Ever experienced your clients looking at you like you have a dollar sign on your forehead?
We have all been there.
Following on from last session with Dev Singh where we talked about personal branding, differentiation, and how so many get it wrong, in this session we discuss how you can use packaging to remove the dollar sign from your forehead. Dev also gives some great ideas on how you should decide on your hourly rate, which makes it another great follow-up session to session 14 on pricing and packaging.
Per hour mentality
People have a misconception that if they are going to be an expert they need to charge big dollars by the hour – after all, that’s what the family accountant and lawyer does. If you want to be successful as a coach, you need to lose the “per hour job mentality.”
Charging as a package or monthly fee
Doing this will remove the price tag from your forehead. This means people stop looking at the clock to ensure they don’t run over their budgeted time. Also, if you need 10 minutes more to bring home the entire point of the session, the client sees it as extra value rather than you pushing for extra charge time.
Next, selling a package with defined outcomes instead of by the hour will allow you to charge higher rates as people are happy to pay much more for outcomes than they are for hours.
Meaningful and measurable results
Don’t be the coach that says, “So what are we talking about today?”
Dev suggests that coaches get stuck feeling that they need to just string the client along until they have built up enough rapport and engagement that the client doesn’t want to let them go. Here the coaching focus is not on results, it’s purely on the feel-good nature of coaching and it doesn’t last; at the end of the day your client needs to feed their family and pay their bills. If they are not seeing results, they will stop working with you and say something akin to, “I think we should be friends.” Dev suggests coaching can be like dating in that way – you can get friend-zoned, and you deserve to be, as you’re not showing up as a professional; you’re showing up as a friend.
Don’t be afraid to put yourself out there. You can say something like, ‘”At the end of working with me on this 3 month engagement, I want you to be able to look back and see you have had x measurable result, and that that result was meaningful to you and your business.”
If you achieve the measurable result you agree to with a client, they will stay with you for life.
Figuring out your pricing
Dev suggests that working out your pricing is the number one thing you can do to help your business, suggesting for most people they come up with a figure that has no basis.
You want a six figure business. Why? You need to be clear about what you need to make and why before you work out what you want to make per hour.
To be congruent about your pricing, you need to first figure out what you need to be making per month. To do this, Dev suggests the following:
Step 1 – Open Microsoft Office application Excel, or your preferred spreadsheet tool.
Step 2 – Add the following:
Column 1 – List all of your personal expenses in categories, i.e – eating out, mobile phone, petrol, car maintenance, massages, gym membership, gifts, etc.
Column 2 – List the estimated dollar amounts needed to pay for all the categories in column one.
Column 3 – List all your business expenses in categories, i.e. subscription services, office rents, accommodation when off site, utilities, travel, etc. Don’t forget to add in education, education debit, the percentage you want to save, and your super/401K contributions.
Column 4 – List the estimated dollar amounts needed to pay for all the categories in column three.
The results of this basic exercise will surprise you. Your relationship with money will improve as you start to make more. For some, it is a surprise to realize that they need to charge more because a lot of their time is unpaid, such as their time preparing for a session, upkeep of business account, sales and marketing. Many people realize they don’t charge enough and become congruent with not only what they charge today, but with increasing their price dramatically.
About Dev Singh:
Dev Singh is a world renowned business strategist, executive coach, and entrepreneur specializing in brand optimization. He is also a certified coach, Master Practitioner of NLP, founder and director of strategy at Sketchpad Ideas, and also hosts his own podcast, “The Life: Optimized Show.”
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This is Better Business Coach, session number 16.
Matt: Hello everyone and welcome back to Better Business Coach. My name’s Matthew Pollard, and as always I am your rapid growth guy. Again, I have with me Dev Singh. And this is part 2 of him giving a wealth of knowledge to you on packaging, pricing – and creating a unified message on how to speak to your customers. He’s a renowned business strategist, executive coach and entrepreneur. And look, a lot of you guys have come straight from the last session, so I’m gonna move straight back into the interview.
So Dev, obviously we just spent a lot of time talking about unified message and making sure that all of the artifacts around what you do and your past experience matches that to ensure that you are preaching exactly what value you’re going to offer. However, we also wanted to talk about packaging and pricing. Because I know these are murky waters for a lot of people. In session 14, we discussed the importance of having a package, and I just wanted to see what advice you feel is vitally important for business coaches in making this decision.
