Did You Confuse Your Coaching Income with Your Salary When Setting Your Fees?

There is a BIG difference between a coaching income and a salary.  There are many differences between your take-home pay as an employee and the coaching income you make as a self-employed coach. Just a few of these differences are:

  1. Your company paid for vacations, sick days, holidays, and personal days.
  2. Your company paid for your continuing education and training.
  3. Your company supplied things like a cell phone, computer, internet access, and office. supplies, plus maintenance and upgrades for all these things. Think printer cartridges.
  4. Your taxes were already deducted from your paycheck.
  5. Your company probably paid for all or part of your medical insurance. (In the US)
  6. You may have already had some sort of savings deducted from your paycheck.
  7. Marketing costs, i.e. website, networking were paid by the company.
  8. Administrative tasks provided by company.

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These expenses, plus many others, are now your responsibility as a self-employed coach. Now you pay them out of your coaching income before you get to give yourself a paycheck. Understanding this is necessary if you want to make your living doing what you love.

Charging what other coaches charge is not the way to go either.  And it is rare for a coach to be successful with the trial and error method of fee setting.

Using the trial-and-error method means that sometimes you will base your fees on what you think your competition is charging, and sometimes you will be tempted to quote your rates based on what you think your potential client can afford or will be willing to pay. Sometimes you may even quote a low price just to get the business.

And you may even feel you don’t deserve to charge what you really need to make to pay yourself after you pay for the things your employers paid when you were an employee.  That’s usually because you haven’t been exposed to Profit and Loss statements.

Think in Terms of Take-Home Pay

To make your living as a solo coach you need to think in terms of what your take-home salary needs to be.  And what business expenses you have to pay to stay in business.  And don’t forget your taxes.

 Just One of the Things You May Miss

Many self-employed coaches confuse income (or revenue) with take-home pay when deciding how much to charge. A rate of $100, $200, $300 or even $400 or more an hour sounds great… until you really think it through. After all, that’s a lot more than you were making as an employee…but what you charge now is not all your salary.  You have to deduct your business expenses and taxes and be able to pay for your basic benefits.   Benefits like vacations, sick days, holidays, and personal days, etc.

For most coaches, about 40% of your coaching income will go for business expenses and taxes.  So… if your coaching income is $100,000 your take home pay will only be around $60,000.

If this feels overwhelming, please know there is a simple way to know what your fees need to be.  Just go to Business Skills for Coaches  and sign up for a complimentary discovery session.  You’ll be glad you did!

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