One of the most common questions coaches have is, “How much should I charge?”  This answer is often more complicated than just picking a price. It requires understanding three critical elements that drive any successful business: value, price, and cost. This framework can guide coaches toward sustainable profits while ensuring the quality of service they offer remains high. Let’s look at how to apply this model to your coaching business.

The Key Variables: Value, Price, and Cost

Coaches must understand the interplay between these three factors to create a thriving business. They can be thought of as levers that can be adjusted to achieve a balance that ensures profitability.

The value you provide to your clients is the cornerstone of the model. It’s not about how much you think your service is worth, but how much your clients perceive the service to be worth. In coaching, this value often goes beyond physical results to include emotional support, personal connection, and guidance through life’s challenges. Clients must feel the service you provide is worth more than the price they pay, or they won’t see your service as a good investment.

Price is the amount your clients pay for your coaching services. To remain sustainable and profitable, the price should stay below their perceived value. If clients feel they are paying more than what they are receiving, they may opt for cheaper alternatives.

Cost includes all the expenses of running your coaching business, from time and effort to overhead like software subscriptions, marketing, and tools. It’s essential that your cost remains lower than the price you charge.

The Profit Equation: How Value, Price, and Cost Interact

The profitability of your business is determined by the difference between the price you charge and the cost of delivering your service. For online coaching, the most significant cost factor is your time. However, you also need to account for the overhead involved in running your business, such as technology tools and administrative expenses.

Many coaches—often those most passionate about helping their clients—struggle with pricing their services. They often feel guilty charging higher rates, not wanting to financially burden the very people they are trying to help. However, this can lead to situations where the value delivered far exceeds the price charged, meaning that the business may struggle to cover operational costs, resulting in burnout or financial instability.

To avoid this, coaches must recognize that charging what they are worth is not about exploiting clients but ensuring the business remains sustainable. If you undercharge, you risk devaluing the hard work and life-changing results you provide. Ultimately, not being profitable is a disservice to your clients.

Starting with Value

To determine how much you should charge, always start with understanding the value you provide to your clients. It’s easy to forget the value we offer, especially when we have normalized our expertise. Coaches who have been in the field for years can lose sight of the transformation they facilitate. To avoid this, put yourself in your clients’ shoes and define what they truly value from your coaching services.

Take the time to ask your clients what they appreciate most about your services. What aspects of your coaching do they find most helpful? What specific changes in their lives have they experienced because of your guidance? This will give you a clearer picture of your service’s value, helping you set a price that aligns with that value.

Balancing Cost and Value

Once you have clearly defined value, you can start thinking about how to price your services. Don’t lose sight of your costs! Your pricing must absorb all of your costs and still leave you with a comfortable profit margin.

You can always look for ways to reduce costs to make your business more efficient, but keep in mind that reducing costs too much can compromise the quality and value of your service. The goal is not just to maximize profits but to create a business that supports your well-being while delivering exceptional value to your clients.

The value-price-cost model is a framework that allows coaches to approach pricing with confidence. It’s about understanding and balancing what you charge, the value you provide, and the cost of running your business. By focusing on value first, you can confidently determine your price while ensuring that your business remains profitable and sustainable.