How I decided what to charge: what’s logical and ethical when you’re doing what you love?

Michael CalozBlog: Synthesizing & Simplifying Complexity, Business5 Comments

scale of justice

Summary: The single biggest challenge for me since starting my private coaching practice (other than the impostor syndrome) has been deciding what to charge. In this post, I analyze all the arguments I’ve heard and figure out what makes the most ethical and logical sense for pricing my coaching services. I’ll also cover some of the most common psychological biases and pricing tactics I’ve seen used in the industry.

This is for you if:

  • You’re a potential client wanting to better understand where I’m coming from with my pricing (or you’re curious to understand some of the common pieces of advice that coaches receive about how to price their services)
  • You’re me, and you want to analyze your own thinking and make sure you’re being rational and ethical 🙂
  • You’re a freelancer or entrepreneur doing something you love, but you struggle with how to price your services

Reading time: 54 minutes (or you could jump straight to the takeaways section)

Since this post ended up long, I’ve divided it into sections:

  1. Context (where this came from)
  2. 10 different perspectives on what to charge (i.e., all the different voices in my head telling me to charge a higher or lower rate)
  3. Distilled takeaways (jump straight to here if all the nuanced details aren’t as interesting to you)
  4. Core pricing tenets based on those takeaways (i.e., the core principals I derived from all those takeaways)
  5. First draft of my full revised pricing model taking all that into account (i.e., what I’m actually going to put on my session-booking page when I update it)

Why this is so hard

I spent many years trying to figure out my life purpose. Now that I finally feel solid there, it’s even more challenging to decide what makes sense for my pricing. I feel great after coaching people—so much so that I might even do it for free if I were independently wealthy.

And that’s why it’s hard: A life purpose should be something you enjoy—something that energizes you and makes you feel alive. If you hate your job, it makes sense to think, “I better be paid good money to balance out how annoyed this makes me.” But if you love your job and it feels super fulfilling, it becomes easier for voices to creep in saying that asking for a lot of money is simply greedy. (Depending on how you were raised and what your parents told you about money, you might have those negative voices even if you hate your job.)

And yet, we live in a capitalist society—money is meant to be a representation of value, which I believe I provide. And, as an independent solopreneur, I’m 100% responsible for paying for expensive health insurance and other necessities to live even a modest life in my area of the United States.

So what makes sense?

How much money do I deserve? What about the privileges I hold that have made my life easier? What’s most fair? What’s ethical?

I’ve grappled with these questions for many months and read all sorts of perspectives from other coaches and marketing experts. I’ve decided to share my thought process point by point here—both to help me make sense of it all and to be transparent with potential clients about where my numbers and policies came from.

First I’ll go through 10 perspectives that represent different voices in my head, ideas I’ve considered, or opinions I’ve heard from others. Then I’ll distill all that down to my key takeaways. Finally, I’ll use that to design the pricing model that makes the most sense to me.

I also want to name that this feels like a very vulnerable post to write. Reading through it, a prospective client might very well think, “Wow, this guy is struggling; clearly he doesn’t know what he’s doing and he’s a second-rate coach. Those other coaches out there easily charging $500/hour are far more skilled and successful.” I hope you’ll realize that I could position myself that way too, but I’m choosing to be real with you because I so strongly value authenticity.

I’d love to hear from you in the comments. Have I missed something? Am I fooling myself in some way? Am I selling myself short or over-selling myself? Am I being unfair?

Thanks for reading, and let’s dive in:

10 perspectives I can see on what to charge:

Perspective #1: Comparison to other coaches

It makes sense to begin by looking at the “going rate” for this profession. What are other people charging?

Well, in my current program (the newest coaching modality I’m studying), I know that a variety of other coaches in my cohort—with quite a bit less experience than me—are charging $200 per session.

From this first perspective, it doesn’t seem fair for me to charge much less than that.

Proper rate from this perspective: $200 (which subjectively feels a bit high to me)

Perspective #2: Self-respect, self-worth, expenses

Next, I should consider how much money I need.

I deserve to be paid at a rate that allows me to live a reasonable lifestyle—not lavish, but also not worrying if I’ll be able to pay my bills and be able to go on a modest vacation once in a while (I shouldn’t have to live a completely austere lifestyle if I’m truly doing good in the world).

Running my own business, I have to pay all my expenses, health insurance, self-employment tax, etc. I also work basically every day of the week from first thing in the morning often well into the evening.

So, I deserve for it to be a viable business where I’m not just scraping by, but where I’m able to save up to have kids, continue my ongoing education and training, and not be continually worried that if I lose a client or two it will have a large impact on my lifestyle.

I literally took a roughly 85% pay cut when I decided to quit my management consulting job to work on my coaching practice full-time. That was worth it to me because this is more in line with my passion, and it feels like less pressure; but, that’s still a lot less money. And yes, I’m spending fewer raw hours actually coaching than I did working my day job; but, on balance, I’m working more hours now when you include time spent on my business website, invoicing, creating programs, etc.

