Over the past months I’ve been thinking a lot about pricing and money in general. I’ve been planning to decrease from my part-time job, worked on setting up a designated business buffer, and have been researching what I need and want to make in more detail. In this blogpost I explore how I decided on prices that feel good in my mentoring business.
To be honest, I have no idea how I first landed on the prices I was charging when I started out. I don’t even remember what those prices were, actually. My guess is that I Googled and compared (more on that below).
When I started my business in early 2019, I aimed for it to be a local, in-person business, offering 1:1 mentoring and workshops. Digging around in my spreadsheet for 2019, I see that I charged €20 per person for an in-person workshop I ran in November 2019. I had 4 participants, so that was €80 in total. I spent €52.55 on flyers, and €36.30 for the workshop space. So I didn’t break even for the workshop, especially when taking into account taxes I had to pay on what I earned.
In February 2020 I hosted a second in-person workshop. I had 6 participants, who each paid €25. I spent €8.75 on large-sized planners for the first 5 people that signed up, and €72.50 on the workshop space. So this time, I did break even, and earned a little bit of money after taxes.
I’m pleased with the prices I set back then, and given the duration of the workshops I also think they’re right. These workshops do demonstrate one of the reasons why even before that February workshop I decided to pivot my business from a local business to an online, international business. I like having a bigger audience, and if I were to do an online workshop, I’d make sure it was recorded so I could sell it as an evergreen option, thereby reaching a bigger audience and making more on it.
Thinking about pricing can really tap into our insecurities. But there are a few ways to work around that.
Deciding on prices that feel good has been trickier for 1:1 mentoring, which is the core of my business.
I experimented with a few different ways of setting my prices: researching the prices set by other coaches + mentors, and then feeling my way towards a price that feels good; deciding on an hourly rate and working from there; working backwards from the number I need; and value-based pricing.
None of these are, alas, an exact science. But I do think my experience is similar to that of many other (service) businesses, and hope they inspire you.
comparing + feeling
This is an approach that’s useful to get a sense of the market you’re operating in. If everyone charges €0.50 for an apple, and you are planning to charge €5.00, doing some research will show you that you need to adjust either your prices, or change something about what you offer.
At the same time, this approach can really tap into our insecurities. I know that in past (especially before I discovered value-based pricing), I would quickly think that all prices I discovered where too high for what I offered.
Like many business owners, I worried about charging too much. I worried about scaring people away. And, I really wanted to serve people, including those that may not have that much to spend (more on that below).
The tricky part about comparing is also that prices and services vary so wildly.
A really quick look at some of the websites of coaches and mentors I know shows this: *
£900 for 6 calls over 3 months £600 for 5 calls over 3 months £1800 for 6 calls over 3 months £7777 for 12 calls over 6 months **
* all of these include support (via email or otherwise) in between the calls, recordings and/or notes, a questionnaire or similar before the first call ** this package also includes 6 groups calls + access to a library of resources
Looking purely at the numbers, the prices here vary from £120 a call to £648 a call (though this last price includes more than the other offers).
This is where the feeling came in. Where did I feel right? I offer the same as all of the above except the highest package, and yet for a long time I charged less than the cheapest of these packages. Why? Because I worried about scaring clients off, and because I wasn’t clear enough about my value. Discovering which prices that feel good for my business also meant dealing with those fears, and getting even clearer on what I offer.
Somewhere in my research when I started my business I decided on an hourly rate of around £80. I wish I could tell you where I got this number from, but I don’t know. I tweaked it a bit to factor in max. 30 minutes for preparation and admin, and ended up with the price for my package.
With an hourly rate, you are selling your time for money, quite literally. You’d pay me to spend an hour with you, essentially. But what about all the work around that? You’d arguably get quicker in doing admin and prep as you get more experienced. Does that mean your hourly rate goes down too?
I’d never really thought about this in such detail until I started reading We Should All Be Millionaires (affiliate link) with a friend of mine. In the chapter on pricing, Rachel Rodgers writes about the risk of setting an hourly rate. If you stick with your hourly rate as you get more experienced, you essentially end up with less as you get more experienced. Building a website might take you a certain number of hours this year, but next year–with hundreds of hours of experience under your belt–you’d do it faster. And you’d, arguably, have to charge less if you’re going by the hourly rate. Doesn’t make sense, right?
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Another way of deciding on prices that feel good is by working backwards from where you want to be. There are a few ways of going about working backwards. You can figure out what you need to earn and work backwards from there to discover how much you need to work. You can also start with how much time you have (and whether that matches what you need to earn). I did a combination of the two when I started thinking about my prices earlier this year.
I did this exercise in late February, and landed on the following, starting with how much time I had and calculating how much that would make:
- package clients: 18 clients per quarter
- 60 + 30-minute clients: 36 clients per quarter
- package clients: 13.5 clients per quarter
- 60 + 30-minute clients: 27 clients per quarter
- package clients: 9 clients per quarter
- 60 + 30 clients: 18 clients per quarter
- package clients: 4.5 clients per quarter
- 60 + 30 clients: 9 clients per quarter
These numbers are without taxes. I needed to be somewhere between 25% and 50% booked to meet my minimum financial goal, depending on the ratio of package vs 60+30- minute calls. In all of these scenarios I’d teach in higher education 2 days a week, also generating an income there.
