How can coaches price their services for profit? In general, a third of your time should be spent on acquiring new clients. When it comes to pricing for profit, how can the rest be valued?
Pricing your products and services is dependent on several factors. What kind of service are you offering? If the price is high then you are looking to cater to a handful of customers who are willing to spend big. If the price is low, then you are catering to the masses – and the masses don’t like to spend a lot of money.
Variable pricing also comes into play. Are some of your services targeted at individuals? These ones should be priced lowest. Services targeted at corporates should then be highly-priced. Variable pricing in packages is necessary, and will allow you to determine where most of your business is coming from, hence, where you should concentrate more.
But what are the 3 base points of pricing that need to be taken into account when a Coach or Consultant want to maximize the profits on their services?
The 3 things you need to consider when pricing for profit
1. Target market
The number one thing any business has to figure out is who their target market is. Who are you selling to? As a Coach and Consultant, what niche are you in? For Career Coaches, your target market is most likely to be found among the unemployed, or those looking for career transition. Ceteris paribus, and based on that alone, you can already think of two service offers that cater to these two groups, and price them accordingly.
But before getting into the actual pricing, whenever one thinks of target market, their initial step should be conducting buyer persona research. This is where marketing comes in. Your buyer persona is a semi-fictional representation of your ideal customer based on market research and real data about your existing customers. When creating your buyer persona(s), consider including customer demographics, behavior patterns, motivations, and goals. The more detailed you are, the better. (HubSpot)
If you’d like to know more about conducting buyer persona research for your business, book an appointment with us and we’ll give you some hands-on advice on how to go about it.
After conducting buyer persona research, you now know where exactly to sow your seeds. Is it a high-end market? Is it more for the masses? This will help you determine your pricing point, whether it will be on the lower or higher side
Competitor pricing is an important element to consider when setting your own price. Without this information, you might as well be trudging in the dark and it is most likely to hurt your business in the long-term. Since you already know who your target market is, the next step is to figure out who already caters to that target market. These are your competitors.
Find out their pricing and stay within that range. When it comes to making the profit maximizing decision, it depends on another factor, which we shall come to.
There are a few things to consider when pricing based on competition. Do you want to maintain a lower price than your competitors? This sometimes has a positive effect, however, perception is a major factor that needs to be addressed. Potential customers will always judge the quality of your services based on their perception of your prices – and ultimately, how your business is perceived.
Either way, this strategic pricing will help place your business among others like it, and now you can put in that extra work to differentiate it from the rest.
3. Added value
When pricing for profit, this could be the most important factor that determines whether you have made the best decision for profit maximization.
How are your services different from your competitors? What value do you give? Is your relationship with your customers purely transactional or do are you building long-term business relationships which in turn result into customer loyalty?
This seemingly small but powerful point of differentiation could be what makes customers unwilling to pay an extra Kshs 1000 to another company, yet are willing to pay an extra Kshs 10,000 to yours.
Take 2 health consultancy businesses. They both offer consulting services on nutrition, advice on best foods for certain blood types, and how to generally take care of your body. In business A, you book a consultation, go in, tell them your issue and they offer the best possible solutions. Their service was good. They gave you a list of foods to buy and you leave there and go straight to the market to embark on your new health journey.
Business B, same thing. You book a consultation, go in and explain what troubles you are having with your health. They offer you the same advice, only this time around, they send you a free eBook on all the possible causes and natural treatments for various health problems. You haven’t experienced all the ailments but you have friends who currently do and this eBook can help them out. As if that was not enough, you are offered a discounted membership at a choice of 5 gyms who have partnered with the consultancy to give their clients the best chance possible at a healthy life. You pick the one closest to you and sign up! What an offer!
Business A is purely transactional. Business B is much more than that. Not only have they given you more value than you had initially wanted, but they have gone several steps further to ensure that not only do you eat well, but you exercise your body as a means to aid your efforts towards better health. As nutritionists, they don’t deal with fitness but they sought a partnership with those who do in order to give their customers the BEST value for their money – because their clients’ needs come first.
If Business A and B were to hold a conference on nutrition, I would definitely pay to attend Business B’s event, even if they were charging double. This is how you would like your business to be perceived, that it offers such value to the customer, they don’t question when they are asked to pay a certain price.
This point at which pricing for profit affects your business most. How much value is your business giving? Are you offering much more than your competitors? Are you giving useful information on your website’s blog? Is your social media bombarding followers with high-value, entertaining and captivating content that they just cannot pass up on? If not, profit maximization may not be in the near future.
In true Business B style, we are always here with open hands. You understand the importance of pricing your coaching and consulting services In order to make maximum profit, but do not know how to do it? Would you like a proper guide or strategy? Would you like a template on buyer persona research? Book a free consultation here and we’ll give you the info you need…and more!