How to Price Your Coaching Services: The Lifestyle-First Method

How to Price Your Coaching Services

[00:00:00] Okay, so let’s talk about a very specific, um, a really painful moment that I think every freelancer coach or consultant knows intimately. Mm-hmm. You are staring at a computer screen. Maybe it’s a proposal, maybe it’s the pricing page on your website. Blinking cursor. The blinking cursor, and you have to type in a number.

The moment of truth. It’s a moment of just absolute panic. You freeze. You start asking yourself, did I just pull this number out of thin air? Is it too high? Is it like way too low? What is everyone else charging? Exactly. It feels like a financial pop quiz you just didn’t study for. It’s the universal anxiety of the entrepreneur.

That feeling that you’re just guessing. But what’s fascinating to me about this topic is that this anxiety. It isn’t just about your bank balance, it’s actually a health warning. A health warning. Okay. That feels like a bit of a leap. Pricing is a spreadsheet problem, not, you know, a medical one. You’d think so, but if we look at the data from Founder Reports 2024, the stats [00:01:00] on entrepreneur wellbeing are honestly.

Staggering. How so? They found that 87.7% of entrepreneurs struggle with mental health issues and over a third, 34.4% to be exact, have officially experienced burnout. Wait, 87%. That’s not a statistic. That’s practically everyone. It is. And today’s deep dive is based on this really compelling argument that.

These two things, your pricing and that massive burnout rate are actually causally linked. Okay, we’re unpacking a breakdown by Heather Stevens called How to Price your Coaching Services Lifestyle First Method. So the thesis here is we’re essentially pricing ourselves into exhaustion. Precisely. Stevens argues that bad pricing creates the conditions where burnout is, uh, inevitable.

Yeah. She points out that most pricing advice is completely backwards. Backwards. How? Usually when you look up how to price, what’s the advice? Look at the market, see what the average is. Then maybe, you know, undercut a little to get your foot in the door. Exactly. The traditional [00:02:00] market first approach, Stevens argues that if you look at the market first, you are building a business that’s designed to crush you.

So what’s the alternative? She proposes the lifestyle first method or what she calls peaceful pricing. Peaceful pricing, yeah. I like the sound of that, but I can already hear the skeptics. They’re thinking, that’s nice, but I have bills. I can’t just charge whatever I want. ’cause it feels peaceful. Right? The market has a say, doesn’t it?

Yes, and it does, but probably not in the way you think. Our mission today is to debunk this myth of the average market rate and walk through the actual math, because spoiler alert, the average is actually dangerous. Dangerous. Okay. How, well, let’s look at the benchmark data Stevens uses from the ICF Global Coaching Study 2025.

This is like the gold standard for industry numbers. Got it. They found that the average coach generates revenue of $67,800 a year. Okay, let’s pause on that number. 67, 800, I mean, depending on where you live, that’s not exactly CEO money, but for a solo gig. It [00:03:00] sounds manageable. It sounds fine. And that is exactly the trap.

Fine is the enemy here. The study also notes that this average coach is working about 13 client hours a week. So your brain goes, wow, almost 68 K for part-time work. Sign me up. Right. 13 hours is basically a long lunch break in the corporate world. It sounds like a dream. We need to apply a serious reality check to that number.

First, let’s talk geography. Location, location, location, exactly. Stevens compares this to data from smart Asset 2025 on the cost of a comfortable life and define comfortable. Are we talking yachts or just paying the electric bill without panicking? The second one, we’re talking basic security. Paying bills, saving a little.

In West Virginia, a single adult needs about $80,000 to be comfortable. Okay? In Hawaii you need $124,000. So even in one of the cheapest states in the US, that average coaching revenue is already 12 grand in the hole already behind, and that’s the best case scenario. But here is the critical [00:04:00] distinction that most new entrepreneurs miss, and it’s the one that usually bites you.

What’s that? That 67, 800. That’s revenue. It is not your income. Yes. This is such a painful lesson. When you have a job, your salary is mostly your income. When you run a business, revenue is just a pot of money. You hold for a second before everyone else takes a cut, everyone, and the biggest silent partner is the government.

We have to talk about the tax gap because this really shocks people. So break that down. Why is it worse for entrepreneurs when you’re an employee, your employer pays half of your FICA taxes. Social Security and Medicare, it’s invisible money. You never see it, right? It’s just gone before it hits your bank account.

But when you’re self-employed, you lose that subsidy. You have the. Privilege, I guess, of paying both halves. So you’re paying the employee part and the employer part? Correct. That’s an extra 7.65% tax right off the top compared to a W2 employee. Wow. So you’re automatically [00:05:00] taking a nearly 8% pay cut just by starting a business.

You got it. Stevens uses a great example from Wisconsin. Let’s say you wanna take home the equivalent of an employee earning say $87,000 as an employee after taxes, you might take home 65,000. But to get that same 60 5K take home as a self-employed coach. You need to generate roughly 97 to $101,000 in revenue.

