I’m still really interested in seeing if there is some way this could be workable. Although I’m not sure if I’m thinking it’s a good idea because I’m thinking as a Coach, rather than thinking as a business owner.

I really appreciate all the points of view that have been given here.

As a business coach, you could probably do a value-based program using a metric such as increased sales having the first exercise as a benchmarking session and then charging a percentage of the difference. Of course that would be difficult because what if due to other reasons the client didn’t get more business, or despite you doing lots of work with the client, they didn’t put in the effort to implement changes.

It’s an interesting thought and I’d love to see it work for you if you try it!

Let’s make some terms clear. “Value-based pricing” is not commonly used to refer to “sliding scale” or “pay-what-you-can.” It’s more commonly used to refer to pricing structures that side-step the question of what something might cost per hour, but instead price based on what someone gets as a value.

Alan Weiss, who wrote “Million Dollar Consulting” popularized this in certain circles. He made the point that if he came in and did two days of work for a company, but the work he did saved them or made them let’s say $700,000, then he felt perfectly justified in charging $40K or $70K for those two days of work, and the companies would pay him, because it was such a good deal.

He set the price, but not based on his time- instead, it was based on the monetary value of what he was delivering.

By the way, I highly recommend going to value-based rather than hourly-based pricing, because hourly-based just doesn’t make sense. The two articles Joely might’ve been referring to are these:

The Wackiness of Resonant Pricing

and this one:
Avoiding the Horror of the Sliding Scale.

In an interesting twist, I was recently introduced to Tad Hargrave and I was really impressed with him. We talked for about an hour, and part of what he was explaining was all the work he’s done on thinking through what he calls the “Pay What You Can Economy”- and there are a lot of examples of this in action successfully.

However, he has worked through it that you can’t just throw it out there, willy-nilly, because of the dynamic I discuss in the Sliding Scale article above. Instead, you need to set expectations, and use it in particular situations, while giving the customer a context and explanation for how it works.

I’m going to do an interview with Tad, probably in July because of our at-odd schedules, on just this idea. And I think we’ll all learn a lot about it, if you get a chance to listen in.

Has this been helpful?

Mark Silver’s last blog post..Help! I’m lazy!

I’ve seen “value-based” tossed around as a buzzword lately. And until you explained it here, I had no idea what it was. That’s a problem: Your customers don’t understand either. Any “huh?” moment is a lost sale.

Now that you’ve explained it and I’m thus the wiser with a new buzzword, I think it’s not a good idea. Yes, it’s nice to be nice. Yes, saying, “Pay what you think is worth,” is kind. But I agree with the others. The onus of deciding the value of your services falls to the clients shoulders, and they’ll become uncertain.

They won’t say, “What’s the value of what I received?” They’ll say, “Oh god… I don’t know what this kind of coaching is worth… what if I give her too much? Or too little? Oh man. Why didn’t she just tell me…” All bad feelings and it’ll take away from your customer experience.

I think Samar’s idea of limiting services to a select few a month is a good idea. But I wouldn’t do it value based – I would just do it pro bono. If they’d like to make a donation after, great. If not, great. Go all the way or nothing at all.

Lastly, this value-based idea essentially gives a message to clients: “I don’t know what I’m worth. You decide.”

That really what you want to do?

James Chartrand – Men with Pens’s last blog post..Let Biblio Help Build Your Business (And Library)

@ Marc. Everything a person does translates into time = money at some point. There is a definate limit there. Scarcity comes into play….

@ Writer Dad. Thanks Sean!

@ Charlene. Interesting idea. I’ll have a look at that.

Go for it! But not with the selflessness you’re thinking of.

Step 1: Limit your value based clients to a certain number per month (or however long a coaching generally takes).

Step 2: Set a price to your coaching or a certain percentage that they will have to pay. You can keep the % small since you want to target people who can’t afford your services. Once the coaching has reached its end, they can pay according to the value they received.

Advice: Let your clients know your usual rates. This way they’ll know what a bargain they’re getting. It will also give them a scale on how much to pay. One clients high price in exchange for the superb value you offered may not be high for you.

As for the guilt. You can offer them options. A certain % of their profit for x number of months. Or 5 referrals that turn into business for you. Or give your clients the option to come up with something. For the ones that really need your coaching and cannot pay – consider bartering.

I’m just shooting from the hip but I do believe you need to put in more thought and organization into your idea.

I’m excited about what your idea and really hope it kicks off.

P.S: Another thing, get in touch with Lentil As Anything. Find out how its working for them. Talk to them about the challenges they faced and if its been a good business model for them (even though they’re a not-for-profit).

Phew. I’ll stop now Good luck Mel!

Samar’s last blog post..Awarded! I’d like to thank…