Executive Coaching is pivotal to the development of a company’s future leaders. Numerous studies show that timely executive coaching can help organizations generate as high as 788% in ROI! In fact, surveys of companies show that 99% of businesses are very satisfied with the benefits that are obtained from executive coaching.
But despite this, some companies still hesitate to invest in executive coaching. The reason – the cost of the coaching program.
While it is true that executive coaching is inherently more expensive compared to other types of coaching, the prices can be justified. Here, we will discuss the nuances of pricing executive coaching services. We’ll understand how executive coaching is priced and what the cost of executive coaching is across the world.
Factors that affect the cost of executive coaching
· The client
Prices of executive coaching can vary depending on who the intended client is. Coaching a mid-level manager to take up a top management role, is considerably different from helping someone transition to the role of CEO. The type of direction and support needed by the highest echelons of management will be highly-demanding, not to mention, more important for the organization.
· Geography
Some countries/regions are inherently more expensive to live in and seek coaching in. Such geographies will have executive coaching providers who charge more than their counterparts in other regions.
· Industry & expertise needed
Industries making more cutting-edge discoveries and developments are often replete with competition. In such industries executive coaching serves as a key service that can help companies get an edge over their competitors. The expertise brought in by the coach can be specialized and helpful in directing the business towards the goal in the right way.
In fact, certain executive coaches tend to charge higher compared to others, if they have practical experience in matters the client is facing. Their industry skills and real-world experience can add a lot of value to clients.
· Method of coaching
Some types of executive coaching take place online, through digital platforms. Others take place face-to-face, either at the coach’s office or on-site in the client’s company premises. This too can affect the cost of executive coaching, depending on the amount of resources the coach spends on reaching the client.
· Bundled services/tools
Executive coaching prices can change depending on what type of bundled services are offered. Some coaches offer handouts that clients can download and peruse at their pleasure. Others also give clients access to special tools and technology to implement their coaching.
Since bundled services offer a lot of value to clients, they may be priced significantly higher compared to other types of executive coaching.
· Difficulty of coaching & desired results
Every executive coaching partnership comes with its own set of challenges. The extent of these challenges and the amount of work needed to bring the client to the desired shape can also vary.
If the effort needed to get the desired results through executive coaching is hard, then such services will be priced higher than other, easier executive coaching services.
How is executive coaching priced in the United States?
In the United States, the business coaching and executive coaching industry was worth around $11.6 billion in 2021. This means that there is spending in the industry. But there is a vast difference between the rates companies or coaches charge for executive coaching.
However, on average, studies show that coaching services can start from $200 to $500 – and even higher – per hour. The higher up the employee is in the management, the more expensive will the executive coaching session be.
Contrary to popular belief, it is actually smaller US companies or those with smaller revenues, who spend the highest on executive coaching. 67% of companies with revenues between $5 billion & $10 billion spend more than $500 to coach their CEOs and other C-suite executives.
Of these companies, those in the non-financial and non-manufacturing services sector pays significantly more for executive coaching, compared to the financial services industry. The median rate paid for executive coaching was at $425.50 per hour.
When it comes to companies who spend on coaching employees who are 2-5 levels below the CEO, the highest spent on executive coaching is between $301 & $400. Once again, it was the companies with the revenue between $5 billion & $10 billion who spent the highest.
Long-term executive coaching
When it comes to long-term, one-on-one coaching sessions, companies in the United States spend around $3000-$5000 for a 6-months period. Executive coaching for CEOs can go up to $25,000 for a period of 6 months, which usually accounts for 40 hours’ worth of coaching. Overall, start-ups and SMEs in the US spend on average $6000 for 6 months. But for this rate, only about 18 hours’ worth of training is provided.
In terms of team executive coaching, the trend in the US has moved towards bundling clients together based on either their department (ex: HR department) or their job role (ex: Vice President). Depending on which coach is chosen, companies spend around $4000-$6000 per person for team executive coaching.
If companies in the United States want to coach leadership across the organization (i.e., multiple geographies and job roles), the prices increase tremendously. Since there is no one-size-fits-all policy with executive coaching, coaches can charge anywhere up to a whopping $100,000 per leader, for a period of 6 months. These charges are sometimes exclusive of assessment charges that certain executive coaching providers conduct to assess the client for coaching customization. Depending on the executive coach chosen and the company’s expectations, these assessments can be as low as $500 per person to as high as $28,000 per person. In all, the extremely premium executive coaching providers can earn up to $3500 per hour, bringing the 6-month cost to around $140,000.
