I talk a lot about pricing and if you’ve been on my previous shows, you know that I hate hourly rates or hourly pricing.
I don’t believe in hourly rates. I think that it’s detrimental to you as a coach, consultant or service provider. I also think that it’s detrimental to the development of your clients.
I think that charging an hourly rate actually hurt your business. It puts you at the mercy of time. If you’re charging by the hour, what happens when you want to take a month off?
What happens when you get sick? What happens when you just decide to take a break? You don’t make any money, because you’re dependent on your time.
Price yourself on a value based basis
To be able to make money, you need to be able to come up with pricing strategy that allows you to scale.
An hourly rate does not allow you to scale. If you’re working around the clock, you’re not going to be able to do more than 40, 50 or even 60 hours of consulting work a week.
If you’re earning $100 a week by doing an hourly basis and you burn out, what happens then? You will have no money.
Make sure that you’re pricing yourself on a valued based basis or on a package based basis. Instead of having a one-on-one interaction with clients, have group interactions with them.
Create a group environment where you can get more clients in. If you have to do one-on-one sessions, come up with a structure where you can do one or two one-on-one session per client and then transition them into a group session.
Create a group format on social media like Facebook group chats or you can do weekly webinars or weekly Q&A calls that are for members only.
Do yearly or quarterly events. Create something where you don’t need to work hours. Don’t create a treadmill for yourself.
You need to work to be able to make money, but never get paid on hours. Think of what is the end service you’re delivering to the clients, think of the result that you’re getting for clients and define the value that it has for the client. After doing that, then define that as your fee.
Take me for example: most of the coaches and consultants who reach out to us are asking for our help.
They generally make between 60 to $300,000 a year. They deal with small businesses and sometimes with corporations, but they generally get paid on an hourly basis.
What we tell them to do is to look at the impact they have. For example, you help save a company a million dollars a year by restructuring and improving the processes in that company, why would you want to charge $50/hour or even $200/hour?
Charging hourly makes no sense, because you know that your end result is big.
If you’re making 6 figures, make it $150,000 a year. If you help a company save or make an extra million, there’s no reason why you shouldn’t get at least 10%, 15% or 20% of that.
You have to come up with a good proposition, a good offer, an irresistible offer, pitching it in a way that makes sense for the clients. If you can walk into a company and say, “Hi, I can make you an extra million”, any company would you be fine giving you 20% for every million you make you and no CEO will turn that offer down.
Think of what the value is. For example, you’re in the weight loss market as a life coach and you help clients lose 50 pounds in a year.
The client saves so much money, time and dissatisfaction from going to doctors and being unhealthy and sick. That has a price; that has value. You should never sell your time for $50 or $100/hour, you should charge way more.
Think of group programs, group packages or campaigns. If you’re a marketing consultant, think of the value you bring to the company and then charge a percentage of how you’ve helped and how you affect the company or your clients.
Think about that and forget about hourly rates. Think of how you could charge through packages, group programs and through resource that you get.