You’re finally confident enough to raise your rates, but your coaching client says, “No Way!” What do you do when your client resists your new rates? Melinda speaks with Bhoomi Pathak, COO at Mirasee, about how to deal with price resistance.
Episode summary: As your coaching business experience and expertise grows, there inevitably comes a time when you decide to raise your rates to better reflect the value of your services. But when you increase your prices, you’re likely to be confronted with strong reactions from your clients. And there’s a good chance this will happen more than once in your coaching career. Or maybe a new client is resisting your existing price, and you’re not sure how to respond. Should you argue for your rates or focus on your client’s results instead?
Our host Melinda Cohan speaks with Bhoomi Pathak on this episode of Just Between Coaches about this challenging coaching situation --- price resistance. Bhoomi is the co-owner of and COO at Mirasee and works very closely with Mirasee’s ACES coaches. During this session, they’ll talk about how to communicate your rates more effectively and what to do when clients or prospects resist your price.
In this episode we discuss:
- Why it’s good to be confronted with price resistance.
- How has the coaching industry changed its pricing models?
- What mindset do coaches need to have when talking about the price of their service?
- Should you consider giving your client a discount when your rates go up?
- Why do coaches fear the money conversation so much?
“If you have someone who's resisting your price, it means they're really interested in working with you.” – Bhoomi Pathak
Guest bio: Bhoomi is co-owner and COO at Mirasee. After a career in management consulting working with Fortune 500 companies, Bhoomi joined Mirasee in 2013 and was responsible for putting in place structures, processes and execution capabilities that enabled us to grow 10x in five years. She continues to build the success team and the infrastructure to increase our scale and impact in serving our community of expertise-based entrepreneurs through online courses and Mirasee's flagship business coaching program, ACES .
Resources or websites mentioned in this episode:
Guest - Bhoomi Pathak
Host - Melinda Cohan
Producer - Cynthia Lamb
Executive producer - Danny Iny
Writer - Michi Lantz, Melinda Cohan, and Cynthia Lamb
Assembled by - Geoff Govertsen
Audio Post Supervisor: Evan Miles, Christopher Martin
Audio Post Production by Post Office Sound
Music soundscape: Chad Michael Snavely
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Episode transcript: Price Resistance – How To Respond When Clients Resist Your Rates (Bhoomi Pathak)
[00:00:01] spk_0: Mirasee
[00:00:05] spk_1: But you know, that's not how business works. That's not how we can build relationships with people. So, um it's really important to sort of separate ourselves, I think from our services and from our business so that it's not quite so entangled with our self worth. [00:00:24] spk_0: Hello and welcome to just between coaches, the podcast that tackles difficult coaching conversations. Head on. My name is Melinda Cohen and I run a business called the coaches console. The coaches council has supported more than 50,000 entrepreneurs and creating their own profitable coaching business. Yeah. Today we're going to talk about a difficult but important topic and a reaction you'll probably confront more than once in your business career. I'm talking about price resistance as your business experience and expertise grows, There inevitably comes a time when you decide you want to raise your rates to better reflect the value of your services or maybe a new client is resisting your existing price. How do you tell your clients and what do you do when someone resists your price to talk about this? Today, I've invited Bumi Patek, the CFO at morrissey. But before I bring Bumi on I'm going to read a listener mail from a coach that reflects today's topic. As I've said in earlier episodes. Unless you tell me otherwise, any email that you send me that we read on the air will be anonymous. We want to make sure it encourage you to be open about what's troubling you without worrying about what your clients might think. Here's what anonymous had to say. Dear Melinda. I have an old client that wants to rehire me and my services. She would be a great client for me and my services are exactly what the client wants and needs. But we are stuck regarding the price. She is reluctant to pay my current rate. I am convinced my pricing is fair but I'm starting to feel insecure about it. How do I argue for my pricing? Should I make an exception in this case? Dear anonymous. I am so glad you brought this topic up. It can definitely be tough for coaches to talk about money but I have to tell you from the get go. I never argue for my rates. I argue for the clients results. If you get into a discussion about pricing before you've established the value of your services that will result in a bidding war. That's never a conversation I want to get into. In fact, if my clients are objecting to my rates or want to negotiate my rates, that's a big red flag that tells me they're making coaching all about the money and not about the results. It's also assigned to me that I need to shift the conversation. I need to get the conversation refocused on the value that my coaching will provide today. On just between coaches is our guest. Bumi Patek. Bumi is the chief financial officer at morrissey. She also works very closely with morrissey's aces. Coaches welcome. Bumi [00:03:06] spk_1: great to be here, Melinda. [00:03:08] spk_0: I'm so excited to be here and to be talking with you about this topic. I couldn't think of a better person to have on the show for this. [00:03:15] spk_1: Well thank you. I'm excited. It's such an important topic. We serve a community of coaches and consultants. A lot of our coaches and consultants to work with us. They struggle this exact same issue. [00:03:24] spk_0: Bumi, could you please tell us a little bit about yourself and your background just to give our listeners a picture of who you are and where you come from? [00:03:31] spk_1: Yeah, for sure. So my background is actually in corporate consulting and in finance. But seven