As part of a business development program, I did an exercise to quantitatively calculate what my hourly rate should be to be able to pay my expenses and achieve the most basic version of the lifestyle I want. (Note that my “basic lifestyle” means driving a 14-year-old car, having no expensive hobbies, rarely eating out, and having high-deductible not-amazing health insurance.)

That exercise came out to $182/hour.

Proper rate from this perspective: $182

Perspective #3: Proven experience

Now, what are my skills worth?

The truth is that I have a lot of experience. There are people out there who just decide to start calling themselves life coaches because they feel like they give good advice. But I have proven experience playing in the big leagues. I’ve managed multimillion-dollar projects and been a part of world-class development teams, so I intimately understand the challenges that people face in that world.

And I’ve also coached leaders and teams at Fortune 100 and Fortune 500 companies in a variety of industries and cities. I’ve worked with very impressive people and received positive feedback.

I also have more objective proof of my success than most independent coaches because I spent years working for a management consulting company—that company would sell my service to clients for a lot of money, and the sales reps would regularly (and vehemently) request feedback to make sure the clients were happy. So, if they weren’t, they would say something and I would be replaced.

I also know what companies would pay for me through my management consulting company, so I have some additional proof that my level of service is worth a certain number (which I won’t share out of confidentiality for my old company).

Proper rate from this perspective: Let’s say somewhere between $150-$250

Perspective #4: Confidence in delivering outcomes

What kind of results can clients expect from working with me?

There’s certainly some impostor syndrome here (research actually shows that top-performers feel even more of that than low-performers do because they’re comparing themselves to their high-performing peers).

So yes, I’ve identified in the past that some of my hesitation around charging more has been related to confidence in my ability to deliver results. Logically, if I were 100% confident that working with me would change someone’s life in a dramatically positive way, surely I wouldn’t be worried about charging a lot, right? I mean, if I knew for sure I could solve their #1 challenge in life, I’d feel ok charging them $1,000/hour, right?

I do think that’s true, but it’s also worth remembering that the outcome would likely not be delivered in a single session. Maybe paying a one-time fee of $1,000 for a 100% of dramatic life change in a single session would make sense.

But what if it were actually a 100% chance of success only if the client saw me every other week for a full year (meaning 26 sessions)? Would that be worth $26,000?

Probably yes, to someone who makes a certain amount of money and wants a dramatic enough life-change (e.g., going from [1] hating their job, feeling extremely lonely, and feeling like they’re wasting their life, to [2] finding a job they love, feeling strongly connected to a community of people, and feeling like they’re making a strong positive impact on the world).

In any case, I think I’d still run into three issues:

  1. There would still be people who couldn’t afford the $1,000—even if it would dramatically change their life—and I would feel even worse knowing that I had the power to help them so profoundly but chose not to because they didn’t have enough money.
  2. I need to remember that this is coaching, not expert consulting. In other words, as a coach I shouldn’t be promising that I’ll solve people’s challenges for them. Coaches aren’t meant to be experts in creating solutions—we specialize in psychology, not business (or whatever domain the person is struggling in). So, I can promise that I’ll change someone’s life in the sense of supporting them in a powerful way so they can find their own solutions, but not in the sense that I have some amazing magical tip to give them that will automatically change everything.
  3. In my original hypothetical here, I was 100% confident that working with me would have a dramatic impact on someone’s life. Realistically, I can’t be 100% confident of that. I do have a fair number of data points showing that I’m effective, and I have very few data points showing that someone working with me for a while did not experience strong positive outcomes. But again, it’s very fair to point out that my confidence is not 100%. So yes, if a potential client were 100% confident in me, it would be reasonable for them to pay $1,000/hour. But let’s say it’s more like a 75% chance that they’ll achieve at least a relatively-positive outcome, a 50% chance that they’ll achieve a highly-positive outcome, and a 25% chance that they’ll achieve a truly life-changing outcome. How much should that be worth? What fraction of $1,000/hour? Would 25% of that be reasonable?

Proper rate from this perspective: Somewhere around $250

Perspective #5: Number of clients and ease of getting new ones

At the end of the day, none of those calculations from the previous perspectives really matter if I have no clients. I could charge $10,000 per session, but if no one ever pays that, who cares?

This issue really breaks down into three separate questions:

  1. How desperate am I? How much do I need new clients right now?
  2. How many clients do I want? How much profit do I want to be making?
  3. How easily can get I get new clients when I want more? Am I confident in my ability to expand my business as necessary?