You have to earn almost $15,000 more just to break even, just to stand still. And that is before a single business expense, right? Because the business has its own appetite. You had to pay for Zoom. The website insurance. Stevens calls this the EBITDA mindset. Okay, hold on. We’re getting into finance acronyms.

Can we explain that? Like I’m five. Sure. Basically, it just means the business has to eat before you do. Got it. Steven’s notes that for a typical coach, 25% to 40% of your revenue just vanishes into expenses, software marketing, all that. Plus you need to set aside five to [00:06:00] 10% for reserves. Reserves. Yeah. Like a rainy day fund for the business.

Exactly. What happens if your laptop dies? What if a client cancels? If you take every dollar out of the business to pay your rent, your business is technically insolvent. So let’s go back to that average coach making $67,800 after the extra taxes, the 30% for expenses, the reserves, what are they actually living on?

They’re likely living on poverty wages. They are almost certainly taking home less than someone working entry-level retail. Wow. And that is why pricing based on the average is so dangerous. You’re just copying the pricing of people who are likely quietly struggling. That is a sobering thought. You’re mimicking a broken model.

Okay, so the money math is bad. I get the sense the time map might be even worse. Oh, absolutely. This is the capacity lie. It’s my favorite part of her analysis because it just shatters the 40 hour work week myth. The lie being, I’ll just work 40 hours a week like I did at my old job. Exactly. You sit down to calculate your rate and you think, okay, [00:07:00] 40 hours a week, 52 weeks a year, that’s 2080 hours.

If I charge 50 bucks an hour, I’m making six figures. But you can’t build 2080 hours. You just can’t. Not unless you wanna be part of that 34% burnout statistic. We mentioned Stevens references, the 12 week year concept. Right. And the authors argue that recovery, strategic recovery isn’t a reward you get for working hard.

It is a biological requirement for high performance. So you can’t just power through on caffeine and willpower. No. If you try to bill 40 hours a week. You will crash. Stevens does the math on the real working year. Start with 365 days, take out weekends. That leaves 260 potential work days. Okay. Standard.

But then you have to subtract vacation, holidays, sick days, and she adds another category. Which one? She calls them. Buffer for life days. Buffer for life. I like that. Is that like a mental health day? It’s everything. It’s when the furnace breaks and you have to wait for the repair person. It’s when your kid is sick.

It’s when you just. Can’t, you [00:08:00] know, I know she estimates a realistic entrepreneur needs about 45 days off a year for all that combined. So now you’re down to 215 actual working days, okay, 215 days. But even on those days, we aren’t coaching for eight straight hours, are we? Absolutely not. This is the 60% rule.

If you’re in a session for eight hours, when do you do invoicing? When do you write marketing emails? When you Right thinking time, Steven suggests only about 60% of your time is actually billable. The rest is marketing, admin, and that essential thinking time, it’s so important. She includes that. It feels indulgent, but it’s literally the job.

It’s essential. Walking the dog, sitting in silence. That’s where the strategy happens. That’s where you find the solutions for your clients. If you’re booked back to back, you’re not a strategist. You’re just a highly paid TaskRabbit. Exactly. So let’s run these numbers. 215 days, 60% billable. What’s the actual number of hours you can sell in a year?

I’m scared to ask. It comes out to approximately 744 [00:09:00] billable hours per year. Whoa, wait. Compare that to the corporate standard again. The corporate standard is 2080 hours. The reality for a sustainable solo business. 744, that’s barely a third. It changes everything about pricing because if I need to make a hundred grand in revenue and I divide it by 2000 hours, I get $50 an hour.

But if I divide it by 7 44, you need to charge about $135 an hour just to hit that same number and remember. 135 isn’t just profit. It has to cover all your overhead, your taxes, and pay for all that unbillable time walking the dog. This is why copying your competitors is so flawed. You have no idea what their capacity is.

You don’t know if they’re burning out. Exactly. Okay, so logically I get it, the math is undeniable. Then the fear kicks in. If I charge $200 an hour, people will expect me to be perfect. Ah, the good, fast, cheap triangle. I remember this from project management. You can pick two, right? You can be good and cheap, but it won’t be fast.[00:10:00]

You can be fast and cheap, but it won’t be good. Trying to be all three is a one-way ticket to burnout, and clients who want that, the unicorns, as she calls them, you cannot serve them sustainably. She tells this great story about a lawnmower that I think just. It nails this concept perfectly. It’s about her son, right?

Yes. And it’s a perfect analogy for value-based pricing. So her son was mowing a neighbor’s lawn for 75 bucks, okay? He started with a push mower. It took him forever sweating, pushing this heavy machine, right? Honest work. You see the effort, so you value it exactly. But then he upgrades to a riding mower and suddenly he can finish the lawn four times faster.

