Just how do you set your fees as a coach? Does it depend on your experience, your own self worth, or what the 'market' itself dictates? Do higher fees give the impression of success - and the coach giving better quality? Olivia Stefanino looks at the arguments and asks whether it's time to set some industry guidelines.
Maybe it has something to do with the fact that as a Gemini, it's all too easy to see both sides of the argument - so help me out here – because I've been wondering about how coaches actually decide what to charge their clients? While there are many persuasive arguments, I simply can't decide which is the most convincing.
"With such a variance in charges, it's hardly surprising that there's an underlying suspicion about coaching in the marketplace."
Before we investigate the matter from a number of different perspectives – and I'm sure there are many more than those I've thought of – it's probably worth pointing out that coaches are currently charging wildly different rates and often for pretty much the same service. A quick straw poll I conducted recently revealed that coaches' fees generally seem to be ranging from £500 upwards for a session - through to 'nothing for friends'.
While no one has the right to dictate what level of fee is actually 'appropriate', with such a variance in charges, it's hardly surprising that there's an underlying suspicion about coaching in the marketplace.
Is it simply that coaches with high self-esteem feel comfortable with charging more? Or is there something else going on?
Four of the most common persuasive arguments used by coaches when they're justifying their fees are:
Persuasive argument one:
"Coaching is about the value you bring rather than the fees you charge."
Even though some coaches don't actually measure their effectiveness, most of them do – by agreeing desired outcomes with their clients before the coaching process begins. If the client has previously failed to achieve a goal on their own, but feel that with a coach's help they can fulfil their dreams, then the coach's time and expertise does indeed have a value. There's a clear equation between how much a client wants something and how much he's prepared to invest in getting it. What is it worth to achieve the goal? And how expensive is the pain of not achieving it?
Story: A man was choking to death when a nearby doctor came to his rescue by performing the Heimlich manoeuvre. Much relieved, the man thanked the doctor, saying: "You saved my life. I can't ever thank you enough. How much do I owe you?" The doctor replied, "Tell you what. Just give me a tenth of what you'd have been prepared to pay me two minutes ago!"
Persuasive argument two:
"In today's society, people tend to value most those things for which they pay the most."
It may be a case of 'Emperor's New Clothes' – and the argument goes someway to explaining the current obsession with 'designer labels'. Perhaps unsurprisingly, when people pay for and value the advice they get, they follow it and get the results they desire – which means that that they feel they're getting excellent value for money. And then they tell everyone about it!
But when they don't pay and as a consequence don't value the advice they get, they don't follow it and don't get the results they desire – which means that they feel the advice (or coaching) was a complete waste of time. And then they tell everyone about it!
Story: A woman struggled with her coaching business – not least because her husband didn't take her new work seriously. The more he belittled her, the less confidence she had. The result was that she attracted fewer clients and in the end, she had trouble even giving her services away for free. However, after signing up with a coach of her own who helped her work on her self confidence, she began to see the real value which she brought to clients and after a few months, she began to feel comfortable with charging for her time. The strange thing was that as she began to charge more, she began to attract more clients!
Persuasive argument three:
"It all depends on what the market expects."
When it comes to setting fees, a coach's own life and business experiences definitely come into play. Even though they may well be offering the same quality of service, a coach who focuses on helping celebrities will probably expect – and be expected – to charge far more than someone who's decided to focus their coaching activities on one parent families.
"Coaches are currently charging wildly different rates and often for pretty much the same service."
Story: Two men had very different working lives. One was a City high flier while the other never managed to earn much more than the minimum wage. Both men had an interest in the healing arts and as they approached middle age, they independently decided to train as kinesiologists. The association with whom the men did their training recommended that in their first year as qualified practitioners, they should be charging no more than £35 for an hour's session. The City high flier was appalled at the idea of earning so little. His low-earning chum was equally appalled at the thought of so grossly overcharging!
Persuasive argument four
"It's your expertise and experience which governs how much you can charge."
It's all too easy to fall into the trap of thinking that you're simply swapping time for money – and at the end of the day, for all of us, time is the one commodity which can't be replaced. Each day, we're all given exactly the same number of seconds, minutes and hours. From that viewpoint, it's hard to argue that one person's time is more precious than someone else's. However, it's a very different story when you take someone's life experience, studies and expertise into the equation.
