There is no magic formula for working out what to charge clients for your coaching or training expertise but with some coaches now passing the £1m earnings barrier against the backdrop of the credit crunch, should professionals be reassessing their worth? Louise Druce investigates.

The spectre of the credit crunch has been looming large in many sectors, forcing businesses and households to tighten the purse strings. The good news is it seems that the current gloomy economic outlook hasn't yet justified a spike in training and coaching fees – and may not for some months to come.

In fact, the industry is looking fairly buoyant in terms of pay, with the credit crunch having an effect in other ways. According to a state of the sector survey by TrainerBase, the majority of trainers have generally maintained the same rates over the last 12 months and don't expect them to change over the next 12 either. Instead, 75% predict believe their turnover will actually increase, suggesting busier times ahead.

It's a situation Robin Lodge, director of The Institute of Leadership and Management training provider People Development Team, can attest to. "The credit crunch hasn't affected our training fees," he confirms. "We're seeing an expansion of business rather than a reduction because people buying training are looking more critically at what they're getting for their money."

And that is where economic factors could be coming into play. "We've seen new, potential client companies more likely to ask two or three providers to give quotes, whereas perhaps in the past they would go with one provider on a recommendation," says executive coach Linda Aspey, of Aspey Associates. "With existing clients, where there is an ongoing relationship, you would deliver the same sort of value and maybe add some extras you might have charged for before.

"Equally, we're finding people are more consciously choosing to offer coaching to people when times are tough. If a person has a lot to manage under tighter conditions, it's going to cost a lot of time, effort and money to re-recruit for that role if that person is likely to leave, so the investment in coaching to help them through those tougher times is seen as being a good investment."

The million dollar question

While fees are likely to remain the same, there is the question of how much people should be charging in the first place. Personnel Today reported that last year, two coaches at coaching firm Shirlaws passed the £1m earnings barrier. According to the International Coaching Federation's survey for 2007, the average annual fee was £32,500, up to £55,994 for full-time coaches.

While the duo at Shirlaws are more the exception than the rule when it comes to earnings in the coaching industry, stories abound of professionals charging anything upwards of £6,000 per day for their services. So should coaches, trainers and clients alike be wary of high or what might be perceived as over-inflated fees? "Define an over-inflated rate," Peter Mayes, chief executive of TrainerBase, contends. "This is a misnomer. A coach/trainer will charge what they feel they are worth based on the benefits they can offer. If that means they charge £500 an hour then so be it. If they fail to deliver then they are unlikely to get repeat business."

"Our research into rates indicates a squeeze. Sadly this is as much to do with jobbing and hobby trainers charging unsustainable low rates as purchasers forcing down prices."

Peter Mayes, TrainerBase

Instead, the experts say people should be looking at value for money. "There are a number of coaches and trainers out there who are perhaps charging more than they're worth," says Lodge. "But things are only worth what people are prepared to pay. There is a joint responsibility. The training organisation is there to make money – it's got to be profitable – but the client has also got to understand what they're getting for their money and whether it's worth it for them. It's no different from any other consumer choice you make."

The equation seems simple enough: if a rate seems too high, don't take it, say Mayes. What concerns him more are rates being too low. For example, he believes a coach charging £25 per hour is unlikely to be running a sustainable business model.

You do the maths

When it comes to devising a formula whereby coaches and trainers can work out what they should be charging, there is no industry standard. While admitting it might be simplistic, taking all factors into consideration, Mayes suggests your chargeable rate should equal your desired disposable income, plus the required business costs, divided by chargeable hours.

Lodge says his company knows what margin it wants to make so builds in the costs and puts this on top. But programmes tend to be bespoke in terms of what they offer and what the client wants. "You could spend £250 on a trainer and they just come in, deliver and walk away again," he says. "Or you could spend £2,000 on a trainer that will do a diagnostic, produce all the materials, brief people around the business before delivering on the day and providing support after the workshop. The question is, is it worth the price difference?"

Aspey also says she tends to look at the whole picture surrounding each individual client, including overall training and development budgets, what their expectations are, length of the assignment, what they're accustomed to paying etc. Discounts may also be factored in. "We have some small companies that have limited training budgets but we've worked with them for a long time so we would make sure our offering is affordable and they get value for money," she explains as an example.

In theory, neither experience nor qualifications should make a difference to the fee being charged if Mayes' model is adopted, as a coach or trainer has to make their work pay regardless. However, if asked whether it does make a difference, he adds: "I would suggest yes, as those that are trained are more likely to feel confident about what they do."

Lodge questions this further. "Qualifications determine capability; they don't determine whether someone is going to deliver to that standard in the future. Therefore, there is an element here as to what quality control systems the organisation has in place to make sure those qualifications are used to best effect with their clients," he says.

"There are instances where there are so many qualifications out there, are people really using them and which ones have the greatest value?"

Aspey agrees that with the raft of qualifications out there, it can difficult for people to gauge what level the qualification is at or how high up on the scale of expertise it may be. It boils back down to the quality and value of what is being offered. "Qualifications help in terms of opening doors and having a conversation but I don't think they necessarily impact on setting fees."

Setting a pay scale

So is the industry crying out for someone to set some standards in regard to fees? It's an argument that has already been addressed by Olivia Stefanino. But Lodge and Aspey both agree that because different organisations cost their work in different ways, it is doubtful how affective appointing a watchdog to control prices would be. Instead, they would prefer to see regulations around the quality and standards of training.

"[Industry standards] is a case of horses for courses," says Mayes. "A senior executive in a multi-billion pound organisation will expect to pay top dollar for a top flight coach, and they won't expect to use the same coach on their line managers. There will be guidelines but much of this will be dependent on market forces – the credit crunch being one.

"Our research into rates indicates a squeeze. Sadly this is as much to do with jobbing and hobby trainers charging unsustainable low rates as purchasers forcing down prices."

No doubt this will be a matter for much debate. But Aspey also adds that having any sort of industry body to set fees would restrict competitive practice. "It's a supply and demand market, and you need to be responsive to clients."