My answers:

  1. Clearly if I don’t have enough money to pay my expenses, I should lower my rate until more clients sign up and I feel more comfortable. At this point, I don’t feel desperate. Even though my independent business is making far less money than I made as a full-time management consulting working for a big company, I’ve also reduced my spending and I have a nice safety net of savings that I’ve been building up for years. So, I’d rather focus on attracting more clients that I’m excited about rather than just anyone. (This would of course be different for you if you’re starting a business without much savings.)
  2. One of the main reasons I quit my day job was so that I could have more freedom and control over how I spend my time. It’s important for me to keep my number of clients manageable so that I still have time for my writing, new program design, and other activities. I’d much rather have more time than more profit at this point in my life.
  3. Honestly I’m not sure. Until now, I’ve relied largely on word of mouth and on my Myers-Briggs personality test to send people my way. So, I’m not sure what would happen if I tried more active marketing or advertising. For now, I feel like people are finding me at a rate I’m ok with, and I also feel confident that I could entice more people to sign up from my personality test if I lowered my rate.

Proper rate from this perspective: Say $150-$200

Perspective #6: “This isn’t a charity!”

I’ve heard that from several business development experts. I’m meant to be running a business here, they say, and it’s reasonable to make good money if I’m providing a valuable service. Money is ultimately a representation of value being exchanged, so I deserve more of it if I’m helping someone achieve something that’s important to them.

Yes, not everyone will be able to afford my service, but we live in a capitalist society—for better or worse—and there are all sorts of things that people can’t afford, and that’s ok. I’m selling coaching here, not basic necessities (it would be different if I were the sole water salesperson in town).

There are other more affordable coaches available as well (who likely have less experience than I do), but it’s reasonable for me to price myself at a higher tier and make more money because of all the hard work I put in throughout my career to get to this point.

Proper rate from this perspective: $200-250

Perspective #7: I’m personally against late-stage capitalism, and I’m lucky to have gone through my life with a variety of unearned advantages

Why shouldn’t this be a charity, at least to some degree?

Yes, it makes sense to use money as a representation of value, but the current manifestation of capitalism in this country is not ethical. Just because the wealthy people in power have designed and perpetuated this system doesn’t mean that I shouldn’t fight against it in whatever way I can.

It’s one thing if I’m working with a wealthy client who wants my coaching to help them grow their business to make even more money. But most of my clients aren’t in that position. Most of them want coaching to help them deal with things like confidence, relationships, decision-making, procrastination, and creating a life purpose that involves doing good in the world.

I’m also well aware of the variety of types of privilege (i.e., unearned advantages) I hold: being white, male, cis-gendered, heterosexual, non-disabled, born into a native-English-speaking middle-class family with college-educated parents, etc. Many other people grew up under much more challenging circumstances (which doesn’t at all mean that my life was easy all the time, but simply that I had opportunities that others didn’t).

Therefore, it would be ethical for me to offer reduced rates to BIPOC (i.e., people of color, especially Black and indigenous people) and people from other groups that have been historically marginalized and given less access and opportunity (e.g., by having less access to generational wealth, by having to contend with racist attitudes from others in positions of power, etc.).

At the same time, the majority of my clients are not BIPOC, and many of my clients and potential clients have some or all of the same privileges that I do.

Indeed, it’s important to name that I decided (however consciously or unconsciously) that my target demographic would be people with a certain level of privilege and wealth. Bluntly speaking, I’m not volunteering at shelters for houseless people or working in a non-profit devoted to helping the most marginalized populations get back on their feet. I’m choosing to work with people who are already doing “fine” and want to feel “great.”

Proper rate from this perspective: $150-250 for people with similar privileges to me and $0-100 for people from historically-marginalized groups

Perspective #8: My values, my purpose, and my “why”

I’ve spent a lot of time considering and designing my values and life purpose, so it would make a lot of sense for me to consider those here. After all, the whole reason I got into coaching was that I decided it was a great manifestation of my purpose.

So, what would my five core values say about all this:

  • Connection (intimacy, community): I should do whatever feels most authentic to me and allows me to be in deep, vulnerable relationship with people. The other big reason I quit my day job is that I felt like—when coaching people in the corporate context—I wasn’t able to go as deep with them as I wanted. There were always masks. With my private coaching practice, I want more vulnerable connection with people, so that means being real about the complexities of money (i.e., writing this post) and also having an honest conversation with potential clients about it.
    • Verdict: Maybe instead of having a firm number, it becomes a conversation each time.
  • Freedom (autonomy, health, safety): I very much value freedom, and unfortunately in this society, that requires money. I want to be able to go on vacations, help provide for my family, and feel a sense of comfort and safety that I’m not suddenly going to run out of money.
    • Verdict: I deserve to charge what other coaches of my experience level charge.
  • Growth (openness): I want to keep learning, growing, and being open to having my mind changed. My original perspective had been to charge a high rate because I have impressive credentials, and I should be able to find clients willing and able to pay that. And, as I’ve continued to work on my personal development, it’s become clear to me that there’s a lot wrong with how mental health is handled in the United States, how people from marginalized groups don’t have the same access to support, and how I’ve been lucky a lot in my life. So, just because it’s common for coaches (especially white men) to be able to charge a certain amount of money doesn’t mean I should. On the other hand, another way I’ve grown is in my transition from following the typical mindset of our society (keep rising up the ladder, make more money) to living with less. In that vein, I’ve already downsized my life a lot, and it feels reasonable to charge enough so that I can at least easily maintain that scaled-down lifestyle.
    • Verdict: Charge enough for me to live a modestly-comfortable lifestyle, but try to be accessible as well to people who have typically had less access to this kind of support.
  • Spirituality / Mindfulness (present-moment awareness, alignment to purpose): Again, I want to follow my values and live the way that feels right to me, not what society tells me to do. Being able to cultivate my mindfulness practices also means having spaciousness in my life, and that means not filling up my schedule with too many clients. To be able to do that, I need to charge a certain minimum amount.
    • Verdict: Charge enough so that I don’t need a packed schedule of clients.
  • Truth (accuracy): What actually makes sense given all these factors? If I avoid biases and false stories I tell myself, what is really true here? Well, I need to charge enough to keep my schedule light. But I can’t charge too much or I’ll have to turn away a lot of potential clients (and I might not find enough people able to pay the high right to sustain my business).
    • Verdict: It seems like the right number is somewhere in the $145-$195 range.

