In this episode of Better Business Coach Podcast, I talk about the uncomfortable subject of price and why you must never mention it until the customer completely understands what you provide as well as the true value they will obtain from working with you. I also discuss how to overcome self-doubt when charging higher hourly rates, as well as touch on the value of selling your service as a package or monthly subscription instead of by the hour. For people that struggle saying, “I cost $xxx per hour,” this session is a must.
Why price comes last
In session 10 of Better Business Coach Podcast, I discussed the five steps to selling business coaching without feeling like you’re selling. Since then I have been inundated with emails saying, “What if a customer asks about price? What do I do?”
Yes, a customer can ask you several times throughout an initial consultation, “What is your fee?” or “How much do you charge?” So shouldn’t you just tell them? At least then they will listen to what you have to say and stop worrying if they can afford you.
Unfortunately, this is not the case. Mentioning price before the end only gets the client to say or at least think, “I can’t afford that,” or, “I don’t think what you have suggested is worth that.” Well of course they don’t because you haven’t told them everything yet. You may not have even asked them enough questions to offer any insight. What makes things worse is that they then won’t listen to what you say and instead will be thinking about the price. They will restrict their answers to you because they don’t want to want to work with you or even if they do listen and respond correctly, they will analyze each point and think, “Is that worth the money?”
So what do you say if they ask?
Do you just say, “Sorry, I can’t tell you right now as then you won’t listen to me.” Of course not. Try saying something like, “Before I can give you a price I need to first understand where, and if, I can help. Then I will be able to work out a package and a price that best suits you. Is that okay?” I still have not had someone say no, and by doing this you are signaling that you tailor a solution to each client, and that you are in control. Both of these will assist you to earn respect and increase your chances of a sale.
Getting over your self-doubt when pricing
I had a recent call with a client, and he asked me how I got people to agree to pay my hourly fee, which was far in excess of his own, to which I responded, “How much do you charge?” He replied, “Like $200.” The answer was clear; he wasn’t congruent with his charge out rate.
For me, I am not only congruent, but I think I charge lower than I should. So when people ask, I deliver the price and people just know it is the right decision.
So how do you become congruent with charging hundreds per hour? I know I struggled with this, especially when I first started, as only a few years earlier I was earning low wages at McDonalds. Perhaps start by giving control over that to the client. When you get to talking about price, try saying the below:
“When you thought about business coaching or considered using me as a coach, I’m sure you had an idea of what professional coaching would cost you. What kind of budget did you have in mind?”
You will get one of three answers:
- “I don’t have a budget yet” – This means you are not talking to the decision maker, or at least not all of them. Turn the conversation to understanding how decisions are made, who is involved, and what they have paid for similar services in the past. Work through this until the client comes up with a budget, and then move to answer number three.
- “About how much do you cost?” – This person is not being evasive; they have a budget in mind. They just want to know if they are in the ball park so they don’t look stupid. Don’t fall into the trap of playing whoever answers first loses. Quote a range of prices depending on the amount of work and try to be as congruent about it as possible. Okay, it’s not ideal, but you have lost nothing by trying.
- “I was thinking it would cost $xxxx” – I hope you like nice surprises, because if you provide a good service and have mastered the art of active listening covered in session 9 and the Business Needs Analysis covered in session 7 and 8, you may find you get numbers much higher than how much you perceive your value, especially if they contacted you for your services. One recent client suggested to me that he expected not to get much change from ten thousand dollars for a service I was thinking about quoting out at $3,500. I generally find that clients respond with option three about sixty percent of the time and very seldom do I get a number below what I currently charge. What I have learned is that people value very highly the information I now take for granted, and I would suggest this may be the same for you. So when you are telling clients things that to you are obvious and therefore not worth hundreds of dollars per hour, they haven’t lived your experiences and may value the advice highly.
- If the offer is acceptable – Simply respond, “I can work with that,” or pick a price slightly below what they have suggested and say, “Great, as my fee is only $xxxx, so we are on the same page.”
- So what if you are lowballed? If the offer is ridiculously low, don’t be disheartened. They may just not have the money to pay anything more, or perhaps you didn’t highlight enough value during your Business Needs Analysis. So you can do one of two things: Take a second to re-explain the value and then tell them your fee, or suggest to them an alternative method of engaging you at a cheaper price, such as a mastermind group, webinar, book, online training, etc.
Package and monthly subscriptions instead of hourly
When you charge hourly, people look at each hour and see if they got enough value. Also, they think in terms of what they get paid per hour verses what your fee is. Try charging for packages and subscriptions with outcomes instead of hourly rates with none. My get more customers program is six hours, so I could say I am $xxx per hour, however, instead I say:
“My program is six hours broken into three two hour sessions. In session one you walk out with a tag line and a unified message to speak to your customers. In session two we look at who will identify with this message and how to best speak to them. Finally, in the third session we look at turning this interest into converted sales by creating you a sales system that works. This program is $xxxx for the first six hours and then we work on a monthly basis at $xxxx per month with set objectives each month.”