And his immediate reaction was. I should charge less. I’m not working as long. Of course, we equate time with value. I suffered less so you should pay less. But his mom, Heather, starved him and she asked a crucial question. Does the neighbor care how long it takes? No, she just wants a nice looking lawn. In fact, doing it faster is [00:11:00] more valuable to her.

How so? There’s less noise, less intrusion on her day. She gets her yard back sooner. That is such a light bulb moment. If I can solve your problem in one hour because I have 10 years of experience, I shouldn’t charge you for one hour. I should charge you for the 10 years precisely. Good Plus fast premium.

If you are an expert, you save the client their most valuable resource time. You should charge more for speed, not less, but this creates a huge conflict with hourly billing, doesn’t it? If I charge by the hour and I get faster and better at my job, I make less money. You’re punishing yourself for being good at your job, so you have to escape the hourly rate you have to.

It puts a hard ceiling on your income, but more importantly, it actually hurts the client. How does it hurt the client? I think they prefer paying for exactly what they get. It creates a transactional mindset. Yeah. The client starts thinking, do I really need another hour? Instead of, what’s the result I’m trying to achieve?

It turns it into a commodity. Hmm. They’re watching the clock. Mm. Not the transformation. And an [00:12:00] hour isn’t just an hour. This is the container concept she talks about. Right. The invisible work. Exactly. If you have a one hour call, you probably spent 15 minutes prepping. 15 minutes on follow-up notes, maybe 30 minutes during the week just thinking about that client.

So a one hour session is realistically two hours of work at least, which is why Stevens and the industry data points toward packages. 40% of business coaches are now using packages of seven months or longer. So instead of it’s 200 a session, it’s this is a three month program to save your marriage, or this is a six month container to land a new job.

You price the outcome. If you help someone negotiate a $30,000 raise, paying you five grand is a no-brainer. Okay, so let’s get practical. Stevens lays out a blueprint. Step one is define requirements, and notice it starts with you, not the business. What take home pay do you need? How many went soft do you actually want?

Step two is the backwards math revenue needed divided by [00:13:00] your available client hours equals your minimum viable rate. That’s your floor. You can’t go below that. And if the number scares you, that’s just the math telling you the truth. Step three, the package mix. Mm-hmm. I like her advice here. Don’t open a Cheesecake Factory menu.

Laughs. Yes. Keep it simple. Buyers get confused. She suggests three tiers. A VIP option, A signature program, that’s your bread and butter, and maybe a group program for leverage. And then step four. The hustle check. This feels like the safety valve. It’s the most critical step. You run the numbers and then you ask, does this plan only work if I am 100% booked?

Never get sick and never have a cancellation. And if the answer is yes, your price is still too low. You’ve built a house of cards, you have to build in a buffer. Plan your revenue on working 40 weeks, even if you plan to work 48. That buffer is what allows you to sleep at night. But I can hear the listener right now.

They’re nodding along the math Makes sense. But there’s a pit in their stomach. Mm-hmm. They’re [00:14:00] thinking if I raise my prices to what I actually need. No one will pay it. The fear factor, and Stevens addresses this head on, she says, if no one pays, it is rarely a price issue. It’s a targeting or a messaging issue.

Pricing is marketing. It is a low price signals entry level, a high price signals commitment. If you lower your price to attract people, you often attract the clients who aren’t ready to do the work. So raising prices can actually get you better clients. Often, yes. Clients who pay premium rates tend to show up.

They do the homework, they get better results because they have skin in the game. And what about existing clients? You just spring this on them? No, she suggests a balanced approach. For new clients, the price goes up today immediately. No apology. And for the loyal ones, give them notice 30 to 60 days. Frame it as an investment in quality to continue delivering.

At this high level, my rates are changing. Some might leave. The ones who leave are making space for clients who value the new level of service. It’s scary, [00:15:00] but it feels necessary. It’s necessary because as we started with the alternative is burnout. So let’s bring this all home. The peaceful pricing method.

It sounds nice, but it feels deeper than just, you know, a strategy. It is, it’s about sustainability. If you undercharge, the math dictates you must overwork to survive. There’s no other variable. You just add more clients, more hours, more stress. So bracing your prices isn’t just a business decision. No. If we connect this back to that 87% mental health stat, raising your prices is literally a health intervention.

It’s a burnout prevention strategy. You are buying back your sanity. That’s it. And here’s a final thought to mull over something that really struck me. We often think of pricing as what we take from the client, right? But what if pricing is actually a filter for the energy you allow into your life? A filter.

If you price for peace, you attract peaceful clients. If you price for hustle, you attract chaos. Your price tag is the [00:16:00] guardian of your calendar. I love that your price tag is the guardian of your calendar. It really is. Well, there you have it. The math doesn’t lie. Even if it’s a little scary at first, we’d encourage you to sit down and run these numbers backwards.

Start with your life, not the market, and be honest about those buffer days. Oh, absolutely. Factor in the dog walking time. Thanks for listening to this deep dive on Lifestyle First pricing. Hopefully you can go out and charge what you’re actually worth. See you next time. Bye for now.