years ago I joined my husband and now business partner, Danny Any on his business called Mirror. See we help expert entrepreneurs, the coaches, consultants grow their businesses. We do that through two mediums. So we have online courses where people can take the online courses and we support them with it. And then we have an online business coaching program called Aces. Um So for the last five years I've literally worked with hundreds of our clients to help them grow their businesses. Worked with a team of coaches um to help them support our clients as well. [00:04:06] spk_0: Awesome. Well I am excited to have you on just between coaches and for us to dive into the issue of price resistance to start off our conversation. Can you give us your view on price resistance and why so many coaches face that problem? [00:04:22] spk_1: Yeah. Well first of all I just want to start by saying that this is a really good problem to have, right? So if you have someone who's resisting your price, it means a really interested in working with you and they just have to figure out how to make it happen. So it's great that you're getting price resistance. Just enjoy it. So it's not an objection. It's really a signal that they are ready to work with you, Melinda. I completely agree with. Which is that earlier around, you know, if they're really resisting to your price, it's because they don't see the value potentially on the other end. Sometimes what I've seen happen is that we were trying to raise our price. You know, we hit the price resistance because people were trying to serve, they're not expecting it in their caught off guard. [00:05:00] spk_0: Well, that's really interesting when you say that the resistance is really an indicator is not a bad thing. It's just an indicator that they're willing to work with you. They just don't know how, so you don't always have to see it as a bad thing. So that's fascinating when I started my coaching business, the standard at that time was time based pricing 20 years ago. That's what everybody was doing. The coaching industry followed the pricing of other service entrepreneurs like bookkeeper or lawyer, right? You get X. Amount of coaching time and you pay X. Amount of money. It was all about the coaching sessions. So basically time for money. Bumi, what would you say to that time based pricing? Is it still prevalent in the coaching industry? Or has that changed? [00:05:45] spk_1: I think we've seen changes in the last few years. I feel like the coaching industry has become more mature. Um And as you know we've become more mature, we've started to see that it's not about charging an hourly rate, it's about really delivering on an outcome that your client is really interested in and then if you're trying to deliver on that outcome then it's not about what are you charging per hour and how many hours you're showing up, but it's more around um you know looking at different packages. So we've seen, you know, coaches offer more and more packages over the last few years and the package are really based on outcome and value versus you know, you get my time for X amount or whatever [00:06:21] spk_0: interesting. Now the way I see it, if you allow the conversation to be about price, it will absolutely always be a hard conversation my business uses like you described that result based pricing model which as I was saying before, it focuses on the outcome that the client can get and the result based package says, here's the outcome when you work with me here are the results you're going to get when you show up and do the work. And then I as a coach get to say in order to support you to get those results. Here's everything including in your package, just like you were describing, Bumi. [00:06:56] spk_1: Yeah, absolutely. Because it's not just about showing up on coaching calls, it may even include some email support. It may include some resources that you're giving your clients. So it's the, you know, it's everything that you need in order to get the result you wanna be able to provide right? And that goes beyond just the, you know, hourly coaching [00:07:12] spk_0: exactly now, to be able to have the conversation about rates and pricing, you need to have the right mindset, you can't be triggered about money and attempt to go into a conversation where somebody's going to have the money resistance or money objections, you'll just swirl into that downward spiral. So I always like to make sure I or the other coaches that I work with, they've got the right mindset around money. Now, Bumi, I know you've got a lot of experience managing the mirror sees team of coaches. What mindset do coaches need to have when talking about the price of their service? [00:07:46] spk_1: Yeah, I mean money is such a trigger issue for so many people. So when we're looking to price, our own services were basically selling ourselves and our whole identity and sense of self worth is tied into that. And so, you know, we're making ourselves vulnerable when we are asking for a sale when we're asking the client to pay a certain price for our package because there's always a fear of rejection. And what does that mean if the client doesn't want to work with me at this price? You know does what does it mean about my self worth and about the value that I have to offer and when we get thinking in those terms then it becomes really about us and our self esteem and they need to protect ourselves and get defensive and then we don't want to have that conversation. We just want people to accept. You know we want to name the price by email. Have the male is the money and so we never have to even talk about it. But you know that's not how business works. That's not how we can build relationships with people. So it's really important to sort of separate ourselves I think from from our services and from our business so that it's not quite so entangled with our self worth. Melinda. Has that been your experience as well? [00:08:57] spk_0: Yeah, it's it takes both. Like we have to really address how we're showing up. What we believe the value is that we bring to the table and separate that from the packages and pricing that we provide to our clients and you know, I just want to add to that if you as a coach, you know have the mindset that