How to structure your pricing model

Your pricing model is how you will charge for your services, and the best approach is one that clients can easily understand and that provides you with a steady income. To get started, you need to decide whether you want to charge per session, offer discounted pre-paid packages, or use a recurring subscription. A simple and effective starting point for many is to offer both a standard pay-as-you-go rate and a small discount for clients who commit to a block of sessions upfront.

Common Pricing Models Compared

Each pricing structure has its own benefits for you and your clients. Understanding these will help you choose the best fit for your business goals and the type of service you offer. Here’s a breakdown of the most popular options:

Model

Best For...

Pros

Cons

Pay-Per-Session

New businesses or clients who want to try your service without a big commitment.

Simple to explain and sell; low barrier to entry for new clients.

Unpredictable income; more administrative work per booking.

Pre-Paid Blocks

Encouraging client commitment and securing income in advance.

Improves cash flow; rewards loyalty; reduces payment admin.

Discounts can reduce profit margins; requires a system to track used sessions.

Monthly Subscription

Ongoing services where you want to build long-term client relationships.

Creates stable, predictable recurring revenue; automates payments.

Can be a bigger commitment for new clients; requires consistent value delivery.

Fixed-Fee Course

Specific, time-bound programmes like workshops or exam revision courses.

Clear, one-off payment; value is tied to the outcome, not just the hours.

Income can be irregular; requires a fully developed course before you can sell it.

Tips for Setting Your Prices

Once you've chosen a model, you need to decide on the actual price. Here are a few key principles to guide you:

• Work Out Your Costs: Before you can set a price, you need to know your numbers. Calculate your hourly running costs (e.g., insurance, software, materials) and factor in the time you spend on non-billable tasks like lesson planning and admin. Your price must cover all these costs and leave room for profit.

• Research the Market (But Don't Just Copy): Have a look at what competitors are charging to get a sense of the going rate. However, your price should be based on the unique value, experience, and results you provide, not just what others are doing.

• Focus on Value, Not Just Time: Are you helping a student pass a critical exam, or teaching a valuable career skill? Your price should reflect the importance of the outcome you provide, not just the hour you spend with a client.

• Keep it Simple at the Start: When you're just starting, it's often best to pick one or two simple models. A single hourly rate and a discounted block of 5 or 10 sessions is a fantastic place to begin. You can always introduce more options later as you learn what your clients want.

Remember, your pricing isn't set in stone. It's a good business practice to review and adjust your model and rates as your business grows, you gain more experience, and you better understand what your clients are looking for.