Services are intangible, which makes them hard to evaluate (e-value-ate = “find the value in”).
Recently I asked, Is Coaching a Commodity? and shared three ways to break out of the trap of sameness that keeps most service professionals’ fees low.
Today, let’s look at specific ways to set your fees so you earn what you deserve. Price can be based on many factors:
How much is required for you to do what you do?
Retailers frequently set prices by keystoning, which is basically doubling their cost to get to a retail price. So, if you need to earn $74.92 per hour to make a living, your hourly fee should be closer to $150.
Although cost-based pricing isn’t a good way for service businesses to establish fees
you must know your costs well enough to ensure you don’t under-price. For example, if an appointment requires two hours of travel, you’re likely losing several hours out of your workday, even if you only see the client for one hour. Be sure you incorporate that cost when setting your fee.
2. Intuition or Gut
Many people have an idea of what they want to receive as a fee within a few seconds
of thinking about the opportunity. Have you ever used meditation or prayer to access your inner knowing in this way? My approach is to quiet my mind, drop my awareness into my heart and ask,
“When I think about this project and the contribution I can make, what feels like the right fee?”
What are others in your field charging?
While you don’t have to charge above or below their fees, it will help you to know this.
One naturopath was galled by the prices conventional medical specialists were charging patients, even though her own results were often better. When I told her she didn’t need to align her prices with other naturopaths – but rather with those offering similar solutions to her patients (those pricey specialists) – she felt much more comfortable raising her prices.
In addition to learning the range of fees, you should also think about what the market will “bear.” It’s wonderful to access your inner value and establish a fee, but if no one will pay it, it’s not too useful.
Like cost-based pricing, having a theoretical hourly fee can be useful to benchmark your fees in the market. An hourly rate tends to send the wrong message if the overall value you deliver your clients is much greater (which I’m sure it is).
Hourly pricing is helpful if you’re having issues managing your client
or if you’re unsure how long it will take to deliver the outcomes the client is seeking.
If you’re struggling to break free from hourly pricing, look into offering packages that deliver a specific result and basing your fees on value.
What is the benefit, result or outcome clients receive from what you do?
The traditional business version of this says, if their business will grow by 20% or $100,000, then you should charge relative to that growth.
But what if you aren’t in a financially measurable niche? What kind of “value” is there in relationships, weight loss or life improvement?
I have clients in several non-monetary niches offering high-end, results-based coaching packages. A holistic coach helping with eating disorders – $5,000. A celebrity relationship coach with a year-long package at $20,000. A life coach charging $50,000 per engagement.
When you communicate clearly what outcomes clients can expect from their work with you, they are more likely to invest with you at higher rates.
7. What are you really offering?
Setting your fees can hook many personal issues and limiting beliefs about money
self-worth, selling and rejection, and more. Getting clear on your unique value is a critical step to charging what you deserve.
Recently one of my clients had an epiphany. She is not a relationship coach selling the commodity of coaching.
I am not selling “me” or even my services.
I am selling the promise of fulfilling enduring relationships. And, knowing that I am not selling “me” or “my time” depersonalizes the whole issue of money.
So much has clicked into place for me, including a high degree of comfort with fees.