Deciding what to charge is one of the trickiest parts of starting a new venture.
Published on Nov 20, 2015
Learn some key strategies to setting your rates for your coaching and consultation services.
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PRESENTATION OUTLINE
Deciding what to charge is one of the trickiest parts of starting a new venture.
Photo by John-Morgan
Ask for advice and you will get a wide range of opinions from charging “newbie” prices to charging “what you are worth” prices.
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Setting the “right” price for you is a subjective process - meaning there is no “right” answer except the answer that is right for you.
KEY POINT
KEY POINT -
Your price strategy must be in alignment with your niche or ideal audience and your business goals.
Your price strategy must be in alignment with your niche or ideal audience and your business goals.
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Your fees must match:
- the number of clients you plan to have at one time,
- the amount your clients are willing to pay,
- the perceived value of your product by your audience,
- your financial goals.
Photo by Aaron Escobar
If your niche or your business goals have not been defined, you risk creating products no one wants to buy or, worse yet, products you begin to hate to deliver.
Photo by John-Morgan
When determining your price there are a few solid components you absolutely need to take into account. This is not optional.
You need to determine what your costs are to provide the product, to deliver the product, and what your costs are to cover your bills.
If your business is designed to support you with a full-time income, to break even your prices need to cover your living expenses as well as the cost to deliver the product.
If your business is designed to support you with a full-time income, to break even your prices need to cover your living expenses as well as the cost to deliver the product.
Product Delivery Costs
Make a spreadsheet of your ongoing business costs that are related to the delivery of your product. Some of these items are:
Monthly phone bill
Internet service provider
Website hosting
Autoresponder monthly service fees
Credit card processing monthly fees (if not using PayPal’s free version)
Any other monthly fees related to the delivery of your product
Monthly phone bill
Internet service provider
Website hosting
Autoresponder monthly service fees
Credit card processing monthly fees (if not using PayPal’s free version)
Any other monthly fees related to the delivery of your product
Photo by marcp_dmoz
Hard Product Costs
In addition factor in hard product costs such as:
Video or audio hosting for virtual programs
Webinar hosting fees
Meeting space rental
Product supplies (ie. binders, workbooks, etc.)
Graphic design fees for course materials
Printing costs
Video or audio hosting for virtual programs
Webinar hosting fees
Meeting space rental
Product supplies (ie. binders, workbooks, etc.)
Graphic design fees for course materials
Printing costs
Photo by Werner Kunz
Other Business Costs
Finally there are business costs not related to the specific program but required for you to be in business:
business cards and marketing materials
ongoing continuing education
coaching
insurance
association & chamber memberships
domain renewals
office supplies
business cards and marketing materials
ongoing continuing education
coaching
insurance
association & chamber memberships
domain renewals
office supplies
Photo by Robert Bejil Productions
Living Expenses
Next there are your living expenses. What will you need to earn to cover these basic items:
rent/mortgage
utilities
taxes
insurance
food
transportation
clothing
medical out of pocket expenses
I use my credit card statements and my checkbook to help me determine my living expenses as I rarely use cash. It makes my life easier to be able to have a paper trail for everything I spend.
rent/mortgage
utilities
taxes
insurance
food
transportation
clothing
medical out of pocket expenses
I use my credit card statements and my checkbook to help me determine my living expenses as I rarely use cash. It makes my life easier to be able to have a paper trail for everything I spend.
Photo by Julián Pavón
Monthly Income
When you have all of these numbers worked out, it’s time to distill that down into a monthly cost.
What do you need to bring in each month to make a living?
Divide that by four to get an average earning target per week.
What do you need to bring in each month to make a living?
Divide that by four to get an average earning target per week.
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Starting Point
Once you have that figure you have a STARTING point.
There is a lot more that you need to do but this gives you a minimum target.
You haven’t made any money yet and you haven’t paid yourself!
There is a lot more that you need to do but this gives you a minimum target.
You haven’t made any money yet and you haven’t paid yourself!
Photo by kevin dooley
PAY YOURSELF
What do you need to earn for your time?
First, figure out how many hours you will work in your business weekly.
This includes time behind the scenes doing paperwork and time “on stage” when you are networking, coaching or delivering your product.
First, figure out how many hours you will work in your business weekly.
This includes time behind the scenes doing paperwork and time “on stage” when you are networking, coaching or delivering your product.
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Profit
Now you have to decide on profit.
What do you want to earn per week above costs, including your own salary?
A common profit margin is 10-20%.
What do you want to earn per week above costs, including your own salary?
A common profit margin is 10-20%.
Photo by Jeff Kubina
Billable Hours vs. Total Hours
BUT you don’t get paid for every hour you work. Here is the tricky part of this calculation.
How many hours will you actually be paid for?
If you provide one-on-one services, how many hours a week will you provide service?
A possible estimate is that at least 25% of your time will be spent on non-billable activities such as paperwork and another 25% on marketing activities such as networking.
How many hours will you actually be paid for?
If you provide one-on-one services, how many hours a week will you provide service?
A possible estimate is that at least 25% of your time will be spent on non-billable activities such as paperwork and another 25% on marketing activities such as networking.
Photo by *vlad*
Days Off
And we are not finished yet.
Do you want to take a vacation?
Are there weeks of the year you will you not be working?
How many holidays or days off will you need in addition to vacation days?
Do you want to take a vacation?
Are there weeks of the year you will you not be working?
How many holidays or days off will you need in addition to vacation days?
Photo by Juliana Coutinho
So now we’ve established a base rate. There’s much more that is going to go into setting your prices but this first rate will be a guide for moving forward.
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More Topics
Other factors that go into developing your rates are:
Lifestyle Goals
Specialized Services
Custom Tailored Products
Value
Competition
Audience Price Perceptions
....and More.
Lifestyle Goals
Specialized Services
Custom Tailored Products
Value
Competition
Audience Price Perceptions
....and More.
Photo by Ewan McIntosh
Get it on Amazon Now
AMAZON E-Book
http://bit.ly/whattocharge
WHAT TO CHARGE – Determining your price structure
We will cover:
How to set baseline, break even and profitable rates.
The critical mindset that eliminates the dreaded task of “selling” yourself.
How to make your competition irrelevant.
Tips on how to set prices that much higher than you think you can charge.
The problem with hourly rates and how to avoid rate traps.
In this K.I.S.S. guide to pricing, my goal is offer you a few different strategies and mindsets to help you select the price points that work for you.
Get it now on Amazon:
http://bit.ly/whattocharge
http://bit.ly/whattocharge
WHAT TO CHARGE – Determining your price structure
We will cover:
How to set baseline, break even and profitable rates.
The critical mindset that eliminates the dreaded task of “selling” yourself.
How to make your competition irrelevant.
Tips on how to set prices that much higher than you think you can charge.
The problem with hourly rates and how to avoid rate traps.
In this K.I.S.S. guide to pricing, my goal is offer you a few different strategies and mindsets to help you select the price points that work for you.
Get it now on Amazon:
http://bit.ly/whattocharge
