A Short Guide to Pricing Your Services as a Consultant or Coach

Many executives dream about starting an executive coaching or consulting practice, or launching one after they retire. But a touchy subject soon emerges: what should you charge?

Too much, and you won’t have any clients. Too little, and you’ll work yourself to the bone — and become resentful in the process. How can you strike a balance that enables you to build a thriving practice where you’re helping people and are fairly compensated for it?

Through my experiences building successful coaching and consulting practices, I discovered there are five key pricing strategies you can use. By deploying the right strategy at the right time, you can build a robust and lucrative practice.

Hourly billing. The simplest way to bill your clients is by the hour. At first, you may not have any idea how long a given project or engagement will take, so instead of risking a bad calculation (you think it’ll take 20 hours, but it actually takes 200), this approach may make sense. On the plus side, it’s clean and simple: they agree to (let’s say) $100/hour, and you worked 10 hours, so obviously the fee is $1000. It’s also what many people are familiar with, because their own lawyers and accountants charge that way.

But there are significant drawbacks, including the intensive record keeping this form of billing entails, and the level of scrutiny it invites (clients often feel entitled to ask, “Why did this take two hours, instead of one?”). Additionally, your pay is capped both by the number of hours you work, and clients’ hesitation to pay high hourly rates (many consultants or coaches struggle to get beyond $200-$300 per hour). I suggest moving on from this form of pricing fairly quickly.

Retainer agreements. A better arrangement, once you’ve built trust with a client, is a monthly retainer. In this situation, clients pay you a flat fee each month for access to your services (anywhere from $500/month for newbie coaches without much experience to $20,000/month for elite practitioners). A clear benefit is pricing predictability: you know that you’re getting X amount of money each month, no matter what. The downside is that unless you’re careful, your client may feel they own you, and take advantage of the “all you can eat” pricing by monopolizing your time.

It’s important to be very clear upfront about who can contact you for coaching help (Just the president? Or also his three vice-presidents?), during what hours (24/7? Just work hours?), and in what matter (Is it OK to call you? Text you?). You’ll also want to specify whether they only have access to your advice, or if there are specific deliverables (for instance, you might also agree to facilitate several off-site retreats). As you gain more experience and build your brand, this will be a natural way to offer your services.

Productized services. Another possibility is to develop a standard suite of products (because you’re selling professional services, the term of art is “productized services”). If you have popular offerings, you can often make life simpler for both you and your clients by creating a standard rate sheet. For instance, I often conduct half-day strategy sessions with clients for a flat fee. This is easier for the client because the pricing is transparent, and because the basic format is the same, there’s no concern about “scope creep” or other variables that would impact the time and effort the coach spends.

Value-based pricing. Another approach, popularized is to use “value based fees”. The concept is that prior to suggesting a price, you have a detailed conversation with the prospect to understand and agree upon the value the engagement, if successful, would have on the business. For instance, you can weave in questions such as, “What would be the value to the company if this weren’t a problem?” or “What impact would it have if you could do XYZ better?” This question can actually be a valuable part of the coaching process, because when clients are coached to think about the value of the engagement, they get much clearer on their goals.

It makes sense that if you’re coaching the CEO of a Fortune 500 company, it’s completely appropriate for you to charge more than if you were coaching the CEO of a small local non-profit. That’s because in the former case, your coaching can create (let’s say) $100 million in new value if she becomes a better leader, whereas even a dramatic improvement for the local nonprofit CEO would only enhance the bottom line by $100,000. Once the buyer realizes the full value your work will bring, your fee — a tiny percentage of the overall gain — will seem trivial in comparison.

Pay for results. I pioneered the “pay for results” model.  It’s not for everyone, because it’s high stakes: if your client doesn’t improve, you get nothing. But if you succeed, the payday can be substantial). But the model is only risky if you 1) don’t have a solid process and 2) don’t pick your clients well. If you do have a coaching or consulting process that you know works, a way to measure your client’s progress, and a willing and able client, your chances of success are high.

The coaches and consultants that succeed are those whose business lasts long enough to make an impact on their clients’ lives. And you can only do that if you get pricing right. By familiarizing yourself with the pricing strategies above, you’re giving yourself the tools necessary to build a successful, money making practice.


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