Dev: Yeah look, I have 2 pieces of advice that I would love to talk about, which I think are going to be super, super valuable to coaches listening to this. There are 2 fundamental mistakes that I’ve seen coaches make. One is a little bit more detailed than the other, so I’ll start with the simpler one. The simpler one is that coaches will charge per hour, because they believe that – or they’ve been conditioned to believe that that’s what people in positions of therapeutic practice or advisory roles do. They basically have billable hours, right? It’s this concept that gets proliferated in pop culture. In media, you watch shows about management consultants. So on the business side of things, business coaches – that’s what they’ll believe. If you’re a life coach or other personal development type coaching work, then you’ll believe basically how therapists operate.
The issue with that is that people, when basically people are watching a clock, and they’re being charged by the clock – their attention is diverted. The advantage of putting a package together, like you’re suggesting Matthew. Or even as simple as charging per month, which I believe is not as optimal necessarily as having a package, but it’s a step above from charging per hour. Is that – the pricing is very much a value exchange, that’s articulated from the get go of the relationship. So I used to, I used to start off charging per hour, because I had a kind of a job mentality. Which is fine, I made a little bit of money. I didn’t make as much money as I did later when I switched over to charging per month.
Then what I did, which I was taught by a lot of my mentors and coaches, and particularly in the seminar world was that the default is to charge per month. So have a monthly fee that you charge for coaching and consulting, and these are the– This is the – basically have a consistent value proposition, your message. And say, “Okay, this is it and I’m gonna charge $15 000, $2000, $5000 a month,” whatever the case may be. At the moment, I charge between $2500 to $5000 a month, based on the nature and scope of the work. And that’s just my retainer.
However, what I’ve found over time is that the kind of clients that I wanted to work with were people who – were very, very committed to their business. Were not price sensitive, they were price conscious. The difference between that is that they’re very sensible about how much of a bang they’re gonna get for their buck, but they’re not necessarily looking for the cheapest option. In my opinion, that’s the best kind of customer and client that you can find. The reason is, is that when you start engaging with them, they’re gonna be very thorough to make sure that they’re dealing with you in a way that’s gonna get them results. Which I find is great, because it proves that the work that you’re– It almost holds you accountable to yourself to make sure that you’re delivering the best possible result. In a way that the customer and client doesn’t have to chase you up, which I think is very helpful as a coach.
The other thing it does is that once that engagement starts, the dollar sign is moved away from your face. Because the worst thing that you could possibly have is sitting across the table or sitting across Skype, working with a client and then looking at your face, and there’s this kind of semi-transparent dollar sign on your face as well, where the person has a quarter of their eye staring at the clock, saying that, “I’m getting charged for every minute that this person is talking to me.”
Dev: It happens, it does happen. People think that’s a ridiculous exaggeration or it’s a caricature of what happens, but it does.
Matt: The scariest thing in the world, and this happened to me even when I was starting, was somebody saying to you, “Look, I appreciate all the advice, but this is now costing me a fortune, so I’m gonna work on what you’ve currently said before I move on.” Whereas a package, they’re happy for you to continue talking, which might be the most important and vital part for them to see the value in what you’ve done for the extra 15 minutes. Because it’s not charged per hour.
Dev: Exactly right, exactly right. So what I was gonna as well is that I kinda took it to the next level over the years. I evolved my approach to this, and now what I do is that I do charge a monthly rate as well. However, I make sure that when I am drafting a proposal, if it’s to a company or I’m talking about what the proposal is– The proposition is if it’s to a smaller business, who are not necessarily interested in a formal proposal. I talk about very specific objectives and outcomes that are gonna get them meaningful and measurable results.
So I run a branding and marketing digital agency. It’s a – what we do is strategy and execution. And we have a very big commitment to making sure that strategy and execution is delivered on time and on budget. And we work with clients all around the world. And when we do, particularly businesses in helping them with their strategies and then also executing on those strategies– When I put a proposal together, whether it’s documented or verbal – I talk about this a lot, meaningful and measurable results. And I say that my mission basically is that at the end of our 3 month engagement or 6 month engagement, I want to be able to look back – I want you to be able to look back and say that as a result of working with Sketchpad Ideas, you actually had this result that was meaningful, and it was measurable by these standards.
If a client can do that for you, and if you can help a client get to a point where they can look back and say that they really got meaningful and measurable results working with you, they’ll stay with you for life. Because that return on investment is always gonna keep proving itself, and essentially the work that you’re doing together, the relationship that you have – that engagement. It’s gonna pay for their investment automatically. And they will see that.
