Case Study: A New Coach’s Negotiation

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A friend of mine is a relatively new executive coach. He starts with a complimentary coaching session, as some do, with the hope that people will see the quality of his guidance. A recent prospect wrote that while he enjoyed the session, the price point for regular monthly coaching was too high for him.

On the one hand, this coach can’t just discount his prices every time someone says it’s too high. Sure, products and services may offer a small discount (e.g. 10% off if you commit to a year), but generally services need to provide price integrity. Otherwise, word gets out that people can express concern and get a lower price. On the other hand, this coach doesn’t have many clients right now, and his time is perishable (he can’t simply store up hours when he doesn't have clients now in order to take on more clients later). He also needs marketing support since he’s relatively new and doesn’t yet have a well-established brand.

Instead of just accepting that the price wouldn’t work, or heavily discounting, he negotiated a tradeoff. Here’s a modified version of what he sent (I’ve changed the numbers, but it reflects the general trade-off).

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I am very happy that you found the session useful. Let's make sure that you continue getting value. You mentioned that you have concerns cost wise, and I want to suggest a path forward, so it works for both of us. My coaching is $1,000 / month. In our case, I want to make an exception and to propose $500 / month. I would ask though, that you commit to at least three months and that I can use you as a reference for the subsequent twelve months. How does that sound to you?

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He didn’t simply discount the price. Instead, he traded off price for something else: commitment and references. Part of the discount is the traditional volume discount; he’s asking for a commitment albeit a small one of three months. More importantly, for the lower revenue the coach is getting a reference customer—someone who can independently validate the value of his coaching—which will help him land customers, and so has true monetary value to him. Note that the volume discount plays into the reference. After just one more session the client may still see him as good, but the coach believes that with at least three months of sessions he can have a bigger impact and get a better reference.

(Implicit is that the reference will be honest. If the client really doesn’t like the service, the coach won’t ask him to lie, he’d simply not use this client as a reference. There’s implied trust that the client will give a reference in good faith and also would be upfront if the reference itself isn’t going to be strong so the coach can know not to use it.)

The person being coached is saving money, what he values most in this transaction; he’s offering being a reference, something that has low cost to him. The coach is getting references, high value for him, and offering his time. In this case since the coach is new and has excess time, it’s something low cost for him.

This is key in successful negotiations, trading off items between parties that have different cost-value relationships to each. One side trades what is low cost to them for something high value, and the other does the same. In this way both parties win and create more value for everyone in the deal. (Sometimes this is referred to as “win-win.”)

Note that what’s true today, may not be true tomorrow. Sometime in the future, the coach may have a full roster of clients, so giving up an hour for a discounted rate may not be worth it. Likewise, he may not need references at that time since he’ll have plenty from other clients.

As I noted in How to Earn $30,000 in 30 Minutes or Less, learning to negotiate can have huge returns throughout your career. This is just one technique. I’d highly encourage you to learn more from my own sources (other negotiation articles, or The Career Toolkit, Essential Skills for Success That No One Taught You) or other books, articles, and classes you can find online or elsewhere.