Coaching Fees: Justifying Your Fees Based on Return on Investment

Sometimes prospective clients pushback on your coaching fees because they are not clear what value they can expect to receive for their investment in your coaching. So it is important, particularly in business coaching, to know how to quantify the return on investment (ROI) that your client can expect.

Quantify the Benefits Your Client Can Expect from Coaching

In general, the coach’s role is to help their clients improve some aspect of their lives. This can be the client’s professional productivity, happiness or health. Every improvement brings a benefit. Every failure to improve brings a cost.

For example, let’s talk about a health coach who helps a man quit smoking for a fee. There are directly displaceable costs equal to the cost of the cigarettes that the man no longer buys. There are avoided costs related to the medical bills the man will avoid since he no longer smokes. Finally, there are less-tangible costs like the cost of feeling bad if the man continued to smoke. Similarly, you can consider direct benefits, indirect benefits and less-tangible benefits.

Ask your prospective client to estimate these costs and benefits. Then ask them to identify the part of each that they feel very comfortable they will actually achieve through your coaching.

Justify Fees with Benefits Received and Costs Avoided

As you discuss your coaching fees with your client remind them of the costs and benefits that they feel comfortable they will avoid and receive. The return on an investment in coaching is very favorable compared to most investments. If this all seems a little complicated, keep in mind that this is the standard way business decisions are made.

Setting Your Coaching Fees Based on Estimated ROI

As you become more comfortable with the ROI process, consider using it as a method for setting your coaching fee for a particular client. After you and your prospect have estimated the costs to be avoided and benefits to be received, ask your prospective client to pick a fair investment to get the return that the client feels comfortable they will receive. This investment amount becomes your fee and this approach is known as value based pricing. You might be surprised how much more your client is happy to pay you than the coaching fees you were planning to request.

Give this strategy a try and see for yourself that it works. If you liked this coaching tip, leave a comment or use the handy bookmark buttons below to share it with others on Facebook, Twitter, Digg, etc. Thanks!

Dave Iuppa
JTS Advisors Strategy and Accountability Coach

FREE Video Course: How to Build a High Paying Coaching Business

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Comments

  1. says

    Hi Dave and Jeffrey,

    Great post! ROI is an important consideration for any business, especially those like coaching, which do not produce a physical product. Your suggestion of involving the client in the process of establishing coaching fees is a great one! Aside from the monetary benefit, it also gets the client emotionally invested in the coaching relationship. A client who has taken an active role in negotiating the fee and setting standards for their goals they’d like to reach will be that much more passionate about investing the time and effort to attain success.

  2. www.alexandreberfinance.ca says

    You made various fine points there. I did a search on the subject and
    found mainly people will go along with with your blog.

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