Let’s look at the life purpose I’ve arrived at too:

Lately I’ve broken it down into three parts, so let’s see what each might add here:

  • “To be fully present with a ‘spiritual’ quality of awareness”
    • Verdict: I need that spaciousness in my schedule.
  • “To connect deeply with other conscious agents”
    • Verdict: I need to be able to sustain my business so I can keep doing this and don’t have to return to the corporate context. And I also want to be authentic with people and be real about money.
  • “To help others improve their self-awareness and pursue their own life purpose—especially by introducing them to new effective paths toward personal development”
    • Verdict: I want to help as many people as I can. And, I also need the space to continue my own deep explorations so that I know what’s most effective. Therefore, I need to balance charging enough to give me a sense of ease in my life but also being affordable enough that I can help people who need it.

I also need to remember my big “why”—why did I even get into coaching?

#1: To pursue my life purpose, because I believe that coaching is effective at making that positive impact.

#2: Because I really enjoy it. After most coaching calls, I feel great—like I made a tangible difference in someone’s life and had fun doing it.

It’s strange how sometimes I feel a sense of dread when I look at my calendar and see a lot of sessions slotted in for the next day—but then, once I’m actually in them, I feel great.

So I need to remember that my brain tricks me sometimes. The truth is that even if I won the lottery right now I wouldn’t be happy simply living a life of hedonistic luxury. I’d still feel a strong sense of wanting to do something important that makes a positive impact on the world. If I didn’t, I know I would feel depressed. I have all sorts of evidence for that from my life.

Even if I had a million dollars in the bank right now, I truly believe I’d still want to be coaching. If that’s the case, being able to see more clients should make me happy. And an easy way for me to attract more clients is to keep my rate affordable. (And, of course, if I make my rate too low, then I risk feeling anxious about not being able to pay the bills or about not being paid what I’m worth.)

Perspective #9: Psychology (for their own good)

I’ve written so far mostly about the hourly price I’m charging, but there’s another key component here as well: How do I sell my service? Do clients purchase one session at a time? Do I only sell bundles? By number of sessions or by time period?

This gets tricky because there’s some powerful psychology and several cognitive biases at play here:

The price-value bias and the confirmation bias:

We subconsciously associate cost with quality. It’s very easy to imagine that a restaurant costing $150/person is going to have tastier, higher-quality food than one costing $10/person. There’s an immense amount of research showing how commonly people are fooled by the price of wine—even top sommeliers are shocked when told that the wine they believed to be a rare vintage is actually $3 from Trader Joe’s.

It’s not fair, but the truth is that this is a deeply-ingrained bias, and it seems foolish for me to ignore it. Logically, even if it’s a placebo, a client paying me $200/hour will most likely trust my expertise more and be more likely to follow my advice than would a client paying $50/hour.

The sunk cost fallacy and the loss-aversion bias:

We value something more when we’ve paid more for it, and we’re less likely to throw it away. Imagine you’re cleaning your house and come across two objects you’ve had for a long time but don’t really use anymore. It’s going to be a whole lot easier to throw out the one you remember paying $5 for versus the one you remember paying $500 for. Again, even if you don’t use either of them anymore and they’re just taking up space, it’s pretty hard to throw out something that at one time you considered to be worth $500.

Similarly, if a client has already paid me a lot of money, they won’t want to feel like it was a waste. So, they’ll be more likely to stick with the coaching and keep trying even when it’s hard.

If you signed up for a free workshop, it’s no big deal to skip it if you don’t really feel like going anymore when the time comes. But if you paid $10,000 for it, you’re going to force yourself to be there. You’ll probably even make sure you do all the pre-reading in advance to get your money’s worth.

So, if I truly believe that my coaching is valuable but it will take time for it to be effective, it would make sense for me to charge more money and to lock clients into a minimum commitment—for their own good.

