3 Secrets To Avoid The Fee Trap And Grow Your Client-Based Business

The other day I was enjoying coffee with some friends, who happen to be coaches and consultants. The conversation was engaging and exciting while the exchange was all about creating possibilities for other people’s lives.

It somehow turned stiff and serious when one coach asked the group for opinions by saying:

“I am in the midst of some tricky negotiations for a complex coaching project. The potential client has started to compare my hourly coaching fee against that of a psychiatrist. I have a good deal of respect for the therapy industries and don't want to argue that coaching is a better modality. Any ideas on how to handle this one?”

The conversation immediately turned into a justification of why coaching is better as a reason to be able to ask for higher fees.

I’m pretty sure some of the stuff I heard was along these lines:

  • “How can they compare a psychiatrist with a coach? Totally different approaches!”
  • “Well maybe a good "argument" is that coaching is a faster process - hence the bigger fee.”
  • “Education is a way. We need to educate people about the value of coaching”
  • “Psychiatrists deal with clinical problems. Their skill set is confined. Coaches create personal energy and space. Their skill set is limitless.”
  • “Your rate is your rate. You do not compare yourself with anyone else. If you want the client you may consider a discount if that is what is required to get hired, but that will be because you want the work not because of a comparison.”
  • “Coaching fees should reflect, at a minimum, the value of the client per hour TIMES 2. My clients pay for the value of their time and my time. If I'm coaching them my time is worth at least as much as theirs. The formula to determine the cost of coaching is targeted earnings of client / income per hour x 2 = cost of coaching.”
  • “During your free consultation you should outline the route that you would like to take to achieve the expectant goals. You should explain the difference between a psychiatrist and yourself and the difference in treatment/coaching and the difference in achieving goals. That should satisfy and finish the doubt the Client is expressing to you.”
  • “I wouldn't go that road at all. The client only wants to negotiate. So he takes the argument to bring your fee down. So either you are ready to discuss the fee or not. But I would never go into a discussion about the value of another coach, consultant, and psychologist. I am only discussing my fee.”
  • “My approach would be to describe my process and then ask them to decide which works better for their needs... You can only describe the value you potentially bring - the client needs to decide whether they are prepared to pay for it... Sometimes not negotiating is the best form of negotiating...”
  • “What specifically do they want...someone to fix or someone to generate generative change? Relevant background, training, expertise and track record has a value. Which they can appreciate, or not. If not, would it be the right contract for you?”
  • “Do not forget to mention that delivering one hour of coaching is actually the equivalent of 2 or more hours of work. Make sure your 'hourly' rate reflects the support work you do behind the scenes.”
  • “This discussion seems to lead to the question - how do we measure the value of the coaching that we do - both the tangible and the intangible value. We know that it is powerful but do we rely on the subjective feedback of the client or do we commit and measure against real business performance?”
  • “Absolutely! You aren't trying to help the client 'fix' their past but expand their future potential. That's surely worth a whole lot?”

Suddenly, I was back at the time when my business model was charging hourly rates for training. I used to struggle and it was difficult to grow a business with that model. Plus, I still remember all the kinds of comparisons potential clients used to make.

From the hourly rate thought to another violent and furious flashback: the instant I realized I was responsible for the communication of the value of my contribution and that the value of my services had nothing to do with me, my processes or my degrees and certifications.

It was a funny moment, too, once I could see the humor of it. The moment I realized that nobody wanted training or consulting, that nobody wanted to spend money and time learning a language, my business changed forever.

It was funny because I had the sudden realization that as passionate and in love I was with foreign languages and all my processes, people did not care. If I could give them a pill that could make them instantly speak a foreign language, they would gladly pay for that.

So there I was trying to educate them about the process of learning a language and the different methods available and why mine was superior, and they were just wishing I would hand them a pill.

Coming back to my coaches friends, I suddenly noticed that they were secretly expecting me to contribute to the discussion. (As a principle, I don’t train or mentor friends and they are very respectful of that).

What I did do was sharing with them the memories that had been occupying my mind in the last minutes and these principles for business growth:


SECRET 1 - It’s all about value, not fees

I hate it when people throw terms like “adding value” without explaining exactly what they mean. What I mean by value is what is valuable TO THE CLIENT.

We know our processes and we love them. Those processes are not what people who are not even familiar with them value.

So what do they value? Results.

As human beings, when we have a problem that we have been trying to solve on our own for some time without much success, all we can concentrate on is getting that result we want.

Let me give you an example. If I want to get a different job because I feel horrible every morning I go to work, I don’t want (or have the capacity to) hear about coaching and how transformative it is. I want help getting a better job. If my marriage is on the verge of a divorce, I can only think of how to solve this. If I don’t know how to get clients, all I want to know is how to get clients. 


SECRET 2 - Nobody buys coaching/training/consulting/therapy, INSERT YOUR PROCESS OR MODALITY

Very much connected with results, people don’t care so much as we do about the process or the modalities we use.

I know that they had been vehemently defending the value of coaching and giving suggestions about how to charge certain fees based on the value of coaching.

This is one of the biggest traps when building a business. If we think that communicating the value of our service means talking about processes and modalities, we are definitely missing the point.

It is also not about time and all the effort we put in our work. If I had invented the language pill, people would have gladly paid to be able to instantly speak a foreign language. They were not interested in how much care and work I put into my trainings or how many hours they would spend in a course.


SECRET 3 - We invite comparison when we charge per hour

What?

Yes, I was inviting my clients and students to compare my services with other solutions when I used to charge hourly fees.

The immediate comparison is almost always with how much they make per hour or, in this case, a professional they perceive has studied longer to get their degree charges per hour.

(I never said that to my friends but I think what their potential client meant by the psychiatrist comparison was not that psychiatry is more valuable than coaching. I think what they meant was “a psychiatrist is a doctor who went to university to do what they do so maybe they should charge more than you”).

I want to rewind here and go back to what is really important: helping people.

An hourly fee is not to their highest good. This is what I mean: they will reevaluate their commitment to a process and to stay in the conversation every single time they have to pay for a session.

During one single session they won’t probably achieve much and their motivation to come to their next session will weaken.

How is this helping people with the results they want to achieve?

I think that this is an important distinction because it is not all about how to make money. In my book it is about making money by effectively helping people. That is where I’m coming from.

Charging per hour also hurts a business so nobody really wins with this model.

One of my clients used to struggle when he charged per hypnotherapy session. The moment he started to concentrate on the result he helps his client achieve, everything changed for his business.

He is really good at helping people stop smoking. The moment he realized that people gladly pay his fees for the result of quitting smoking and he learned how to position himself as the authority in his field, his business transformed.

In his case, this is what the before and after look like.

BEFORE
Sessions = struggle.
Poor positioning = more struggle.
Talking about how great hypnotherapy is = even more struggle.


AFTER
Offer based on the end result + right positioning + right communication of value = happy clients who gladly pay his fees and recommend him to more awesome people + No more need to “discount”


I want to end this with one final thought: it is our responsibility to effectively communicate the value of our contribution.

With love ​
Ana

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Ana Rosenberg

Ana is a best-selling author, host of Business Innovators Radio, and contributor to the Huffington Post. Ana helps service professionals, business owners and executives to position themselves as the Educator and Champion for their prospects and clients success. Ana has developed a system to quickly shift you from service provider to industry Authority using powerful Online Media Marketing strategies that create instant credibility and provide the tipping point to make them choose you. By repositioning her clients from traditional hard sales tactics to being the Educator and Champion for their prospects and customers success, Ana has been credited with boosting businesses and transforming lives.