As we get closer to the release of our upcoming just-for-coaches class, we have more questions in the proverbial mailbag to answer. (The two previous questions are here and here.)
Today’s question is the ever-common, “What will make me the most money as a coach?” question.
There are more than a few different business models out there for coaches, but it’s probably safe to say that they can be boiled down to four different ways of making money.
First, there’s the Big Group model.
In the Big Group Model, you’re looking to get as many butts in the seats as possible. Live butts, live seats. This typically happens by way of classes, teleseminars, or other things that could safely be categorized as “live programs that we want 100 or more people to buy.”
Sometimes these Big Group programs can be expensive, especially if they have some level of interactivity in them. (Think Q&A sessions, office hours, email support, or a certain number of coaching hours included.)
Sometimes they’re expensive, sometimes they’re not. If it’s over $1,000, though, it probably doesn’t fit in this category because most people can’t fill enough $1,000 seats to call it a big group. Usually with a lower price point comes lower (or no) interactivity, which everybody understands because it’s designed for the people who don’t want to pay for the bigger Platinum Mastermind Masterful Mastery program. You’ll generally get more people in this kind of program, because they can pay less.
If you can fill the seats – and that’s truly IF you can fill them – you can make this your only income stream, now and forever, and be just fine.
Then, there’s the Small Group model.
In the Small Group model, you’re looking to get fewer butts in the seats, mainly so there can be a much higher degree of interactivity. Coaches call this interactivity “intimacy”. A common range would be 5 to 25 people in a small group.
The advantages that come with a Small Group model is that you’ll probably be able to charge more per person than you would for Big Group, and it will be worth it to them because of the increased access they get to you.
In a Small Group, there’s a 100% chance that the coach will get to know the participants personally and, in some cases, tailor the program to fit their specific needs.
This is good for the participants for obvious reasons, and it’s good for the coach because the people who work with them in a Small Group setting are many times more likely to develop the kind of strong loyalty that leads to repeat business, private coaching, and a lot of referrals.
Small Group classes can also be easier to sell at times because you can niche it down to a specific audience and you only need to sell a few. If IttyBiz had a class called “How to run a coaching business while homeschooling a special needs kid,” it would probably be easier to find 25 buyers than it would to get more than 100. (Those 25 buyers would also pay more.)
What makes this model nice for coaches, other than the intimacy, is that you can target an underserved niche without getting as much competition – you’ll have cornered the market before too long, while everyone else will think that the “real” money is in Big Group classes or products.
Of course, there’s always the Products Model.
You can make a lot of money going the Products path, whether you’re selling physical products or downloadable ones.
Or, you can make no money at all.
It’s a common refrain that selling products is the path to easy money, and that trading hours for dollars is what stupid people do. But as The Dude in The Big Lebowski wisely said, “Yeah, well, you know, that’s just, like, your opinion, man.”
Yes, you can make a lot of money selling products. They are relatively easy to make. You can make them fast. With the right copy, they fly off the shelves, and you can sell them again and again while you sleep.
Which is exactly why it so easy for your competitors to do the exact same thing. Only they’re in Round Two, and can look at your products and make better ones.
Oh. Nobody seems to mention that part. But all is not lost! And we shall tell you why at the end of this post.
Finally, there’s the One-On-One Model.
Again, many people will tell you that trading hours for dollars is not what smart coaches do. Generally, they tell you this in $2,000 Big Group programs, so you’ve got to take that with a grain of salt.
If you are trying to go the Celebrity Million-Dollar Coach path, then yes, Big Group (mixed with high-priced products) is probably the way to go. But at that point you’re really a professional marketer who does coaching on the side, to one degree or another.
That doesn’t mean it’s wrong, it just means know what you’re getting into and decide if you’d rather spend the majority of your time marketing rather than coaching.
Here’s the thing about One-on-One coaching. You generally make less money per hour starting out and more money per hour as you get better at what you do and you get more established. (You also book more hours.)
You stay very close to the pulse of your clients and the market, which means you have an inside advantage for staying competitive, discovering emerging market trends and speaking in the language of your clients.
You also get a lot more experience, which means you are more prepared to create products (and Big Group classes, and Small Group classes) that stand above the competition. Your stuff tends get the reputation of being better than everyone else’s because, well, you talk to humans on a daily basis.
You also create an expanding base of strong referrals – and by “strong” we mean that people don’t tell their friends that you’re dreamy and they should read your blog – they tell people about the actual problems you solved for them. So as time goes on, you can spend less time on marketing.
Basically, you get a whole lot out of walking your talk. And while some people say you’re trading hours for dollars, you’re trading that time for a whole lot more than just your hourly rate.
So which coaching model makes the most money?
It depends. Anyone who gives you a blanket answer on this isn’t thinking about it for more than five seconds.
Here’s what I can tell you.
If you have a big list and you are better than average at marketing, you’re probably going to make the most money in Big Group. But you have to be very, very good at selling to people who will never know you personally and have probably seen your competition up close.
If you are better than average at solving a very specialized problem, and you can market competently, you probably stand to make the most money in the Small Group model. Pick an underserved market or target a relatively specific, underserved problem, and you’ll be able to command higher-than-average rates because what you’re doing is specialty.
(This assumes you’re solving a problem that people have the capability and willingness to pay for. That’s important)
You can also make a fair bit of money selling higher-than-average-priced products because your market is aware that no one else is creating products that serve their need. We’re not talking price-gouging here. In the real world, “How to Pick Tech Stocks in 2013” is going to be more expensive than “Stocks for Dummies.”
If you are very good at making products both rapidly and better than your competition, and you are better than average at marketing, you probably stand to make the most money in the Products model.
Essentially, this is like being an author and a marketer rather than a typical coach. For those who have schedule constraints that make having a regular practice hard to pull off, the right coach can make the most money with this model.
If you are better than average at coaching people one-on-one, and you can market competently, there’s a good possibility you will make the most money – over time – in the One-On-One Model.
Continue to get better at what you’re doing until your referral system gets you to the point where you don’t have to do as much marketing, and you’ll be in a strong position to command satisfying rates. You’ll also eventually be in a better space to run classes and make products, too. It’s a less sexy path, but it can open up more opportunities long-term than the other models.
Of course, that’s just my opinion. Your situation and goals are different, so your mileage may vary.
We will discuss this over the next couple of posts.
Your homework for today:
Think about this.
You’ve heard a lot of things from a lot of people about the best way to make the “real money.”
Each of these options comes with upsides and downsides that are determined by your experience, your capacity, your marketing skills and, most importantly, what the hell you want to do with your life.
Just for today, forget about what everyone has told you in the past.
And think about which path seems right for you.