A black art? Maybe, certainly pricing coaching services is not straightforward for either provider or buyer.
There’s no mystical formula that I can provide but I can share my views and some of the approaches that I think work best.
It seams to me that coaching engagements fall into two main categories; coaching as part of development projects, and individual 1-2-1 interventions. I think that pricing models fall loosely into these same two categories.
What I mean by ‘development projects’ is things like leadership programmes, management skills programmes etc. Fee structures for these types of projects are perhaps the most straightforward as they tend to be based on a consultancy day rate equivalent to trainer fees. Often with these types of projects the coaches are also the trainers running the skills development workshops that form part of the development programme.
In this instance it’s normal for coaches to be expected to deliver 3-5 coaching sessions within a consulting day and the utilisation of the consultant’s consulting day is built into the overall project plan – simple.
Consultancy rates charged and paid vary a great deal – if you’re a coach looking to work within an organisation I think it’s a very sensible idea to ask the organisation what they are used to paying for work with the specific seniority level of the client group. As much as purchasers grumble about high fees there is also a tendency to perceive consultants will lower fees as less good – a trap definitely worth avoiding so worth doing a little bit of investigating before negotiating.
Individual coaching interventions are a different story. Outcomes vary considerably – they often include; supporting a senior exec stepping up into a new role, performance development for execs considered as performing below potential, supporting execs responsible for new/key initiatives etc.
In my view ‘per session’ rates are a nightmare approach to pricing. I’d always suggest a 6-month project at a fixed price. This would typically involve an average of 1 face-to-face session per month and open communication with the coach for the duration of the project. These projects tend to be far more resource time heavy at the front end. By spreading the project over 6-months the coach is able to balance the contact and support effort and ensure support right to the outcome. For the purchaser (most often not the coaching client) this fixed cost approach is much easier to work with – the funding can be agreed and budgeted for. It also removes the association of the contact time and the fee – ultimately it’s about the outcome and this approach works well.
How much? I think a good rule of thumb is 6% gross annual salary for a 6-month programme. This assumes that the execs salary represents the influence that client has on the success of the organisation and so it seems intuitively right to use this to measure value delivered by the coach.
A really good coach can deliver exceptional value to a client and client organisation – so it’s always important for organisations to choose the right consultant who will achieve a successful outcome. For the buyer of coaching services this I believe more important than difference in consulting fees.
Matt Tobutt
HumanTechnics