Experts estimate that Paul McCartney and now John Lennon’s estate have made over $30 million dollars for the song Yesterday. Not bad for a melody that came to Paul in a dream. While the lyrics took many more months to complete, $30 million is quite the profit for a few months of work.
While coaching doesn’t pay nearly as much as a hit song does, it can still be quite profitable. That profitability, however, depends on the transformation you’re providing and the people you’re serving. It’s important to look at both.
What price could you realistically charge?
Given the transformation you want to provide and the target market you want to serve, how much can you realistically charge?
For example, business coaches tend to make more money than other coaches because business owners will tend to think of coaching as an investment in future profits and so will willingly pay more.
Coaches that specialize in helping millennials have a harder time charging more for a couple reasons — millennials may have less money and be less willing to pay for coaching.
You’ll also need to consider how much pain your transformation alleviates. On average, people will pay more money to alleviate pain than pay for pleasure. And people are usually unwilling to fork out a ton for prevention.
What kinds of profit margins do you expect to make?
Most coaches have pretty high profit margins because our expenses are pretty low.
Consider this fun scenario...
Imagine walking to the coffee shop to meet your client who pays you by check. Your only expense would be the coffee (because you’re not a jerk who would go to a coffee shop and not buy anything) and the clothes you’re wearing. You may spring for a notepad and pen to take notes, but that’s it. You don’t even need a phone! Coaching can be one of the least expensive businesses around.
However, it can and does get more expensive when we add tech. For example, I use a computer ($2,000), AcuityScheduling ($10/month), and Zoom ($15/month) for my coaching calls.
I also use Ontraport ($300) for my marketing and sales.
It can add up. So make sure to take into account the expenses to run your business.
How many clients do you need to get to six figures (if that's your goal)?
Once you’ve figured out the profitability of your coaching business given how much pain your one transformation alleviates, how much your ideal client avatar will pay for that transformation, and the expenses you’ll have for your coaching business, then you can look at the number of clients you’ll need to get you to the amount you want to make.
My suggestion is to never go over 25 clients per week. The reason for this is that you’re not just a coach. You’re also a business owner. And with that comes admin, customer service, marketing, sales, and everything else it takes to run a business.
Let's say you want to make six figures per year...
$100,000 per year = $8,334 per month
$8,334 / 25 clients = $333.36 per client
$8,334 / 20 clients = $416.70 per client
$8,334 / 15 clients = $555.60 per client
Hey, look at that. Six figures seems kinda doable, doesn't it?
To sum up, the three things to think about as you decide on a niche are...
- 1What price could you realistically charge?
- 2What kinds of profit margins do you expect to make?
- 3How many clients do you need to get to six figures (if that's your goal)?
Did you find this article helpful? Let me know in the comments below.
With love & joy,
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