This offers three very specific outcomes for the money and in my experience is much more effective.
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- BBC 010 : 5 Steps To Selling Business Coaching Without Feeling Like Your Selling
- BBC 009 : Listen and succeed, it’s that simple! Learn the 5 keys to active listening.
- BBC 008 : Part 2 of 2 – First FREE Worksheet – The Business Needs Analysis
- BBC 007 : Part 1 of 2 – First FREE Worksheet – The Business Needs Analysis
Better Business Coach Transcript
This is Better Business Coach Session Number 14
Hello everyone, and welcome back to Better Business Coach. My name is Matthew Pollard and, as always, I am your Rapid Growth Guy. Today, due to popular demand, we are going to be talking about price. And the reason for this is, in session 10 we talked about summarising your findings. And in summarising your findings, we discussed a package of 4, 6, 5 hours where we would deliver a certain outcome for the client, and we talked about the price of that package. And I have had a lot of people message me since then, saying “Matt, how do I not talk about price till the end? I get a lot of people asking me during the Business Needs Analysis, or even in the networking event, what my charge-out rate is, because they don't want to continue on unless they hear the price.” Now the first piece of advice I want to give you is, if you mention price up until the end you’re doing yourself a massive injustice. And the reason for that is, as soon as you talk about price, people transition into decision-making mode and work out, based on information that they currently have, whether or not you're worth the specific dollar amount that you highlighted at that specific time. If you say anything after that point, it may or may not get added to the decision-making process because they already have price in mind. Anytime you say something after that as well they straightway look at the entire dollar value that you say you’re worth, and that one specific element, and say it still doesn't make you work that price. You're actually cutting yourself short. So many people will mention price in a networking event and then not get to a Business Needs Analysis because somebody is like “I can't afford that.” We don't know if they can or if they can’t afford it yet. You haven't highlighted your true value. If you’re five or six or ten questions into the Business Needs Analysis, again, you may not have highlighted your true value. You may not have completely unfrozen them to the fact that they need your help. (And again, if you don't know the term unfrozen this is going to be covered in session 12 of the Better Business Coach Podcast.) So, talking about price at any time up until the completion of the Business Needs Analysis is a horrible thing to do.
So, what do you say to stop them asking you about it, or stop them thinking about it, until the very end? What I say is, “for me to best give you a price, I need to first understand your true requirements and what work I need to do with you specifically. For instance, with some clients I can work with them on a six-hour engagement to work out whether or not I had a good fit for them and they're a great client for me. Other people I tend to have to focus on ten hours because there is so much additional work there, and it’s going to take me a lot more time in my back office getting things prepared. So, until I fully understand what your requirements are, I can't really discuss price yet. So, if you don't mind, can we continue with this, and when we’re done, go right through what my analysis as shown, and what price and package I think would be best for you. Is that okay?” The customer will always say yes, and then you have their permission to continue on through your process. If they mention price in the initial networking event, you can say “It’s actually funny. A lot of people ask me this. And it's really hard to have any idea what sort of price is involved in business coaching. Some people it’s only a couple of quick things and then they're off and going and they don't need me anymore. Other people need me on a consistent basis. So, what I do is, I have a free Business Needs Analysis that I do with a client to help them really understand where they are going, what they need, what their greatest problems are, and how I can help. And after that process, then I can generally discuss price in much more informed way, where I know the price I’m giving you is actually going to fit what you need. So how about…” And then you move into talking about the Business Needs Analysis and booking them in just like we talked about in the elevator pitch and networking section of this podcast which was session two and three.
Okay, so, let's work out what you're actually charging for. And what I mean by this is, what's your specific package? See, so many people will say “I charge $200 an hour,” or “I charge a thousand dollars an hour.” However, this doesn't give them outcomes. This just says to them “I'm going to charge you a large amount of money,” and this in anybody's head is a massive issue. Now remember, when we spoke in session 10, we spoke about highlighting what they wanted as a deliverable. For instance myself, when I talk about differentiation, niche marketing, and sales systemisation coaching, or what I call rapid growth coaching, I say “from my analysis I can see that you really don't have a unique message. You don't know what market segments that you can really tap into to really create that dollar value behind what you want, and you don’t have a sales system to translate interested customers into paying clients. And as a result of that, you’re not making the money that you need. So what I like to do is, I like to start with somebody over six hours and the way that’s broken down is, we spent two hours working out what your unique message and tagline is, so that you have that one unified message that you can tell your clients to get them to understand straight away what you do, and identify with the fact that they need it. Then we look at markets that are easier for you to sell to, to find the willing-to-buy customers rather than the customers that really aren’t that interested in your service. And as a result of doing these two sessions - and each one is two hours – you’ll move away from the I'm-just-like-everyone-else, or I-do-what-everyone-else-does, and everybody-knows-everybody-that-does-what-everybody-else-does-to-charge-what-everybody-else-does. I’m sorry to say “what everyone else does” so many times. However, that is the truth.