The United States executive coaching industry is seeing a standardization of prices, especially with the increased adoption of retainership fees. The Pay for Access retainer model is most-used for C-suite and leadership executive coaching. This means, retainership is paid for 6-12 months in advance, in exchange for coaching access at any time. The prices for such retainership vary across industries and clients, ranging between $4000 and $10,000 (sometimes more).
When it comes to price changes, only about 5% of companies are open to negotiating higher prices year-on-year. But for the most part, these prices stay stable for a couple of years, before being revised.
Cost of coaching executives in the United Kingdom
Business coaching and in particular, executive coaching, is growing at a tremendous pace in the United Kingdom. Perusing LinkedIn turns up around 2636 individuals who call themselves “executive coaches”, while another 23868 call themselves “mentors” to C-suite professionals. This is just the visible number – the executive coaches on social media. There are many more who don’t have social profiles.
When it comes to the cost of executive coaching for C-suite in the United Kingdom, prices start at £500 per person. This is for a session that lasts two hours. Typically, companies which charge £500-£850 have less than 5-8 years of experience.
Higher end executive coaching services with a decade or more of experience, typically charge up to £1475 per executive/leader, each session. The mean price of executive coaching sessions is £1100. The ultra-premium service providers sometimes charge even higher up to £2400 for each session, for rapid transformation.
According to surveys, companies in the UK felt that the ideal cost for executive coaching was between £1050 and £1200 per person, for a single two hours session. Anything higher is generally viewed to be too expensive.
These prices are exclusive of tax. According to UK taxation law, companies can claim deductibles for any coaching that help employees upskill themselves to run their already existing business. However, companies cannot claim deductibles for any coaching that can help employers/CEOs start a business.
For long-term coaching – which typically lasts either 9 months or 12 months in the UK – mid-level executive coaching costs fall between £4500 and £7000. But a few higher-end and premium level coaching providers have been found to charge significantly greater. Usually, this is between £10,000 and £20,000 per person for the duration of the 9- or 12-months session.
Pricing of executive coaching in other parts of the world
Executive coaching is prevalent in other parts of the world too. 48% of companies in Europe, 39% in Asia, 27% in Australia, 27% in South America and 20% in Africa invest in leadership coaching.
Now let’s consider the cost of executive coaching in other parts of the world, outside of the US and the UK:
· South Africa – Between $1436 and $2550 per month.
· Australia – Between $20,678 and $29,540 for one-on-one coaching for 12 months.
· India – Between $4106 and $8212 for a period of 6 months.
· Canada – Between $250 and $500 per hour.
· South America – Various countries charge between $1942 and $9870 for 12 months.
While globally countries spend varied amounts on executive coaching, the media range is between $401 and $500 per hour, per executive.
Justifying the high prices of executive coaching
Despite these expenses, executive coaching does make a lot of economic sense. As we discussed at the start of this article, the ROI you can generate through investment in executive coaching can be tremendously high. In fact, surveys of Fortune 1000 companies indicate that the ROI a company typically generates as a result of executive coaching, is 6X higher than the investment made. So, even if you spend $500 for an hour’s executive coaching, your leadership executive will have received sufficient guidance and clarity of vision, to help them earn up to $3000.
In addition to ROI, executive coaching has also been found to increase organizational productivity tremendously. According to studies by Forbes and Fortune, executive coaching can bring revenues as high as $2.35 billion. Also, it can help increase employee productivity by 22.4%. When combined with the requisite training, executive coaching can increase productivity by 88%.
Second, research also shows that employees tend to stay longer in a company if they know that they will receive mentorship and executive coaching opportunities. In fact, there is evidence of Sun Microsystem seeing a 72% increase in employee retention, when they implemented a mentorship and executive coaching program at their workplace.
Finally, many executive coaches don’t merely help C-suite professionals on the job, but they also benefit them personally. Executive coaching can make leadership happy and satisfied. This is mainly because executive coaching helps align the individual’s strengths, beliefs and values with the company’s growth plans. Many executive coaches work on helping executives become cognizant of their limiting mindsets and behaviours and support personal transformation. Through this, executive coaching seeks to empower leaders to develop a brand vision that can champion these values and contribute to the society. When this happens, the leader is not only professionally satisfied, but is personally benefitted and happy too.
Wrapping up
Given that happy employees are more engaged and therefore more productive employees, this once again ties back to how beneficial executive coaching actually is.
So, investing in executive coaching – no matter how costly it may seem – can be very profitable and helpful for companies.