The Exact Formula I Use to Price My Offerings

“If you’re not worried that you’re pricing it too cheap, you’re not pricing it cheap enough.”

~ Roy Williams

Ethical and accessible pricing is super important to me. So much so that I get told regularly that I don’t charge enough for what I offer. I love it when that happens because that’s actually one of my primary goals with everything I create — to give tons of value for the most affordable price possible.

Now I say affordable, but of course, that’s subjective. What’s affordable for one person might be impossible for another person, but my strategy around pricing is to go as low as I can on price without sacrificing myself and my livelihood. I do this because I remember well how hard it was to access useful and much-needed business advice when my business was not yet making enough money to be able to afford it. Talk about a catch 22.

I knew early on that I didn’t want to be a business owner who charged exorbitant prices for my work.

So if I don’t charge the way I often see others in the mainstream marketing and business coaching world charging, how do I come up with my prices and how do I advise my clients come up with their prices?

Pricing is something that gets discussed in many of my coaching sessions. And when it does, the topic of worth often comes up — i.e. what is this offering worth to the end user? Which on the face of it might seem like a sensible question to ask but when it comes to services or digital products like coaching, workshops or courses, “worth” is a tricky one to determine.

By comparison, physical products are a different story because there is a cost to the elements included in the product itself. An Apple phone, for example, is worth more than a cheap, unheard of brand phone because the quality of materials and the technical spec are significantly higher. Worth in this case is easier to determine because of the cost to make it.

Given that there is rarely physical materials involved in what I or my clients sell, a better predictor of price is time. Let me walk you through what I mean.

When considering the price of a new offering, I first consider my minimum hourly rate. That is the lowest amount of money I want to earn per hour of my time spent delivering my services.

This is something I highly recommend you do for yourself.

In terms of how you come up with that number, I usually recommend considering the figure below which you would start to feel resentful. For example, if someone paid you $75 for an hour of your time would that leave you feeling resentful? If so, at what point would you not feel resentful and start from there.

Remember, your minimum hourly rate today can increase with time as your audience and demand grows. Starting off lower gives you that scope but if you start off high and find that price is affecting sales then it’s harder to reduce prices without sending the message that not enough people were buying.

My minimum hourly rate is currently 150 euros. The only thing I charge that for are the discounted single sessions I offer to former 1:1 clients or CBM participants. The price per hour for all other offerings is usually higher. Hence it’s my minimum hourly rate.

A few years ago I hit a cap in my earning potential with 1:1. Given that there are only so many 1:1 sessions I can do in a day, week or month and that I wanted to keep my services accessible when it comes to price, putting my rates up to 300–500$ a session (like many other business coaches with my level of experience do) didn’t feel like an option for me. So I had to think about other ways to make more money per hour.

That’s when I started to offer workshops — that way I can keep prices low and work to get more sales so that I can hit and even exceed my minimum hourly rate target.

Taking into account my minimum hourly rate of 150€, I was able to work through how to price my workshops based on how much time I needed to spend delivering the product and the number of sales I’m likely to make.

Note that I say time spent delivering the services not creating the services. This is because the creation of a workshop only happens once, but because I get revenue for my workshops in multiple ways I don’t include creation time in the price. For example, I usually go on to sell the replay of my workshops and I often deliver my workshops in other people’s group programs or masterminds and get new clients as a result. I even use the same teachings in my group mastermind which I’m generating revenue from too.

I also don’t include my marketing time in the cost of my workshops. I’m of the believe that we do our marketing to get paid not get paid to do our marketing.

You might find that including this time in the price is important but I’ve found that if I try to include creation time and marketing time, it renders the price prohibitive for many.

So let’s work through this with a real example.

Recently I’ve been charging 50€ for a 3-part workshop. This is cheaper than many of my colleagues might charge for 4+ hours of training, but here’s how I do the math.

First of all I figure out how long it will take me to deliver my workshop. Let’s use my Create More Clients with Gift Sessions Workshop as a working example.

This was a 3-part workshop which included 2 x 90 minute sessions plus 1 x 60 minute session. That’s a total of 4 hours.

But there is also some prep before each session. Let’s say one hour per session. This makes for a total of 7 hours.

If I go back to my minimum hourly rate of 150€, that means I would need to make 7 x 150 (1050) in sales for this to hit my target of at least 150€ an hour.

I figured if I priced the workshop at 50€ and got 20 people registered, I would just about make it (and that’s without replay sales).

In the end, I actually had 17 people register for the live workshop which brought in 850€ but since then I’ve made 11 sales of the replay which adds up to another 550€, bringing the running total to 1400€ which brings my hourly rate up to 200€ for the time spent delivering that workshop. This will only increase as more sales of the replay are purchased.

I’m aware that these figures are lower than I would like, but I’m aware that as I grow my audience and the number of live attendees and replay sales grow, so will the revenue.

Hopefully, that makes sense. But just in case it doesn’t let’s work through a second example. My Conscious Business Mastermind.

I charge 135€ per person per month for this program. There’s usually 1 x 75 min call every Tuesday (excluding my holidays). This year for the first time and because the number of participants was high, I decided to run two groups. So that’s 2 x 75 min calls per week. And let’s say I spend about 2 hours a week on call prep and between call support inside the Facebook Group, that means I’m spending 4.5 hours a week on the delivery of this program.

It used to be a lot more because I was doing all of the admin and creating the content from scratch but this is my 5th year of running the Mastermind so much of the content has already been created, refined and improved and I have VA support for much of the admin.

If we consider the average month is 4 weeks long then I’m spending approximately 18 hours a month on the delivery of this program. 18 x 150 = 2700€ so this is the number I need to exceed if I hope to clear my minimum hourly rate. With 22 participants each paying 135€ a month, that brings in 2,970€. It’s important to note that I also don’t run the CBM every single week of the year as I have holidays so when you take this into account it well exceeds my minimum hourly rate.

So my price of 135€ a month feels good to me, despite the fact that people are constantly telling me I should and could charge more. That said, because of the feedback and to account for inflation, taxes and Stripe fees, I will probably put the price up to 150€ next year.

Now this all might sound great, but the downside is when you don’t hit your sales target. There have been years where my Mastermind didn’t make its sales target and the numbers didn’t look so great and the same for some of the workshops I’ve run.

That’s why I always recommend having a minimum number of sales. So that you can say, if this workshop doesn’t get at least X number of sales, I will cancel it and refund people’s money. Or if you know it’s early days and you’re prepared to make less as you build it up, then go into it knowing that this is something that will grow.

My first Mastermind had 6 people paying 100€ a month and boy did I do more work than I got paid for that year, but over time it’s grown into a profitable source of revenue and one that I absolutely love delivering too! So it was definitely worth the hit in that first year.

The formula is, therefore, as follows:

Number of delivery hours (DH) x Minimum hourly rate (MHR) ÷ Expected number of sales (ES) = PRICE

So in the case of a my gift sessions workshop, my formula ran as follows:

7 (DH) x 150 (MHR) ÷ 20 = 52.50 (Price). Hence why I priced my workshops at 50 euros.

Going forward, I do feel this price has to go up somewhat because of what gets taken in fees and taxes.

Now, I’m not saying that this is how you should price your services. I do believe pricing is very personal and even when I run the formula and it looks like I won’t hit my minimum hourly rate, I may still choose the price that “feels right” but I have found this formula helpful and I hope you do too. Let me know in the comments if this breakdown was helpful to you. I’d love to know.

If you’d like to read more from me like this directly in your inbox, you can head here to subscribe to my Soulful Strategies Weekly.