Again, all of this isn’t to trick people but to help them. If I truly believe that (a) my coaching will help someone and (b) they’re likely to give up too early when it’s hard or before they’ve seen a benefit, then it seems ethical to use some of the above psychological facts in how I approach sales.

Price anchoring, “strikethrough pricing,” and “the rule of nine”:

These tactics are used everywhere—a higher price will be displayed crossed-out, and a cheaper price (ending in 9, as in $99 rather than $100) will be shown next to it. Studies show that this taps into something so deep in human psychology that it even works on marketers who use this tactic themselves.

So, I don’t have a problem using it to some extent. It seems perfectly reasonable for me to price an offering at $199 or $197 rather than $200 if it makes the client feel better about their purchase.

The “strikethrough pricing” aspect is a bit trickier since a lot of people simply make up the supposed “original” price to make the “real” price seem more reasonable. It does seem fine though to use a strikethrough price if the number comes from somewhere. For example, if I know that $200 is the standard rate most coaches charge, it could be reasonable to show that as the crossed-out number with, say, $179 as the “real” price next to it.

Here’s the hardest part of the price anchoring thing, though: People like feeling like they’re getting a discount—like they’re somehow being shrewd to have obtained the lower price. They hate feeling like they’re paying more knowing that someone else is paying less.

In fact, studies have shown that having one of those “have a discount code?” boxes on checkout pages can actually hurt sales because customers worry that they’re missing out if they don’t have a code.

So how does this translate to my business? I worry that this factors into why the tiered pricing model (i.e., a sliding scale) often doesn’t seem to work properly: People who could afford the higher rate see that other people are getting the very same service for less money and that simply doesn’t feel good. 

The dark side

It’s definitely possible to go too far with using psychology “hacks” on people though.

Here are some common ones I’ve seen other coaches use that don’t sit right with me:

  1. Creating self-doubt: “You don’t want to keep wasting your life, do you? You’re probably not doing anything meaningful right now, so you probably wonder if you’re actually worthy. Join my elite group only for the top people in the world. You’re part of the elite, aren’t you?”
  2. Artificial scarcity: “Sign up by tonight at midnight for this once-in-a-lifetime opportunity. Only one spot left.”
    1. Note: This one is borderline because I’ve used a variation of it before. I think it’s unethical to make up false numbers and deadlines, but one thing I have done is given people a deadline to apply for an early-bird special for my program, and my goal there was (a) to make sure I had enough time before the program started to prepare everything and assemble the groups, and (b) to help potential applicants make a decision instead of going back and forth forever, especially since this program was specifically about how to help indecisive people make decisions. It’s also tricky in general because artificial scarcity works. So again, if I truly believe that my coaching is helpful and I know that creating artificial scarcity will entice people to join, it sure becomes tempting to use that.
  3. Making false promises: “I’m an expert who has all the answers you need, and no one else can give you the secrets that I can. I will absolutely solve your problems for you.”
  4. Questioning their values: “Oh, you say you can’t afford this? Well, I understand if you don’t actually care about making a positive impact in the world. If you really cared about improving yourself, you would make the necessary sacrifices to be able to pay for this.”
    1. Note: This is also a tricky one because of what I’ll talk about in the next section.

Perspective #10: People’s “money stories” and relationships with money

A lot of coaches like to talk about people’s “money stories”—meaning how they think about money, particularly in the way they’ve been influenced by the family they grew up in and any strong life experiences related to money that they’ve now internalized as stories (e.g., money is evil, or becoming rich is important).

I agree that it’s important for each of us to understand how we relate to money. But, it’s been interesting how often other people in the coaching or business development communities have accused me of being held back by my money story that I shouldn’t charge too much. I’ll usually say that I feel bad pricing myself beyond what most people can afford, and they’ll respond, “No, you should charge what you’re worth, and you’re only not doing that because of some false story about not being worthy of those high prices. You deserve more, and you’re sabotaging yourself.”

Sure, I’ve got some impostor syndrome like everyone else, and I do question if I’m worth high rates. But, as I’ve described in this post, I think it goes a lot deeper than that. It’s not so simple as “either charge a lot, or you’re fooling yourself.”

In any case, I’d like to explore three parts here:

(1) What was my own experience looking for coaches?

When considering how much to charge, it seems valuable to look back at how I felt when I was looking for a coach several years ago.

Back when I was making a high salary, I remember looking at a variety of coaches. At the time, my need didn’t feel desperate. I wasn’t totally bought into the idea that a coach could actually help me, so I saw it as a “nice to have,” not a “must-have.”

With that mindset, I worked with two different coaches—one charged me $150/session and the other $200/session.

For the $150 one, I remember thinking that it felt barely-ok for me to pay that every other week for nearly a year. I remember thinking that much more than that would have felt like too much.

For the $200 one, I remember thinking that that felt like a big expense—like it was high enough that I could afford maybe a few sessions but not something more regular than that.