If, as a lot of coaches get stuck into this fear – and I know a lot people don’t want to admit this, but it’s true. And it’s true largely because there’s a lot of proliferation of seminar junkies. They get taught this way of doing business. That in a very unconscious, subtle way, they feel that they need to string the client along until they’ve built enough rapport and engagement, that the client doesn’t want to let them go. And the focus is not actually on the results, it’s on purely just the feel good nature of the coaching relationship – it doesn’t last. And the reason is, is because it might last for a little while, but the client eventually has a business to go back to.
They have results that they need to produce. They have a family to feed, they have bills to pay. They will realize that whatever commitment you’ve made to them – whether you’re a business coach or a relationship coach or a health coach. If they’re not seeing the results, they’re gonna stop working with you. And you know what? They’ll probably say, “You know what? I think we should be friends.” And it’s almost like as a coach, you get friend zoned, just like if you’re a guy and a girl sort of– Goes on a couple of dates with you and then says, “You know what? I think we should just be friends.” That can happen to you as a coach as well. And the reason it happens is because you’re not showing up as the coach, you’re just showing– You’re not showing up really as a professional, as a service delivery guy who’s bringing real value on the table. Which, in my personal opinion and my values – it is meaningful and measurable results. So that’s one thing I’d be very conscious of. Would you agree with that Matthew?
Matt: Yeah definitely. One of the things that I love having, people like yourself Dev on the show for – is that you’ve been through this. You’ve probably made these mistakes yourself. As you said, you developed over time. And the people–
Dev: Plenty mate, plenty of mistakes.
Matt: Exactly. So the people that are listening to this, and I really hope the listeners are taking full advantage of this. Embrace these stories, and don’t make the mistakes that both I and Dev have made. Cut the learning curve in half by just making sure that you start charging in the terms of packages, as opposed to what you learnt from your lawyer, your accountant friend that one day you’d hopefully aspire to be the per hour psychology.
Dev: Yeah, this segues really nicely into the second point, which is about pricing. The number one, number one thing that you can do as a coach, that I’ve found in my experience. But especially my recent experience, including with myself – that is going to help your business is figuring out how much you need to be making per month. Now, it sounds like the most simple and obvious thing, and some of you may be saying that, “Well yes, yes we do budgets, and I have this and that.” But if I had a penny for every coaching client that – every client that I’ve worked with who’s a coach. Who says this, that they do do budgeting and they do do this and they do that.
And then I asked them, well how do they come up with their pricing? And how much do they come up, like how much do they need to be making in a month? They’ll say, “Well, we need to be making let’s say $5000 a month or $10 000 a month.” Let’s say $10 000, roll with that, it’s more typical. And then I say, “Well how did you come up with that number?” And their eyes glaze over, and they have this look of, “Well, it’s my financial goal, it’s what I want to be, what I want to be making.” And I say, “Okay, but why, how? How do you justify that? Where did you come up with this number? If it’s a goal, it has to be attached to some sort of value system, it has to be attached to some sort of measure. What’s the issue here? Like what’s going on? Why do you want $10 000 a month.”
They’re absolutely flabbergasted, they have no idea where that number came from, and they’ve realized that that’s basically just this glorified number that a lot of coaches that start out, kind of have this impression of. Because it basically means that they’ll get into a 6 figure business, and that’s another buzzword that gets thrown around – 6 figure business. And I could tell you so many people who talk about having a 6 figure business that really doesn’t take home 6 figures at all. And a lot of people who don’t talk about how much money they make, and then they make a lot more money then you would imagine.
The point is that you need to be really, really clear on how much money you actually need to make before you’re clear on how much money you want to make. Which will then, more sensibly inform – how much money you should be charging, how many clients you should be working with? It’s all a lot more strategic than people imagine it should be, which is just plucking out a number out of their arse – which, funnily enough, I’ve seen a lot of seminar leaders actually teach people to do. They say, “How much should you be charging? Doesn’t matter, just pluck it out of your arse and just charge – charge $1500 or charge $2500 a month, or charge $5000 a month. Find your comfort zone, whatever scares you – charge around that price.”
I started off doing that as well. I’ve realized it’s a ridiculous strategy. So here’s what I do specifically – technically. And I think if – I really hope that people listening to this will actually take this on and do it. It’s very simple. Open up Excel, open up a spreadsheet or whatever you use for spreadsheets, and make a column. List every single item that you can think of – well, item category that you can think of – that you would spend in a month. So, and that’s one column. And obviously the next column would be how much you’re actually spending in a month on that.
