I’ll never forget the day I asked my mechanic how much a new part for my car’s engine would cost. He sat me down and said, “Robin, let me explain what it will cost if you DON’T buy this part.” He proceeded to explain the route of devastation that would result from NOT replacing the broken part, and the costs. It was another case of “pay me now, or pay me later.” Now I don’t ask him what it costs anymore – I just pay, and my car works perfectly.
My mechanic isn’t some spoiled brat child who attended a seminar or read a book and now has suddenly become a self-styled Car Consultant. I chose him because he came highly recommended by people I trust, and because of his track record and years of experience. And I had no contract to sign – I can walk away any time, as can he.
Asking someone what something will cost before understanding the value and the return on investment is like asking a lawyer what your divorce is going to cost. It’s like asking for the price of a car without knowing anything about the car.
There is a vast difference between a cost and an investment. An investment brings a return. If you were getting two dollars back for every dollar you invested, would that be expensive? You would want to invest as much as possible! So until you understand how the investment brings a return, don’t ask how much it is.
The reason why people ask what something costs is so that they can leap to a confusion as to whether they can afford it or not. I always ask people, “IF you only had one toilet in your house, and it was broken and couldn’t be used, and it would cost you $2,000 to get it fixed, would you find the money? If your kid was rushed to hospital with life-threatening injuries, would you find the time to be at his bedside?”
Often, when I often talk with prospective coaching clients, I feel like telling them that they really can’t afford not to afford my services, because if they keep on doing what they’re doing, they will go bankrupt. I have been there myself, and I know what it feels like. Adapt or die, and with their knowledge and experience, they don’t know the way out of their death dive. And often, I decide that accepting the client will cost ME too much in terms of frustration, so I don’t close the sale, or I make my price ridiculously high.
Before you provide some eager prospect with prices, explain to them how your service works, what the return on investment can be, what their alternative is, and what that alternative is going to cost them. A good example is a franchisor I dealt with some time back. If he only did half the things I taught him to do with half the commitment required, his ROI would be massive. He decided instead to “save money” by using use a conman who had purchased a coaching program six months earlier, and he lost his entire business.
Help the client calculate the lifetime value or even the annual value per customer, that is how much a customer spends, on average, in a year, and then work backwards from that in order to gain perspective on the potential ROI on your services. That’s without adding the back end, referrals, added lines, and so on – a conservative estimate is always best. Remember, there is only one of you, and there are millions of potential clients out there. Don’t spend time on prospects who have revealed antagonism, arrogance, or plain stupidity – you might close them and regret having done it!
Finally, use numbers from outside sources to gain credibility and give your prospect perspective, like this:
- In one study conducted by MetrixGlobal LLC, companies including Booz Allen Hamilton received an average return of $7.90 for every $1 invested in executive coaching.
- A survey by Manchester Inc. of 100 executives found that coaching provided an average return on investment of almost six times the cost of the coaching.