your work is a nice to have luxury, then that's also going to make the money conversation really difficult because you don't even believe in yourself, you don't even believe in your services and that's when you can drop into sales mode and now you've got to convince yourself and convince people and you feel like you're manipulating and that's the bad place I never want to get to and you don't want to train people to negotiate with you, right? Like if you give in to that once, then you're basically letting them know that you're open to future negotiations. [00:09:49] spk_1: Yeah, you're training them to negotiate with you. Yeah, [00:09:52] spk_0: Yeah, Right. And I know that you've dealt with this and you know, teaching, advising other coaches, how can a coach communicate that their service is a necessity to their clients? [00:10:03] spk_1: That's a great framework. That's a that's a really great way to think about it. Um, I think it comes down to making sure you're solving a problem that's important to the person that you're talking to and you can't really convince someone that they have a problem, right? You can only tap into the problem they already have and then communicate in a way that gets them to see that yes. You know, this is solvable and they're working with you is going to accelerate or help them get there [00:10:28] spk_0: exactly. Now, going back to the question from anonymous, if you had a longtime client who questioned your rates, would you consider giving that person a discount? [00:10:39] spk_1: That's a really interesting question. You know, a lot of factors come into play, but something that anonymous said in their letter was that there would be a great client for them. So if you, when you're trying to raise prices and people have worked with you before, you know, there's an expectation that they are bringing to the table in terms of what they're getting from you and what they're paying. And so first of all, the fact that they want to continue working with you and they want to come back and work with you is great, right? Because that means they really got a lot of value the first time around And then they also have certain expectations in terms of how much the service would cost. And so when you came back to them with, hey, by the way, these are my roots now, they were thrown off a little probably because they were not expecting it. And so oftentimes the resistance comes from being surprised. And so in that case, you know, I can see a justification for going back to them. You know, letting the client in on your thinking and potentially offering to work at the original rate that you had worked with them before and letting them know that in future, you know, the rate might go up. I don't ever want to feel like I'm on opposite sides of the table with my client, right? I don't want to be negotiating with them. I want to be on the same side as them. Like I think it helps if I can kind of let them in on my journey, you know, and something like, yeah, you know, when I started working with you, I was just starting out, I learned a lot. It was really great. You know, clients like you really helped me get to where I am today. [00:12:05] spk_0: I often like to use the evolution of my coaching practice rather the evolution of me and my services, I like to put it on my coaching practice. And so when I was a new coach and I charged in the beginning, I also charged for my time and then I began to switch over to more of a result based approach where I could bring more to the table to support my clients to get even better results. And because I'm bringing more to the table, therefore I'm raising my rates and these are the new rates because you're getting more than just the coaching session, which is what it focused on in the beginning, when we first started together, it's not just about time, but they're getting more support, different types of support that gives reason for an increased price rate. [00:12:50] spk_1: Yeah, I love that. That's great framing [00:12:53] spk_0: Now about me, let's talk about fear and money right now, because about 90% of the coaches that we get in coaches console there in their first one or two years of business, they are usually so frightened about the money conversation that they will end up pricing their coaching based on a number of sessions or duration, like, you know, three-month coaching package. We talked about that before that time based model and because there's so much fear about the money conversation, the rate is usually extremely low and so when we work with them we teach them how to get out of that time based pricing and move into the result based packages like we've been talking about and so why do why do coaches fear the money conversation so much? Why do you think that is? [00:13:38] spk_1: Why don't we all fear of money conversations? I mean I don't remember the last time I looked forward to a money conversation even with my husband. So I don't know, I think it's just it's it's just an awkward conversation. We're not grazed in a culture to talk about money openly and transparently and you know without a lot of baggage and shame and stuff. You know a lot of us like we're used to having jobs and working with or working for other organizations and so we never have to have the money conversation right? We only have to have it when we're accepting the job offer and then money gets deposited or accounts from some magical money tree. So it's not a conversation that we're used to having. I think like everything else you get better added the more of these conversations you have And what I found for me that works for me is you know, fake it till you make it right. Try to get through like your 1st 10 money conversations and then you're not going to have any issues with it. It's going to just become second nature and part of running a business because it's, you know, having many conversations asking for the sale. Those are really critical components of owning a business. You don't have a business if you can ask for a sale because you need pain clients, right? [00:14:45] spk_0: I really like what you said. It's something that we're not used to. The culture doesn't have to be personal. It's just the culture that so many of us have been brought up in. It's not