about charging hourly and start creating packages that you can sell over and over again for a higher fee.