Both were helpful, but the $200 one was life-changing. Who knows how much of that was a placebo from paying that higher rate and how much was that she was simply someone skilled enough that she was able to charge that much. Either way, I look back on my sessions with her as the tipping point that started me on some critical experiences that changed the course of my life.

(2) What about less wealthy people I know?

I know a lot of people who have followed less “typical” life paths and make a lot less money than I was making in consulting.

It’s interesting to notice that, at my high salary, I felt like $150 was my limit—because I know people who make less than half that salary and are willing to pay a coach $180.

Sure there are a lot of factors at play, like how much you pay on student loans, car payments, childcare, etc. But beyond all that, everyone sees money differently. To me, $150 represented a certain percentage of my yearly salary that felt almost too high. To other people I know, $150 represents a much higher percentage of their yearly salary, but they’re still willing to pay it because they believe that coaching is hugely important for them.

(3) What about people who don’t consider themselves especially wealthy even though they objectively are?

Having worked in the management consulting and tech industries for over a decade, I’ve seen how easy it is for people to get used to being paid a lot of money and take it for granted. It becomes really easy to live in a bubble where all your friends are regularly making $100+ purchases on Amazon without a second thought. That feels normal.

What happens then is that they start to see themselves and their friends as typical. When asked if they consider themselves wealthy, they’ll compare themselves not to people working in food service but to their peers or to people above them in the company who make even more money.

So, say I offer a sliding scale where you can pay one of three prices depending on your financial situation.

It feels unfair to assign strict income ranges to each tier because I don’t know their whole situation (do they have a lot of student loan debt? are they raising kids? have they benefited from generational wealth, or are they the first in their family to go to college?), so I ask them to use their best judgment (I’ve tried offering some guidance as well such as “choose this tier if you’re able to go on an international vacation every year”).

The problem is that almost no one pays the high-tier price, and almost everyone asks for the low-tier one. I’ve had a client who works for a top tech company ask for my $99 rate, and a client who works a much more modest job be willing to pay my $179 rate.

Again, I don’t think it’s malicious, like they’re trying to trick me. I simply believe that it’s easy for people to rationalize deserving or needing the low rate, especially if they work in a well-paid job in tech or finance (“does this really count as an international vacation? I mean, I’m only going to Mexico, whereas my manager goes skiing in the Swiss Alps”).

Distilled takeaways:

Here are my takeaways from all that:

Reasons to charge more:

  • That’s the market rate. Other coaches charge more, so it’s not fair to me if I don’t as well.
  • I calculated what I need to live. My objective analysis of my lifestyle expenses and the number of hours I want to work gave me a precise number I should be charging, and it’s on the higher end.
  • I worked hard to obtain my skills, and they should be worth a lot.
  • I’m confident that I can actually help people get through challenges that have troubled them for years, so surely that’s worth a high amount of money (as long as paying that wouldn’t have a major negative effect on them).
  • I’m not desperate to get more clients, so it’s ok to wait for fewer people who are able to afford the higher rate.
  • Money is a representation of value in this capitalist society I live in. It’s reasonable for me to run a business with the intent to make money (as long as I’m not taking advantage of people or aiming for extravagance).
  • People will subconsciously see me as a more qualified coach if I charge more. They’ll be more likely to trust me and follow the advice that feels outside their comfort zone. They’ll be more likely to stick with coaching and do the work. So, charging more actually helps them.
  • I don’t need extravagance, but I do need spaciousness. Looking at the larger arc of my life—my meaning of life and purpose for living—one of the key things I want to practice is slowing down, being mindful, and practicing my flavor of spirituality. That requires a schedule that isn’t packed every day, so I need to charge more to allow me to live that way.
  • This isn’t just for me. I want to be able to help support my partner and community house, to have kids and provide for them, to give to charity, and to offer lower-priced coaching to people in need. I should feel comfortable charging enough to pay for all that, including reasonable medical insurance (which is expensive) so that I don’t feel conflicted about whether I can go to the doctor or I can take my cat to the vet.

Reasons to charge less:

  • I want to do better. Just because I live in a society promoting capitalism doesn’t mean I can simply offload all ethical judgments to that system. I still have agency in terms of how I operate within that system. I have privilege, and other people have had less access and opportunity than I have. It’s ethical for me to give back to others by charging less (assuming they have less privilege than I do—if they have the same or greater privilege, it seems less ethical to make sacrifices myself).
  • I don’t want to be a hypocrite. Back when I was looking for coaching, it felt challenging for me to pay too much money (but, it’s not that I couldn’t afford to pay more—I certainly could have ordered less from Amazon;  rather, I had decided that I wanted to keep spending money on nice restaurants and such, whereas other people might decide that making a big change in their life is most important and thus it’s worth paying for coaching).
  • I genuinely love coaching, and I very much want to help people. If I charge less, more people will be able to afford it. If I’m not coaching people, I’m more likely to feel empty, depressed, and nihilistic.
  • I want people to be able to afford enough sessions to experience the full value. I had the experience of asking someone to pay my high rate, and they agreed (“yes, that’s a reasonable rate for you to charge, you have a lot of experience, and that’s what other coaches charge”); but, then they said that at that rate they could only afford to see me once a month. That’s less good for both of us: they get less support, and I feel less connected to them.
    • What’s tricky here is that the real issue could be one of two things: either they truly can’t afford to pay that amount more than once a month, or they’ve prioritized other things and simply feel as if they can’t afford more. It’s hard to figure out the truth because it’s so subjective. What if it turns out that they “can’t afford it,” but I know that they go out to eat at fancy restaurants a lot? And let’s say I also know that they’ve experienced a lot of pain struggling for years with a huge challenge that I know how to solve? Is it ethical for me to try to convince them that coaching is more valuable and that they actually could afford my services if they ate out less? That feels icky but also potentially logical. (Bleh!)