Story: An engineer gets called into factory as the plant has broken down. Within 10 minutes, he's isolated the problem, given the machine a good kick and everything's running smoothly once again. "That's a relief," says the director, "we'll make sure we pay your invoice straight away." However, it was a different story when the very same director saw the size of the bill. "Why," he exclaimed to the foreman, "the engineer was only here for 10 minutes and all he did was kick the machine. How dare he charge us £1,000? Tell him that I'd like him to itemise the bill." The engineer happily obliged. The subsequent invoice read, "Kicking the machine: £50. Knowing where to kick the machine: £950".
Is it time for coaching institutions to set guidelines regarding the fees coaches charge?
Olivia Stefanino is the author of 'Be Your Own Guru' and has run leadership and coaching programmes within both blue chip organisations and SME's over the last 10 years. To download her free tips booklet '127 ways to harness your personal power' visit www.beyourownguru.com
TrainingZONE 16-Jun-08 Categories: Story read 2135
Bill Dueease , 14 July 2008 @ 17:07 PM You revealed the pricing dilemma
You have addressed one of the most important aspects of coaching that few people, especially coaches, will touch. Bravo for you. Your observation is right on target when you said: “it's hardly surprising that there's an underlying suspicion about coaching in the marketplace.”
Coaches charge prices that all over the map. Your pervasive arguments are what most coaches use and are taught to use. You captured them extremely well, and your examples were on target. I especially like #4. I believe the experiences of a coach are critical. The more experience a coach has in coaching and the higher the success rates of their clients provides an excellent indicator of the potential success rates of new clients.
Far too many coaches and coaching schools fail to consider the perspectives of their clients. Instead, the prevailing practice is to create “Sliding Scale” pricing, that depends on what the clients are willing or able to pay. This is especially true where coaches create multiple fee structures. One fee structure for corporations at a normally much higher rate, and another fee structure for private citizens at a lower rate.
But in reality; “The quality of the coaching a client receives and the quality and quantity of the coachable goals they achieve are not price sensitive.” In other words, a client will not receive better coaching from a coach who charges more, or lesser quality coaching from a coach who charges less. This IS the White Elephant that coaching schools, coaching associations, and coaches in general do not want to discuss. By not doing so openly and honestly, coaches are forcing clients to come to the same conclusion you so clearly articulated.
Thank you.
PS I believe the information your registration form demands is intrusive. I completed as little as I could to be able to submit may agreeing post.
Peter Mayes , 18 June 2008 @ 14:46 PM The time to earn
Hi all
I commend the laudable comments here but would like to add one more element: time.
People may not charge by the hour but a failure to earn sufficient within a time frame will inevitably lead to ruin however commendable the results of any coaching done during that time.
In a week; how much do you as a coach need to earn to run your buisness? If you do not know that then you are on a hiding to nothing. Yes set a rate by results, what the market will bear, value of experience; but if, after all this, you do not do enough fee earning work (and you know what enough is); then sooner or later you will be back on someone elses payroll.
The rates bandied about by attendees on 2 diploma courses I attended suggested that many of the expectant coaches lived on another planet when it came to deciding on their rates.
Coaching is a powerful tool and being a coach a rewarding activity; but if it is a business; treat it as such and include a pricing variable of 'what do I need to earn to pay the mortgage'.
Peter Chief Executive TrainerBase The Association for Learning Practitioners Peter Mayes
Joel Canfield , 17 June 2008 @ 20:38 PM All of the Above
An assortment of random thoughts:
What I charge should be related to the value of the end result to the client, the effort required to achieve the desired result and the effort I've saved them.
I adjust my rate based on the client's ability to pay. Profit is a side-effect of my business, not the purpose.
I don't sell hours. If I can help you resolve something you've spent a month on by asking you a single thought-provoking question, I've earned myself more than 15 minutes' pay. Charging by the hour makes folks think they have to 'use up' the time they've paid for.
Mike Morrison , 16 June 2008 @ 17:24 PM whats in a name
If you were to take the word coach and apply: * trainer * consultant * interim * facilitator etc..
The argument(s) would still hold water - people will charge what they think they can - and people will pay what they can afford. Try to put this in a fixed framework and those charging the same as everyone else but does not deliver will undermine the industry..
Just how do you set your fees as a coach? Does it depend on your experience, your own self worth, or what the 'market' itself dictates? Do higher fees give the impression of success - and the coach giving better quality? Olivia Stefanino looks at the arguments and asks whether it's time to set some industry guidelines.
"With such a variance in charges, it's hardly surprising that there's an underlying suspicion about coaching in the marketplace."