conversations that were taught to have, especially if you're used to having like you were talking about your easy to having a job and now you're in a whole new situation and so you just have to practice and practice and practice and then it will become less filled with fear and more like any other normal conversation. [00:15:13] spk_1: I'm not sure why, but we feel like this is a conversation like making sales or having sales conversation is a natural thing that we should just automatically know how to do. We know how to walk. And if we come at it from that perspective, then it becomes very difficult to you know, accept rejection and nervousness and stuff. That comes from having to have these conversations because we think that we need to already know it rather than seeing it as a skill that can be learned [00:15:41] spk_0: right? And it starts with mindset like we were talking about earlier. And then there's just things that you need to know about the skill set and then you just keep practicing it. Now, going back to the dilemma that anonymous is facing, what would be more important to you keeping the client, if you have that good relationship or staying firm with your increased price, which one would you choose? Bumi? [00:16:05] spk_1: So it's not necessarily about keeping the client or raising my rates. I don't see those as being mutually exclusive first of all, but it's about making sure that I'm I'm honoring them and I'm honoring their feelings about me and I'm making sure that they are well supported and they'll serve if not by me, then maybe by someone else when we raise prices for our program. You know, we had some pushback from people who had been with the program for a couple of years and they were feeling that we betrayed them because we raised prices on them. But the reality of the situation was that our cost to fulfilling the service had gone up dramatically. We're including a lot more things than we had when we had first started the program so that it wasn't really sustainable for us to continue offering the program at the same rate that we have been offering for. So, you know, I got a call to them. Absolutely heard them out. Made them feel, you know, really hard. I acknowledge their concerns acknowledged that the validity of what they were bringing up I shared with them all the reasons why wasn't sustainable for us and that I value them as people. I really think we can help them. I value our relationship. I value the contribution they made to the program over the years. And so I'm I'm happy to extend them the guaranteed pricing for another year. I didn't shut them down. I didn't get defensive and they also appreciated the ability to work with us for an extra year at the same rate that had been used to paint and when it came time to renew, they all renewed at the new rate without any objections. So I guess it's about valuing the relationship and the trust factor and having conversations and doing things that are in alignment with fostering more trust and more connection. [00:17:47] spk_0: I love how you just took us through that whole conversation so that we could see like how you navigated each part of that so that you presented the idea, the reasoning behind it. You acknowledged what they needed but still teed up what the new prices were going to be. So the next time it came around there was no surprise and they just I love how you took us through that whole conversation. Thank you for bringing us inside that behind the scenes. Look at how you navigate this, [00:18:16] spk_1: you're very welcome. [00:18:18] spk_0: So now anonymous, let's summarize some of the things that we talked about today. Price resistance is not unusual. You'll have clients who will question your rates, but there are a few things you can do to handle that better or even avoid having the conversation at all. First check your own mindset about money and if you're triggered by money, talk, take that to your coach before you talk to your clients to focus on results. When you're talking about your pricing, that is key. And make sure you establish the value of your services three. If you want to honor a longtime client, that's fine. I suggest you do that by offering the guaranteed rate for a defined time frame rather than forever and make sure you don't do the oh by the way, here's my new rate. People don't like surprises and four see your services as a necessity for your clients that is required if you want to practise result-based pricing, which I completely recommend. And finally I believe as coaches and as business owners we have a responsibility, a responsibility as coaches to organize ourselves in a way that we can speak confidently about our rates and about the investments that people make with us because the more coaches keep their rates low because of fear to have the money conversation, the more the whole coaching industry diminishes overall. Bumi. Any parting words? No, [00:19:45] spk_1: I think you did great. This was a lot of fun. Thank you so much for having me. [00:19:49] spk_0: Well, I just want to thank you for being here. I want to thank everybody for listening in to this episode of just between coaches and also a big thank you for this conversation. It is a necessary conversation and Bumi, I hope to do this again with you sometime soon. [00:20:03] spk_1: Sounds like a plan. [00:20:05] spk_0: If you like today's episode, you'll surely enjoy the inspirational episodes over at making it in each episode, a successful entrepreneur will share what making it means to them and what they've learned along the way. I'm Melinda Cohen and you've been listening to just between coaches, Just between coaches as a mere CFM original production. This episode was produced by Cynthia, lamb Danny. Any is our executive producer. I wrote this episode with me, She Lance and Cynthia. If you don't want to miss future episodes, please subscribe to Apple podcasts, Spotify or wherever you're listening right now. And if you like the show, please leave us a review. It's the best way to help us get these ideas out to more people. And if you have a question for just between coaches, put the show title in the subject line and send it to podcasts at mira si dot com. That's podcasts, plural podcasts at Mira asi M I R A S E dot com. Mhm mm.