So I’ll, what I’ll do is, I’ll actually – I’ll tell you the items that I have on my list. ‘Cause I’ve found that when people do this, the clarity and their clarity and their relationship around money improves so much. And they start making more money as a result as well. So the kind of stuff that I have on my column list – I have 2 categories. I have personal and business. So in my personal, I have public transport, groceries, eating out, mobile phone, petrol, car maintenance. I even put things like massages, gym membership, supplements, gifts. And then I have a miscellaneous cost for anything else as well. Now then in my business category, I have all my subscription services that I need to run my business.
I have my office expenses – phone number, bank fees, accounting software, fees, etc, etc. I then have a separate category for accommodation. You may just put this into your personal expenses. It just depends on how you want to do it. Where I put in rent or mortgage and utilities. And then I have a travel category, where I put in flights and accommodation, based on how much I want to be saving or spending each month, based on how much I might be traveling over a period of 12 months. Then I also have a savings percentage, how much percentage a week I want to be saving. And then I consider taxes, super help – which is – for your American listeners, basically a university debt, educational debt that you accumulate over here. And you basically come up with a figure. So I have a figure about how much I want to be making for my ideal lifestyle to the cent. And I look at my budgeting every day because it helps me set goals. Because of those goals, I can backward engineer, look at my packages, and actually figure out my pricing.
I totally understand that a lot of coaches listening to this, it will scare the crap out of you. It will, because a lot of people in the coaching space – even if you’re a business coach. Even financial coaches that I’ve worked with, they struggle with this stuff, because it scares them to look at the reality. And it’s very confrontational for them to look at the reality of what they need to be making. As opposed to saying, “Well, wouldn’t it be nice if I was making $100 000 a year?”
Matt: It’s actually more important than that as well, Dev. Because a lot of people don’t realize that you have to spend a few hours – a lot of hours, finding clients. You’ve gotta spend time preparing for those clients, invoicing those clients. So you can’t just say, “Okay, I need to get this much per hour, because I’d be happy to earn 100, 200, 300 dollars an hour.” For me, sometimes a client – I can take a whole morning to prepare for them, because I know what we’ve got on. So while I charge – well, I discussed in the last session. For a 2 hour by 3 intakes, where I talk about differentiation, niche marketing, and sales systemization, I charge $3500. But then, sometimes I have to work on a project for an entire morning, and that means I can’t keep my charge out rate at that level, because – becomes more in depth. And as you said, that’s why you charge sort of $2500 to $5000. Because as things are more in depth and require more thought work outside the hours that you’re spending with the physical client, things have to change.
And so many people don’t factor this in. They say, “If I can get $100 an hour, I’ll be happy.” They don’t take into account all of the additional hours for finding those clients, for billing those clients, and for working on those clients work. Because they’re gonna expect you to come prepared, not come and say – which I’ve seen coaches do, and it horrifies me. “So what would you like to work on today, Mr Customer?”
Dev: Yeah, yeah, that’s right, yeah. I think that’s a fair question once you’ve built up some evidence that you can actually get meaningful and measurable results as well. I do think a lot of people go out there and call themselves coaches. Because they think that that word has somehow got some inherent value to it. They don’t understand the difference between being a coach and a consultant. What’s even worse is that a lot of clients out there, and a lot of customers out there who will engage a coach, don’t necessarily realize that sometimes they – what they’re actually looking for is a consultant.
And sometimes what they’re actually looking for is a business manager or a CEO. Because they want to build this fancy business – particularly and obviously we’re talking about business coaches in this case. But they want to build a fancy business, they just don’t want any other responsibility of being an actual business manager, or an entrepreneur. So they just want to do service delivery – which is fine, but if you’re not aware of that, it can cause all sorts of complications in the relationship. I really always, when this conversation comes up, feel a moral obligation to inform people and advise people very, very carefully that if you are a coach or you’re calling yourself a coach, make sure that you understand the difference between coaching and consulting.
And make sure that you’re willing to show up as a coach when you need to show up as a coach, and you’re willing to show up as a consultant when you need to show up as a consultant. And make sure that the vision of that relationship that you have with your customer and client, is very, very clear. It’s very clear, the value that you’re bringing to the table. Not in terms of the value proposition you write in the sales letter, but specifically to each individual client that you’re working with. You know what’s gonna happen as a result – at the bare minimum of you working with them for 3 months.
