How to establish rates for life coaching

When you become your own boss as a life coach, apart from providing coaching services, you assume responsibility for every part of your business. These responsibilities include doing the accounting, paying taxes, marketing, selling, and answering emails and phone calls on a daily basis. Therefore, your rates for life coaching should be driven not only by the cost of providing your services themselves but also by expenses for other things that are required to maintain your business, such as: 

• self-employment taxes
• office space (if you need physical space)
• health insurance
• software and equipment
• website or hosting
• marketing and advertising
• education and training

There are various pricing strategies for life coaches. Let’s explore the pros and cons of the most common pricing models in detail and see how to calculate your rate using each one.

#1 Hourly pricing

With hourly billing, you bill clients by the hour. This model suits coaches who are beginning their coaching practice and want to attract more clients. Yet hourly pricing can be a downside for coaches who wish to scale their business because this pricing model can make the client feel that you are only offering value during the time the client spends with you.

Pros

• Flexible. Your clients can decide when to schedule a session and how long it should take. This allows you to keep a flexible schedule. 
• Immediate cash flow. Hourly pricing is a great way to earn quick cash, especially when starting your coaching practice. You’ll get paid for every working hour you spend with a client, and your clients will know where their money goes. 

Cons

• Unpredictable revenue. You never know how many clients will book sessions. That’s why it’s problematic to forecast how much you’ll earn when charging an hourly rate.
• Time equals money. With hourly billing, the client pays a fixed price for a single session. If you want to increase your income, you must either provide more sessions or raise the price, and existing clients may not wish to pay a higher rate. 

What does a life coach charge per hour?

Once you define how much you’ll need to invest in setting up your business, consider your target annual profit and calculate your hourly rate. As an example, let’s assume the following numbers: 

If you’re getting started as a freelance coach, you can calculate your hourly billable rate like this:

1. Add your annual business expenses to your desired annual profit to get your desired income. In our example, your target yearly income will be $90,000.
2. If you work 8 hours a day 5 days a week, that comes out to 2,080 hours per year. Now let’s take away 3 weeks of vacation (120 hours) and 5 sick days (40 hours). That gives us 1,920 working hours per year. But considering all of your organizational and other business duties, let’s say you’ll spend about 75% of this time actually providing coaching services.



3. This means you’ll get 1440 billable hours with clients per year. Now we can figure out your hourly rate: 

Rounding this number up, we might say that $70 an hour would be your minimum rate to reach your financial goals.

#2 Package pricing

With package pricing, you set the price for a package of coaching services (such as a two-month program with eight sessions). The client can decide what coaching package they want to purchase. Coaching packages can include private and group sessions or training.

Package pricing suits more experienced coaches and ensures higher and more stable revenue. However, if you set a fixed price, you risk staying at the same income level. 

Pros 

• Fewer clients is okay. Coaching service packages can last two to six months, so you don’t need to constantly search for new clients.
• Predictable revenue. When selling service packages, your revenue is predictable and stable over some short period of time. This means you can worry less about earning money and focus more on coaching. 
• You’re paid up front. Clients can pay for coaching service packages when they enroll. This allows you to plan your budget and business expenses ahead of time without risking losing potential profits or breaking even. 
• Better client outcomes. Coaching packages last longer than an individual session and allow for building trusting client relationships.

Cons

• High degree of responsibility. You must put much effort into packaging, marketing, and selling your coaching programs and making them top-quality. Still, you will always face the risk of disappointed clients.
• Less flexibility. When creating a service package, a certain amount of time is allocated to every coaching session and activity. This means you become limited in your available time. It might be hard to adjust a program midway or change its terms if the initial time frame of the program is insufficient to achieve the client’s goal.
• On/off payments. You’re paid for a given period of time until the end of the program. Then you need to re-engage clients to pay for another coaching package. However, clients may not wish to return.

How much a life coach charges for a coaching package

Rates for life coaching depend on your coaching niche, your clients, and your years of experience. In general, coaching package pricing can look like this: 

• $90 per session 
• $400 per month
• $2000 for a 3-month program

#3 Value-based pricing

With value-based pricing, before agreeing on a price with the client, you should discuss with the client what value your coaching will bring to their life or business. You may ask, How would your business prosper if you achieved X goal? The client can then consider the value you can offer by coaching. By increasing the quality of your coaching services, you can set higher prices that your clients will be willing to pay because they see the value in what you’re offering.