Reasons to offer variable rates:

  • I want to be in authentic relationship with people, so it makes sense to have a conversation about money instead of just setting a firm price.
  • People are in very different financial places. It’s clear that the ethics of pricing are quite different when someone has a lot of disposable income versus if they’re barely able to afford the necessities. Logically, I should offer a range of options for people to pay.

Reasons to not offer variable rates:

  • It’s more confusing. People are used to seeing that a given service costs a certain price. Potential clients might be scared off if it doesn’t make sense. They also might get caught in a loop of indecision—going back and forth on their own ethics of what to pay—and then end up just giving up and not signing up.
  • It simply doesn’t feel good for most people to pay more, knowing that other people are paying less for the exact same service. The natural response is resentment, and it takes some mental gymnastics to remind yourself that you’re lucky enough to make a lot of money, so it makes sense for you to pay more than someone who makes less.
  • It’s complicated to strike the right balance between being fair and being overbearing. I want to give people the freedom to make their own choices about what number makes sense for them, but I also have evidence that the vast majority of people will simply pay the lowest rate available and make up excuses about why that makes sense for them.
    • It’s also complex to figure out which life circumstances qualify for deserving the lower rate. For example, someone who identifies as BIPOC has almost certainly been negatively impacted by compensation systems stacked against them; therefore, it feels reasonable for me as a white man who’s benefited from those same systems to charge them less. But what about a parent who can afford less because they chose to have kids or a doctor just coming out of medical school who has huge student loans but will eventually end up a lot wealthier than me?

Reasons to allow people to book one session at a time:

  • Freedom is one of my core values, and I want to make sure people don’t feel locked in.
  • Some people will be less likely to sign up at all if it feels like too much money to pay all at once or too much commitment to take on.

Reasons to require people to sign up for several sessions at once:

  • It helps me feel more financially secure.
  • It’s less bureaucracy for the client because they don’t have to worry about paying a separate invoice every time.
  • It’s frustrating when I put a lot of effort into onboarding a new client, and they quit after one or two sessions, especially if it’s because they had unrealistic expectations and were hoping to be “cured” after only 50 minutes together. Requiring people to sign up for packages can help defend against some of those unrealistic expectations and help people stick with it long enough to actually reach positive outcomes.
  • It feels less transactional for both of us. So much of our society is structured transactionally: You pay Apply $1,000 and they give you an iPhone. It’s not really a relationship—it’s a structured exchange where you know exactly what you’re getting for that amount of money. It’s the same exchange every time no matter who’s buying the phone. It’s not about growing a relationship between you and the company (even though Apple is better than most at making it feel more like a relationship). Think about how different the experience is to buy a product like that from a sales associate you’ll never see again versus stopping at a local coffee shop or “mom-and-pop” store or restaurant where they know your name and you might linger to chat after ordering. Maybe you’ve never even experienced that feeling since that kind of thing has become less common in the United States. But you’ve probably seen it in movies. The bottom line is that while, yes, you are paying me for a service, I want it to feel more like the “mom-and-pop” store than buying a fixed product from a giant corporation. My goal is not to give you some fixed product (“Michael’s patented 10-step program to change your life”) because you’re not a fixed person who’s the same as every other client I work with. Instead, I want to create a relationship with you.

With all that, I end up with several core pricing tenets (and questions to think about):

