How To Price Your Offer
We asked 100 so-called experts how they go about pricing their offer.
Some people said to test and measure until you achieve the ultimate price point.
Sounds great… but if price is the deciding factor for your clients you’ll have a difficult time showcasing your value.
Others said that you should NOT measure your pricing but to get to your pricing by listening to other coaches.
Problem is, unless you’re working very closely 1:1 with a coach, and that coach is well trained in business (not just the school of the internet), they don’t understand the nuances of your particular business.
Other advice we got was to find a similar offer and copy the price.
But although your offer may be the same, the rest of your business — like your processes, team, and fixed expenses might be vastly different.
And then we got some other advice to pick a number from a range based off your intuition…
Or to just price based on how much money you want to make
But do these account for where you want to take your business in the future?
And yes, while your income goals are important your bottom line — and your ability to MAINTAIN your bottom line as you grow — is even more important.
Listen… not understanding how the financials of your business play a role in pricing and pulling an arbitrary number may put your growth in jeopardy.
But when we hear “financials” as a creative entrepreneur we get all sorts of freaked out.
So let us show you a simple formula for pricing on your offer that will take the particular of your business and how you want to grow it into consideration.
We call it the 3P Perfect Pricing Formula and it consists of 3 parts:
People + Process + Profit completes your perfect price.
Let’s break down each part, shall we?
Step 1: List out your people costs
I want you to think about every person that you’ll need to pay in order to grow and scale this offer.
Will it require 5 hours a month from a virtual assistant when you’re full with clients to handle the administration?
Will you bring on associate coaches? If so, how will you pay them?
If you pay yourself a salary out of the business how much is that?
if you’re unsure of how much something or someone will cost, comment below and we’ll help you with a range.
Step 2 is to list out your process costs
This is part of why it’s SO important to have a single process that you work clients through,
because if it looks different for everyone, you’ll very quickly begin to resent your work and your customers.
Go through each step of your process and list any tools, travel, or supplies that you’ll need to complete each step.
Sum up the cost of those tools, travel and supplies and divide that by the average number of clients you’ll serve at any given time.
If you haven’t already watched our video on how to create coaching programs that actually sell, make sure you do
In that video we go into detail there on what your process should look like
and how it will help you create an impact with the people you want to serve.
We’ll link that video in the description box below.
The last part of the perfect pricing process is to add in your profit margin.
The amount of profit that you want to add will depend on whether or not you’re drawing a salary from your business or living only off of the profits
To get to your price we’re going to use this formula:
Price = (People Cost + Process Cost) / (1 – Profit %)
So, let’s say that your people costs were $2,500 and your process costs were $1,000 and you wanted to make a 30% profit…
To get our prices we plug it into the formula and it looks like this:
“Price = ($2,500 + 1,000) / (1 – 30%)
Price = $3,500 / 0.70
Price = $5,000
Now you have the perfect price formula, but how do you actually find people to sell it to?
We’ve created a free training workshop on how to find clients and fill your calendar with sales appointments
It takes about 90 minutes and during the training we provide a ton of no-fluff content
Like how to call out your perfect clients on social media
and how to use your warm market, even if they aren’t your ideal clients
and how to overcome the fear of putting yourself out there — even if you’re an introvert.
Click on the card or link in the description box below to be taken to that video.
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like our video next week that’ll be on How to Get Your First Coaching Client