So, the third session is systemisation. And what we then do is, we learn, after it getting your unique message and speaking to the right people, how to create the sales process to convert these into dollars into your bank. So it's three sessions: one is differentiation and getting a unique message for yourself, the next one is working out the ideal markets for you to sell to, and the third one is creating that sales system so that you can make money off every person the calls in every single time. And we do that in six hours and the total cost for that is three and a half thousand dollars. So what I need to do now is…” and I moved into booking them into my calendar and that sort of thing. Again, if you don't know how to do that, listen to session 10 and it will show you how to make the transition from summarising your findings into getting them into a paid client. However, for the sake of this session it is important for you to understand that I have a package, which is three specific elements: differentiation, niche marketing, and sales systemisation. I don't tell people what they charge per hour; I just tell people what I charge for that entire package. And then when people ask me my price - not until the right time, the completion of the Business Needs Analysis, and not until I've already explained my findings - do I mention the price after explaining everything that the package entails. And then I move into the close. And people will transition to “oh, there’s the price. Oh, yeah, I can afford that!” because now they see that total value. And then I move forward into paperwork. And it always is that seamless. I'm not a pressure salesperson I don't need to be, because I do it in the right way. I use active listening, which we've discussed very recently, I look at summarising my findings in the correct way, I have a total package that I offer, and then I transition, as we discussed in session 10, right into paperwork and money. And I generally have people's credit card details right there on the phone. It's that simple. And if people are actually interested in that session, if you opt in to any of my opt-ins on MatthewPollard.guru, you'll actually get the opportunity to book in for a 30 minute session to talk directly with me about that specific service.
Okay, so you need to go away and you need to work out what your unique sales proposition is. Then, once you have that worked out, you need to work out how you talk about price. So, I’ve said that those six hours are three and a half thousand dollars. So I've highlighted exactly what that cost is, so that people are comfortable moving forward at that stage. However for you - and I'm going to use an example of one of the people that emailed in, and he called me afterwards, and we’ve had a bit of a conversation since. And his response to me when I asked him what he charged, he responded “I charge, like, $200.” And, the first thing that came to mind when he said “like, $200,” was that he didn't value himself, and he was worried that people couldn't afford him. For him $200 was a lot of money and, as a result, when he was asking for $200, he felt like they wouldn't be able to afford it. This was his perception, and he was pushing that on other people. And you may be in the same situation. For me I think that six hours’ worth of coaching for three and a half thousand dollars is undervalued, because the results that I get. And I’ve got testimonials all over my website that say “for three and a half thousand dollars I made my money back just in the first session because I created a unified message.” Now unfortunately for this person who called me, he didn't quite understand what the true value of what he did is. He was a personal life coach, not a sales and niche marketing differentiation coach - what I call the rapid growth coach - so he didn't know whether or not he was worth $200 an hour. And even though he says “I get phenomenal outcomes and I know I'm a great coach and I know a lot of people that are charging more than me,” he still perceived what he has offer as less than the value of $200 an hour. So, the first piece of advice gave him was, “you need to create a package, like I do, of six hours or any number of hours; however, it needs to be a package where you can explain elements and then offer that to clients. And the reason why we do that is so that it is nice and easy to talk about, and we create that value as we just discussed.” Then I gave him an option of talking about price in a different way, and that is after you summarise your findings you can say something like “okay, so I'm sure when I came in and started talking about coaching, or you knew I was coming in to talk about coaching, you probably had an idea of what sort of budget you would need to set aside for professional business coaching to achieve the outcomes like we just discussed. What sort of budget did you have in mind when you were looking at having a coach?” Now, this throws the price question back onto them. And you'll find you'll get one of three responses. The first one is “I don't have a budget yet.” The second one is “about how much will this cost?” And the third one is “I have a budget that is around X,” or something like that, like “I was thinking of around X amount of dollars.”
So let's talk about the first one, “we don't have a budget yet.” You may not even be talking to decision-maker, or maybe you speaking to a husband need to speak to a wife or a wife that needs to speak to her husband, or it might be another business partner involved. You might be speaking to a middle manager that can't even discuss what the budget is because they are not involved in that part of the process. They just have to pitch for you on your behalf to the upper-level managers that they feel that this will help the business. So what you need to do here is you need to turn the conversation into the budgeting process. You to find out who is involved in the decision-making process, and how that decision is made. Have they paid for similar services before and what have they paid? What you need to provide the client to secure that budget. You go through this budgeting process until they work out what the number should be. Then you go straight through to option three, where they've said “my budget is around X” and we’ll talk about that the second.