Initially I felt quite good about that fully booked scenario. I’ve had days of 3 mentoring calls (even more), and I always get energy from them. But then I thought of that one remaining day. And of how one of the biggest priorities in my business is having space, and working with my energy. Suddenly, having 3 calls a day, 2 days a week with only 1 day left for writing, marketing and other things did not feel slow and gentle at all.
Now, my max is 2 mentoring calls a day, 2 days a week. This will give me enough space to do other things both on those days and on the one remaining day. I ended up raising my package prices to accommodate having fewer calls, creating a budget for a VA to help out with marketing, and continuing to donate part of what I make to the Blurt Foundation.
Your prices should cover all the time you spend on your business, not just the time you spend explicitly working on your products or with clients.
Your prices should not only include the time you spend on your clients, but also the time you spend marketing and creating free resources. In other words, it should cover all the time you spend on your business, not just the time you spend explicitly working on your product or with clients.
In her chapter on pricing, Rodgers argues for value-based pricing rather than hourly-based pricing. It inspired me to take a closer look at that calculation I’d made.
And I realised that what I was asking was not enough. Once I started to get clear on the value I offered, the price that feel good changed.
Value-based pricing “focuses on the value received by the person enjoying the fruits of your labour, whether that be your boss or your customer.”Rachel Rodgers, We Should All Be Millionaires, 150.
So, you might be selling bath salts, but the value for your customer is not just a bag of bath salts. It’s destressing, being inspired to take time for yourself, feeling that lovely soft skin feeling afterwards, etc. It might even ripple on to being less stressed around your partner and children, sleeping better and therefore having more energy the next day, easing muscle ache so you don’t need physical therapy, and more.
For me, the value that I offer my clients isn’t just the one hour we spend together, or the notes I send after the call, or the accountability I provide.
It’s that I help them create a business that is slower and more gentle, that is more aligned with them and their values and that enables them to live the life they want to lead. I support them to market their business in a way that feels better, to give themselves permission to not always be ‘on’ all the time, to build rest into their days, and much more. This, of course, is the kind of stuff that’s hard to quantify.
Value-based pricing also takes into account all of your skills and experience, all the courses and trainings you took, your intellectual skills, your emotional skills–basically everything that makes you valuable as a business owner.
This really clicked for me.
I am not just spending an hour of time with my clients. The value of working with me is not just that hour, but the entire package of who I am and what I offer.
That value includes all of my experience: my experience building and running a business and all the experiments I’ve done in my own business, for example. It includes the 17+ years of experience I have mentoring people from all walks of life, how I’m really good at providing clarity and focus because I have a very analytical mind. It includes my ability to be both focused and practical, as well as my ability to hold emotional and mental space for people. It includes all the business investments I’ve made over the past years, from the coaching and mentoring that have made me a better mentor, to the courses that taught me skills that allow me to run my business, and enable me to support my clients.
an experiment to try
Take a moment to think about or journal on these questions to help you decide which prices feel good:
- How did you decide on your prices?
- How do your prices make you feel?
- What kind of value do you bring to the table? And what is the value received by your clients?
are you ready to build a slow, gentle and profitable business?
If you’d like some help to create a slow, gentle and profitable business (including setting prices that feel good), do get in touch. I’d love to work with you 🙂
But what about being affordable?
This is a good question. I don’t want to exclude people from enjoying my services. But, at the end of the day, I am running a business and can only do so if I make money.
While I’m not lowering my prices for the sake of affordability, I am doing a few other things so that as many people as possible can benefit from my support:
- loads of free resources: I love, love, love creating free resources including these blog posts, my newsletter and the worksheets that I make. I’m good creating these kinds of materials, and get great feedback on them. It’s important to me to keep offering them, which is why I charge what I do to ensure I have time to create these free resources.
- some of the courses that I’ve taken and the mentoring that I’ve had, were real investments. I needed to save up for them, and that was really inspiring. I think it also helped me get more out of them, because I’d saved up for them and looked forward to them for a while. I want my services to feel the same.
- paying in instalments: for my 3-month mentoring package I offer the option of paying in 3 monthly instalments so that clients don’t have to pay a large sum in advance. Instead, they know what they need to earn extra every month in order to make that instalment.
- referrals: I love it when people spread the word about my work. If a client refers me to someone else, and they book a call or package with me, the original client gets a free 30-minute check-in session with me.
I hope this blog post gave you some more insight in setting prices that feel good. I’d really recommend going through the experiment yourself, and investigating your money stories in general. Thinking and talking about money has been huge for me in how I approach it. Writing this blogpost on how I decided on prices that feel good is equally empowering and confirming for me.
Do let me know what you get out of this post. Send me a message, I’d love to chat.
And, if you want to create that slow, gentle and profitable business that truly nourishes you, discover how we can work together here.