However, there are better options than a value-based pricing model for beginner coaches. You need time to gain clients’ trust to charge a high price.

Pros

• Increased motivation. You’ll become more motivated to create top-quality offers for your clients, who will be willing to pay more and refer their friends and family members to you.
• More opportunities for increasing income. Focusing on value-based coaching can make you stand out among competitors. Your clients will be willing to pay more next time after benefiting from their engagement with you. 

Cons

• Value is volatile. With value-based pricing, you rely on your clients’ evaluation of value. But people change their minds over time, and what they value can change. 
• Intense competition. There are 23,201 life coaching businesses in the US as of 2023, an increase of 4.8% from 2022. Value-based pricing fits businesses that have few competitors. If competition increases, it might be harder to justify your value.
• Prolonged research. To implement an effective value-based pricing strategy, you should comprehensively research the market to gain insights into clients’ needs, willingness to pay, and perception of value. This requires time and resources, which can be costly.

How can you calculate value-based services?

Suppose your client aims to increase their revenue by 50% after finishing your 10-week coaching program. Assuming the client achieves this outcome, your life coach rate (value-based rate) would be a certain percentage of the client’s higher total revenue. 

#4 Monthly retainer fees

Once you get trusted clients, you can set a monthly retainer fee in exchange for access to a broader set of coaching offers. For instance, a monthly retainer can provide access to educational materials such as online courses and the ability to contact you for support. 

You can charge a flat monthly fee, from $500 per month for beginner coaches to $20,000 per month for premium specialists.

Pros

• Stable income. You can get a predictable amount of money every month.
• Less marketing spending. You don’t need to constantly hunt for new clients and put lots of money into marketing, as you know you will get paid monthly on a specific date. 

Cons

• Lower cash flow. You get stable monthly income with a retainer, but no more than expected. Your revenue may not be enough to scale your business or make upfront investments.
• Unpredictable outcomes. Every client is different; some may need more than one month to see visible results from your offers. You may risk losing monthly retainers.

How can you price monthly retainers?

If you coach a client for $100 per hour, you can offer this client a monthly retainer. You’ll get your monthly payment while providing additional value to the client. 

Tip: Clients may ask themselves, Why am I paying every month? Remember to structure your coaching sessions and set clear expectations for your clients. For example, you can demonstrate what a client can achieve after a three-month, six-month, or one-year coaching program.

Factors to consider when defining a price

You may ask yourself, Isn't that too much for the client to pay for a one-hour session? What could I do during such a short time? While determining your coaching rate, you must think logically and not emotionally. If you’re a professional coach and put much effort into creating high-quality services, you should consider various factors prior to setting a price, such as your qualifications, geography, target market, and types of clients. Let’s look at this in detail:

Type of payer

You can charge between $75 and $400 per hour for your coaching services depending on your years of experience, qualifications, and type of clientele. The fewer years of experience you have, the lower your rates will be. 

Who pays matters in terms of setting the price. The higher the client is on their career ladder, the higher your coaching rate should be. For instance, when a client is a middle manager or a newer founder, you can charge between $250 to $450 per hour or more if you’re an expert in the client’s niche.

When working as a corporate coach, your hourly rate will typically be higher than for individual coaching. A coach consulting an executive leadership team in a large company can charge between $500 and $650 per hour.

Geography

There’s a correlation between pricing and place of living. Your coaching rate should depend considerably on where your client lives and the cost of living in that city or region. For example, clients from Florida, New York, or Washington state can likely pay more for your coaching sessions than clients from Colorado or West Virginia.

Niche

Research and evaluate market rates in your coaching niche in your state, considering your education, years of experience, and credentials. 

Among the most profitable coaching niches are: 

• Executive and leadership coaching
• Family and relationship coaching
• Business coaching
• Marketing coaching, sales coaching, and so on

Wrapping up

We recommend starting with the coaching pricing model that feels best to you and fulfills your business needs. Don’t be afraid to experiment. You can begin with one pricing model, try another option to compare results, and choose the model that works best for you.