The second one we need to talk about is when they respond “about how much will this cost?” This customer already has a budget in mind, they just want to know whether they’re in the ballpark. So don't stonewall them. Quote a price of ranges. “So these services cost somewhere between here and here,” and make the final price depend on the exact amount of work you need to do. This isn’t ideal, but you’re no worse off than mentioning a price at the start. You can also say exactly like I said with my package, and that was “talking about differentiation, niche marketing, and sales systems, two hours, two hours, two hours, three and a half thousand dollars.” And by doing that the customer will say “Oh, I agree, we’re in the right ballpark,” or “no, were not in the right ballpark. Let's continue discussing.” And that just means that I need to continually talk more about what I offer and the services and the value that they will get from working with me. There is also a great thing, we talked about this in session 9, if they say they can't afford it, simply respond “how do you mean?” And what that does is, it puts the customer on the back foot to explain why they can't afford it. And, generally, the case is that they can afford it because you’ve just explained all the benefits. Or they’ll highlight the objection inside their head that will allow you to focus directly on fixing that to move forward to the sale.
The Right Price for Business Coaching Services
So the third one - and this comes up in my experience around 60% of the time - and that is they actually provide you a budget, especially if the client contacted you rather than the other way round. The great thing about when they enter this way is it puts the true value of what they perceive your product or service to be as opposed to looking the opposite way - how you perceive it. And at the moment if you are very similar to this email that I got that I later spoke to, that said “I charge, like $200,” the customer might see something that you're not seeing and value it much, much higher. So if you've got a top-notch product it actually makes sure that you get paid its true value. Now, if the price is ridiculously low, try suggesting an alternative like a book or an online training program that you have, or a way of working with you that isn't direct coaching. If the number they gave you is within reason, just respond “I can work within that budget.” And then that way, you can continue working with them. They’ve mentioned the price, and they feel like they got what they wanted, and you've got a new client. The benefit with doing it this way as well, especially for new people, is that a lot of times they will give you a price that is so much higher than you could have expected - ridiculously higher than you expected. To give you an example: this three and a half thousand dollar package that I was talking to you about. Occasionally I will try this with a client, and I can tell you one story just recently where I did this, and his response was “I wasn't expecting to get much change from $10,000.” I responded simply “I can work with that. My package is only $8790.” He was ecstatic! He felt like he was saving $1000. And again you don't have to always say “I can work within that budget.” If they say “I wasn't expecting much change from $10,000,” you can just simply say a price which is slightly under that. They’re going to be happy, then you can move forward. However, realistically, I just made almost 3 times again on what my price tag was just by asking the question the opposite way. So I hope you can see the true value in doing that.
Okay. So, we’ve discussed two things: one was summarising your findings, introducing a package like I did when I talked about differentiation, niche marketing, and sales systemisation, mentioned the price, then straight into booking into my calendar. The second option we will be able to start getting more comfortable with charging high amounts of money. And don't feel ridiculous charging this sort of money. Don’t forget, you can actively go out and find a client, and if you charge a high enough amount you also have to do a lot of homework to make sure that those sessions are packed full of information. I know, myself, I spent a few hours before every session making sure that my sessions as good as they possibly can be. So you’re actually only charging for the hours you’re with the client; however, by just asking “what kind of budget you have in mind” and getting the response “I don't have a budget yet,” so you know that they’re not to decision-maker or they’ve got to talk to somebody else and you can understand the budgeting process; “about how much will it cost,” these are the people who don't like to be stonewalled and just want to know if they're in the ballpark; and “my budget is around X dollars,” where a lot of the time you will find the price tag you will get back is massively higher than what you were expecting, you will start to come to terms with what your true value is. Do this enough times and all of a sudden you'll easily and comfortably be able to say “I charge X dollars for this session,” and that is the true success of doing it this way.
Okay, so thank you very much again for joining me. I hope you got a lot out of this session. I know that pricing is one of the scariest things for a lot of people, so I hope you got true value out of understanding two different ways of doing it. If you've got more questions or if you want a little bit more feedback, as I said, hop on MatthewPollard.guru, opt in to any of the opt-ins on the page, and it will give you an option to go in and book in for a 30 minute session with me and I'll happily help you for that period of time to get you to be able to cover-off on these things in a much more simplistic way. I'll also put a link to my scheduling website on the show notes. Thank you very much again for joining me. Please, if you haven't already, take the opportunity to subscribe and post a review to the Better Business Coach Podcast. It really only takes about 30 seconds. I appreciate your time, and I look forward to seeing you in the next session. Cheers.