And just opening themselves up to engaging with the universe in a more fanciful way. So that money starts being attracted to their life. Sometimes that’s fine, sometimes that is actually what the client needs. They just need a counselor in the guise of a business coach, but that’s very, very rare. What people really need is the results that you’re gonna bring to them. And if you’re not clear about your own relationship – with how much you should be pricing, how you want to be packaging as a byproduct of that, or as a follow on from that. And what value you’re bringing to the table. In the context of that pricing and packaging conversation, that lack of clarity is going to do a disservice to the clients and customers that you’re gonna work with as well.
Matt: Well look, I couldn’t agree more. And it’s funny, we haven’t discussed this but, I’ve actually got some sessions planned about talking about meaningful and measurable results. And starting with why to help people understand why they need to price in certain ways to achieve certain goals. And working out what your goals are before they start working on what they’re going to charge. Because sometimes their charge out rate is inconsistent with what they want to achieve in their life. So I’m really glad that you bought those up. But on the flip side, I know that there’s gonna be a lot of people listening that have identified with some of the things that you’ve said. And I’m a big believer in identifying with a specific role model and a person and then following that person. So if somebody has identified with this message, which I’m sure they have, Dev. How can we get in contact with you?
Dev: Yeah look, I’m a very, very open guy. I believe in really sustainable relationships, the reason I got into business was to make cooler friends. And that’s not a, it’s not a fancy catchword I came up with just to share on stages that I speak on around the world. It’s just something that I really, really believe in. I was in medical school before I got into business coaching, and I dropped out because of various life circumstances. I had a bit of a near-death experience, and my journey took me elsewhere.
And when I got into business, I realized that a part of what drew me to business was the people that I got to connect with all around the world. People like yourself, Matthew. So firstly thank you for having me on the show, it’s a real honor. If anybody wants to connect with me, there are a few different things that they can do. My company, as I mentioned earlier in the conversation, Sketchpad Ideas is at sketchpadideas.com. You can learn a bit about me there, you can learn a lot about what we do. And if you happen to be in Sydney or in Western Sydney, in the area – you can pop by my office and meet me or give us a call. If you want to learn more about me specifically, it’s devsingh.net. Where I share a lot of my thoughts that are a little bit off tangent sometimes from business. And my podcast show, as you mentioned, The Life Optimise Show, is at thelifeoptimisedshow.com. Hopefully season 2 will kick off by the time this episode releases, but if it doesn’t then we still have 22 episodes of really, really inspiring excellent conversations. To the point where I’ll even often go back and listen to them myself. So people can reach that way.
If anyone has any questions specifically in regards to anything that we’ve talked about on this show, please, please, please do email me. Just send me an email. I’m more than happy to answer questions and emails. I’m not a hot shot celebrity where I’m so inundated that I need someone else at the moment to address my emails. You can reach me at [email protected]. And just ask me any questions. I’m a massive believer in this one thing that I first learnt from Tony Robbins, which is that, “The quality of answers that you get in life is directly proportional to the quality of questions that you ask.” So whenever someone puts an offer for me there to ask them any questions, I completely pick their brains, and I welcome everyone to do the same with me.
Matt: Fantastic Dev, and look, please take Dev up on that opportunity. Because very seldomly do you get somebody offering that level of assistance. So feel free to send him an email, and that website again was devsingh.net. But Dev, it’s been great to have a fellow Aussie on the call, and I really appreciate you being here.
Dev: Thank you again Matthew, I hope I didn’t make you too homesick, with my bit of Aussie accent. And yeah, hopefully see you in Australia soon.
Matt: Yeah, I’ll be down there as I said in April, so I’m very much looking forward to it. And look, everybody that’s listening – whether you’re in Australia, the US, the UK or all of the other locations that are loving this podcast and posting reviews. I really appreciate you turning in. And the commitment Dev has to giving value in every one of the sessions that he does. I know that’s what a lot of people that he’s interviewed with before have shared with me. So please if you’re enjoying this content, take a second to subscribe to this podcast, to make sure that you don’t miss out on any other of these unbelievable podcasts. And if you have 30 seconds, and it really does only take 30 seconds, I would really appreciate it if you hopped on iTunes, typed in Better Business Coach Podcast, and posted a review, with the star rating that you feel that this podcast is worthy.
Thank you very much, and I’ll see you in the next session. Cheers.