One of the most common questions we get from people who are considering becoming private counselors is, “How much should I charge?” And built into the question is often an underlying, even more complex one—“How should I structure my services (hourly, yearly, pay-as-they-go, etc.)?”
There are no easy, one-size-fits-all answers to any of those questions. In fact, I think part of the learning in entrepreneurship is figuring out the answers to questions about things like pricing, not taking a shortcut or just trying to out-copy your competition. So here are a few pricing guidelines to help you make that decision for yourself.
1. First, sell one hour of time.
The best place to start is to pick a price for one hour of college counseling and then go try to sell it to someone. If a family is willing to pay you for one hour of time, it means they trust you enough to see value in what you’re charging. But if you can’t sell even one hour, you’ve got a problem, either with the price, the offering, or both. Offer more, charge less, and see if you have more success. But start with one hour. If that works, you’ll already have at least one customer who may be willing to come back for more. And you’ll have a starting point for your pricing and your programs.
2. Remember that you’re choosing more than a price.
Your price isn’t just a number—it’s a signal of what kind of business you want to run. Do you want to be the most expensive private counselor in town, the cheapest, or somewhere in between? Whatever you decide, choosing a price means that you’re also choosing what type of customer you’re likely to draw (and repel) and what they’re likely to demand from you in return. You’re also deciding how many available substitutes there are in town, the number of clients you’ll need to enroll to hit whatever your budget is, and how much time you’ll need to spend on billing and looking for new clients. You may not have perfect answers to those questions if you’re just starting out. But it’s worth thinking about—and revaluating—those choices as you test your pricing.
3. Remember that price isn’t permanent.
Many budding entrepreneurs get paralyzed by the pricing decision for one reason—they’re afraid they’ll be wrong. But remember pricing isn’t a permanent decision. There’s no law that says you can’t change your mind later. Sure, you’ll have to treat your current customers fairly and make sure you don’t offer tomorrow’s customer the same thing for much cheaper than the customer who paid you today. But all the market research and business planning in the world still isn’t as infallible as actually testing a price, seeing what happens, and then changing it if necessary. And this is a lot less scary when you remember that pricing isn’t permanent.
4. Charge what feels right.
Would you pay this price for your own services? And more importantly, would you feel right asking a customer to pay that price? At some point, you’ll need to look a potential customer in the eye and say, “Here’s what I charge.” Make sure you feel good about that number. I won’t define what “good” should feel like. But “bad” can be everything from feeling embarrassed that you’re not really worth what you’re asking to feeling taken advantage of because you’re charging too little for too much. The way your price makes you feel may change with time and experience (in which case, refer back to #3). But find a number you feel good saying out loud to people. You can’t control how they react when you quote your price. But you get to decide how it feels to you when you quote it.
5. Remember the value of your value.
If you test a price and nobody buys, it’s likely because they don’t see enough value in what you’re charging. So lowering the price is just one option; increasing your value is the other. What change or impact are you offering to them? How do they and their kids feel when they interact with you? Do you inspire trust and confidence? Do they believe that you’ll keep your promises? If they can get the same thing someplace else but cheaper, they’re not going to choose you. But if your customer decides (and they get to decide) that your value is one that can’t be matched elsewhere, your price will become less important to them than your value is. And a superior value is much harder for your competition to match than your price is.