  • I’m worth higher rates. If someone can afford it and doesn’t have substantially less privilege than I do, I should charge the higher rate. Charging more will also help them because of psychological biases. It’s a win-win.
    • If someone has a lot less privilege than I do, it’s ethical for me to offer them a lower rate.
    • But, because we all have different money stories and life experiences, our definitions of what’s “expensive” or what constitutes “privilege” will differ. So, it seems important to have some objective standards to make it less of a subjective decision.
  • To be in authentic relationship with someone, it’s reasonable to make this a conversation instead of just throwing a fixed price at them (asking something like “what can you afford?” seems promising but flawed). Overall, money conversations are uncomfortable for both sides, so it makes sense to find a way to support both of us in that and to offer as easy a system as possible for helping decide what’s fair to both sides.
    • It seems logical to offer a tiered “sliding scale” pricing model to accommodate people with different financial circumstances. But, I can’t yet think of a good way of helping people not feel resentful knowing that other people are paying less for the exact same service (I’ve tried saying that paying more allows me to offer my service for less to others, but maybe I can reinforce the charitable aspect to help the wealthier people feel like they’re doing good in the world by paying more. Bleh, even saying that feels a little gross, though).
    • I also need to be careful that there are enough people paying the high-tier to offset the low-tier; otherwise, I’ll end up having to pack my schedule more tightly with too many low-tier clients to make up the difference. So, it seems that I need to limit the number of slots available at the lower tiers (and have a waitlist beyond that).
  • It makes sense to require people to sign up for some kind of package (maybe 3 sessions) and to require that people see me at least twice a month—otherwise, they really won’t get the real benefit from my coaching.
    • But, paying for 3 sessions at once might feel like a lot to some people. Could there be some way of offering a payment plan while also ensuring that I get paid, and people don’t ghost me? How would offering a payment plan be different from just charging by the session, though?
    • Finally, it’s reasonable to give someone a first full session free so they get a good feel for what I’m offering before requiring them to sign up for a package. (Some coaches choose not to even show prices on their website because they want the prospective client to experience how powerful coaching can be before considering the price. But, that feels wrong to me, so I’m choosing to clearly state my prices even if that turns some people away who might have been swayed after the free session.)

Here’s the first draft of my revised pricing model after thinking through all that:

(Update from the future: Below is what I had come up with in February 2021. Since then, the foundation remains the same but I’ve updated some of the nuances. I’m leaving the draft below for transparency, but you can see the newest version on my “How to work with me” page.)

Thanks for your interest in coaching with me.

My goal is to be able to serve a variety of people in my practice, including people from groups who have typically had less access to coaching. At the same time, this is my primary source of income and I need to be able to run a sustainable business. To do that, there are a few key components to my model:

  • I use a sliding-scale variable pricing model. I offer the exact same service at multiple different prices based on need. Please realize that by paying at one of the higher tiers, you’re allowing me to offer coaching at the lower tiers to others who can’t afford more.
  • I offer a limited number of slots at the lower pricing tiers. This allows me to make sure I’m earning enough money to pay my bills. I’m relying on the honor system, so please carefully consider the highest tier that you’re able to afford.
  • I offer the first session for free to make sure we’re the right fit for each other and to give you an opportunity to sample my coaching.
  • After that, I ask that you purchase sessions in bundles of three and schedule at least two sessions per month. This is because a lot of experience has shown me that it takes at least a few sessions to really begin to see the effects of coaching (and of the relationship that we’ll be building together).
    • Yes, you’ll likely leave even the first session with some powerful insights, but real transformation takes time. I’m willing to talk about it if paying for three sessions at once feels challenging, but if I allow a payment plan then I’ll count on your integrity to follow through with paying the whole thing even if you choose to stop coaching.
  • Let’s be real with each other. I’m not a big faceless corporation charging one fixed price for a product, and you’re a complex human with a lot of different types of expenses in your life. It’s often uncomfortable to talk about money, but let’s have a real authentic conversation about what you can afford that’s fair to both of us. My rates aren’t set in stone; but, I’ve also thought a lot about them, so I hope we can work something out that makes sense for both sides.

Sliding scale

Again, these rules aren’t set in stone, but this is meant to make it easier for you to pick a number rather than just asking what feels right. (Please remember that many of my peers with similar experience charge $200 or more and that paying more allows me to offer more slots at the lower-income levels.)

Here are my rates for a 50-minute session (again, this is the same service being offered at each price tier):

$179–349 if:

  • You frequently make purchases costing hundreds of dollars without significant financial planning, or you can afford to go on an international vacation every year
  • I suggest $179 if you make around $120,000 USD (before tax, including bonuses, etc.) and $349 if you make around $200,000 or more; or, if you make a bit higher than each of those salaries but have a lot of other non-luxury expenses (e.g., childcare, caring for elders, paying for expensive healthcare needs, etc.)
  • Note: If your company will be paying for your coaching, I generally request $349

$129–149 (limited slots) if:

  • You frequently make purchases costing over $50 without significant financial planning, or you can afford to go on a modest vacation every year or two where you stay in hotels and eat out
  • I suggest $129 if you make under $80,000 USD (before tax, including bonuses, etc.) and $149 if you make around $80,000–$120,000; or, if you make a bit higher than each of those salaries but have a lot of other non-luxury expenses (e.g., childcare, caring for elders, paying for expensive healthcare needs, etc.)

$49–99 (very limited slots) if:

  • You identify as BIPOC or part of another historically-marginalized group, or
  • You make under $50,000 USD (before tax) and have very little disposable income available after paying for basic necessities (rent, utilities, groceries, etc.) and you feel committed to pursuing coaching and strongly drawn toward making a positive impact in the world in some way

What do you think about all this? I’d love to hear from you in the comments below.

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