Discussing price and payments can be unsettling for some people, but ultimately it’s something we all must deal with in business. If you are just starting out, some friends may ask you about your model, what your monthly costs are, and how much you think you will charge your clients.
There is a lot to consider but one of the most rudimentary concepts to understand is that of perceived value.
For instance, if you spend $10,000 putting together what you think is an incredible offering, and a person is only willing to spend $100 on it, then the perceived value by the market is far less for your product and it’s probably not worth pursuing.
This applies to any business and health coaching is no exception.
Identify your Offering and be able to Concisely Articulate it for Market Research
In a recent post I mentioned the critical first step is to identify what you are offering, but it’s also important that you are able to boil it down to several concise points that you can articulate to others. i.e...
This is the problem I will solve by providing these services at this cost.
Before we launched Nudge Coach I had to try and concisely summarize our company’s purpose so that I could begin getting the necessary feedback from industry pros. I need to know whether this was a valid concept and if people would even want to pay for it.
It now seems like a pretty simple concept, but it took countless conversations to hone in on what exactly we were going to build and offer our customers.
Are you creating a digital business or depending on many face-to-face meetings? Each coaching business is different and you need to first identify your niche and the time required to dedicate per client before you can assign appropriate value.
Health coach, Megan Lyons, adds that it's important to also consider the ancillary tasks and services that make up your offering - everything takes time and has an associated cost... everything.
"I was sure to calculate the number of hours I spend with clients (not only the in-person or phone session, but also all of the follow-ups between sessions, preparing, and writing detailed follow-up emails). Many health coaches miss this, and just price hourly for the time spent with clients."
- Megan Lyons The Lyons’ Share Wellness LLC
A Simple Google Search to see What’s Out There
A simple Google search is generally the easiest place to start to gauge what's already out there. If you search something as basic as "health coaching price" you can begin to see that there are plenty of health coaches online providing varying degrees of service.
After a quick scan of several sites I was able to get a rough idea for both HOW coaches generally charge and for WHAT amounts - a few results are below as a reference, but I now know a typical coach charges between $200-500/month with some type of preliminary consult to "hook" the prospect.
- Coach 1: $99 for upfront consult + $199/month
- Coach 2: $50-120/week depending on offering = $200-480/month
- Coach 3: $300/month with a 6 month commitment
We can use this data as a starting point and assume that these models are (somewhat) market tested, giving us a basic understand of what a client MAY be willing to pay. It's worth noting that coaches, like Megan, always recommend promoting long term commitments providing you with sufficient time to prove value.
"I have 2, 3, and 6 month programs, since I see the best results when guiding the client through a longer-term transformation, rather than just a week or a single session."
- Megan Lyons
Price sensitivity is also something to consider, but at the end of the day it all comes down to target audience and value provided.
With that said, if all coaches charge roughly $250/month and you swoop into the market at $75/month thinking you will undercut the other coaches, consumers will likely question your value and experience - not an ideal scenario.
Leverage Market Pros for Insights on Your Pricing and Customer
Once we were able to concisely articulate what we were building with Nudge Coach it was time to ask the industry professionals what THEY thought about the idea - the more conversations the better. It’s worth pointing out that there is a real difference between asking someone if they think something is a good idea vs. if they would be willing to pay for it (and what amount).
“Good idea?” → yes/no question in which a person can simply say “yes” to provide an answer to avoid providing you any additional feedback. Not very helpful...
“How willing would you be to pay?” → This allows you to better understand the perceived value from an intelligent source in your market. Is this your customer? No, but this is hopefully a person who is familiar with the space, knows of comparable models, and more importantly what your customer may be will to pay.
I strongly recommend trying to get feedback from as many credible professionals as possible who will provide you critical feedback on your offering and share insights on what they think a customer would pay.
Leverage Online Tools!
After speaking with some industry experts I remember thinking that we may be on to something, but I wanted more data points before we decided to jump all-in with our business. I encourage you to do the same.
Luckily there are countless online tools to survey groups of people (focused or random) that are great, cost-effective ways to gather additional feedback.
For instance, if you have several targeted questions you want to ask your contacts - such as “Would you feel comfortable paying for remote coaching? (i.e. only phone and skype)” or “How often would you want to speak with you coach each week?” - I’d fire up a campaign on SurveyMonkey, which allows you to send simple surveys to a set group.
Instead, we opted to run a campaign with Google Survey because we wanted to poll a larger population of health minded professionals outside our network for objective feedback.
We asked professionals if they would be willing to pay for a solution like ours, and more importantly, we structured the response to be a meter on their willingness to pay (1-10, with 10 being the most willing).
At first glance you can see that answers were all over the map, but we were relieved to see that the "10" was the clear winner.
While the average was a 5.8, the results were very polarized by age, and the younger demographics (up to about 40 years of age) were VERY willing to pay for a solution like this - ok, maybe our crazy idea wasn't so crazy :)
At the time, this was a simple $100 test that allowed us to get some great, additional data.
Start With a Low Barrier to Get Early Clients
Naturally, businesses require hard work and constant evaluation and iteration. Keep this in mind as you look at your pricing model, and don’t be afraid to give a discount in order build up your client list. In my initial google search I encountered several coaches offering free consults or crediting cost towards sign up.
Don't be afraid of cut your margins on your first clients.
The early experience is critical as you learn to better articulate your value proposition and how you present yourself. Holli Thompson, a leading health coach and coach mentor is adamant doing whatever it takes to get your first "yes".
“When you’re starting out as a coach, the most important thing is to get clients. You want to work with as many as possible...It’s important to establish a price in the beginning that will allow you to do that. It might be half or a third of what you plan to eventually charge, but find the number initially that is easy to say 'yes' to."
- Holli Thompson hollithompson.com
Price influences quality of clients, so work your way up over time
Yes, having a higher price might exclude part of the market, but it may generate the RIGHT type of clients you are looking for: the ones that appreciate your value and are more likely to stick around.
For instance, a health coach friend and I were recently discussing his model and he mentioned that at one point he had a client, also a savvy businessman, mention that my friend needed to raise his coaching prices because his offering was so outstanding.
He was reluctant for obvious reasons, but after careful consideration this coach decided to raise his prices and as a result... he lost 0 clients. Why? Because the perceived value of his offering by his customers was still far higher than the amount this coach was charging. Provide exceptional service and clients will stick around, be willing to pay more, and refer you to their friends.
While it can be an uneasy process, Holli recommends raising your rates gradually over time as your business begins to attract referrals and renewals.
"After you’ve built your roster of clients, and they begin to refer friends and you grow, plan to periodically raise your rates. It might be after 6 months or a year. And then you will want to evaluate it biannually until you reach the place you’re comfortable with."
- Holli Thompson
Identifying how much to charge as a health coach is a tedious task that takes careful research and well structured conversations. Leverage your contacts and the available online tools to get started, but be prepared to iterate as you grow over time.
Any other strategies we missed? Let us know and we can try to cover it in another post!
Can a mobile client app help you 2x the capacity and impact of your coaching?
Holli Thompson is a leading health coach seen in outlets, such as NBC and FOX, as well as a mentor to health coaches where she helps coaches create action plans to launch businesses geared towards their ideal clients. See her list of coach mentoring services HERE.
Megan Lyons is a health coach and the owner of The Lyons’ Share Wellness LLC.