Increasing Your Therapy Rates: How to Seamlessly Do So
Have you been considering changing your fee structure? Maybe switching to private pay? Are you unsure how — and if — to do this, or what your clients might think?
Increasing therapy rates ought to be a sensible business decision. If you do not raise your prices, practice sustainability will take a hit. Undercharging can also gnaw away inside, leading to resentment, stress, and disillusionment. You must look after yourself as well as your clients and your business.
So, if your mind and gut are telling you that it’s time to increase your rates, listen. If you’re struggling here, take the time to dive deeply and do some personal psychological work around your worth…
Are you worried that people will unfairly judge you? Are you concerned about being labeled as greedy? Are your beliefs and lack of confidence getting in the way of your flourishing? Be brutally honest, are you holding yourself back from success?
Once you’ve determined that a price rise is warranted, it’s time to explore the “how-to”. These considerations will aid and ease the decision-making process.
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Make a practical business decision
As a practice owner, you need to know your non-emotive numbers. What exactly are your costs? List every outgoing expense, both large and obvious and small and sneaky. Remember to include items that protect you should something go awry.
This list provides some ideas:
- Association and membership fees
- Banking costs
- Employees, freelancers, or other hired experts (like your accountant and, if relevant, attorney)
- Office equipment and supplies
- Permits
- Practice management system
- Insurances: disability, health, liability, renters
- Marketing including ads, professional listings, letterheads and business cards, your website, domain name, and HIPAA secure email
- Professional development
- Rent
- Retirement contributions
- Saving for vacations (you won’t be much good to your clients if you’re overwhelmed and exhausted)
- Taxes
- Utilities
Now, consider your desired income. How much money do you need to live comfortably?
Add your desired income to your outgoings. This will provide a figure to work from. Next, divide this by the number of clients you see (or wish to see). Factor in your cancellation rate.
As an example, if your required income is 100K per year before tax and your outgoings are 50K annually, each year you need to generate $150,000. Assuming you can accommodate 30 consultations per week but have a cancellation rate of five clients, that’s 25 booked and attended consultation week-ly. Next, think about how many weeks you wish to work each year. If you want five weeks of annual vacation, that leaves 47 remaining weeks. Once you calculate the math, the average fee would need to be $127.66 per session.
This example uses rounded numbers for ease. It is not a recommendation but a simplistic exemplar. You need to tailor your figures to your precise circumstances. However, it provides important guidance on how to set your rates in a considered, reasonable way that should work for you.
Once you have this figure, ask yourself: Are you charging a rate that you are happy with? Or do you need to increase your rate?
By doing the sums, you gain clarity and confidence around your pricing. This quells the fear of upsetting clients or seeming unreasonable. It will help you achieve an ethical decision in a sustainable, supportive way.
Tip: Yes, you are a therapist whose expertise is desperately needed. But this does not mean you should relinquish your health or your prosperity to chase martyrdom. This will only set you on a sure-fire course to burnout. Instead, charge what you’re worth!
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How much should you increase your rates by?
In the above example calculation, a current rate of $100 per session should be increased by $27.66. In this way, your tailored calculations will provide you with a figure.
However, there are other ways to determine an appropriate raise. Let’s consider three…
Compare the market
Your professional association will likely provide a recommended schedule of fees. You can also hit up your favorite search engine and explore local therapist websites; they might advertise their costs online.
Once you know the average consultation fees within your area, you have a general price guide you can use.
Remember, though, you do not want to place yourself in a race to the bottom in terms of price.
Consider your expertise
Do you have additional training and expertise in a specific specialty? Are you well known in a desired niche?
People are willing to pay a higher price for specialist care (consider who you would choose for a brain operation: neurosurgeon versus general practitioner) and for those who carry celebrities.
If you are perceived as an expert (this can be done through ethical marketing, local speaking events, and a professional website, for example) if you have desired expertise that sets you apart from other therapists, if you fill a specific niche, you can charge a higher price point.
While not in practice, can you see how Dr. Phil Graw (like him or loathe him) could command high rates because of his celebrity?
If you hold local celebrity (or are in the process of its creation) or expertise in a specific niche, this should factor into the rates you apply.
Look at the fullness of your books
Supply and demand are learned in economics 101. If you are fully booked, if your supply is filled, increase your prices. Even if some clients choose not to continue, the increased prices will fill any profit void and allow you the space for new, ideal clients.
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When and how do you tell your client base?
Okay, so you’ve decided a rate increase is appropriate. Now comes the path of implementation. How and when should you tell your clients?
Before you spread the word, consider two points:
1. What are the benefits to your clients? Have you incorporated new systems or inclusions that add value to your offerings? Have you undertaken additional training? Have you expanded your service in some way; for example, free webinars for your current practice clientele? Determine any additional value that you can communicate with your tribe.
2. People understand that at certain points every business needs to increase prices to remain competitive and robust. Plan to communicate your new rates clearly, confidently, and without apology.
Then organize a seamless, communication strategy.
Firstly, consider the questions that might be asked… When does the new fee rate come into play? What will your charges be, precisely? What happens if a client has made upfront payments? Or if they have a special rate?
Then design a rollout plan, allow time for implementation, and communicate with your clients before D-day. This will allow people time to consider whether to find another therapist, to reallocate funds, if necessary, or to discuss their concerns with you. Most won’t bat an eyelid.
Tip: Don’t suddenly advise attending clients that your rates have increased by $X per session.
Contemplate an annual increase
Businesses can get caught in the fearful trap of stagnant pricing. So they hold off. Then, when at breaking point, they’re forced to increase rates while feeling uncertain and guilty. Clients can detect unease, raising unhelpful resistance.
But, we’ve all heard of a consumer price index. We all know of annual economic increases. So, particularly if you feel awkward in asking for more, opt for an annual increase. Set a date, say the 1st of January, where your rates routinely increase X amount or percentage. This can then be explained as business protocol and good, ongoing client communication will ensure there are no unexpected surprises or hiccups.
Before you take action to increase your therapy rates, take time to also consider possible potential cons…
The cons: Consider any potential downsides of a price increase
Before you make a firm decision, consider both sides of the potential coin. If you do not bring substantial value, a price rise may turn people away. Ask yourself questions like:
- If you already charge higher than standard rates, what additional value do you bring?
- Upon learning about you, can future clients understand why you — and you alone — are THE best therapist for their needs?
- Is your branding spot-on? Do you have a website, stationery, office space, and personal presentation that subconsciously *shouts* rapport, trust, and authority? (If you need a standout website, talk to us)
- Do your current clients feel well cared for, appreciated, and deeply heard and served?
If any of these elements are missing, consider fixing the problem before you raise your rates. Why? Price is not the problem, value is.
Think about the purchase of a new car… A brand-spanking Porsche Macan with all the trimmings is a bargain at $30,000. People would jump through hoops at this price. A base-level Chevrolet Spark at $20,000 is overpriced. Unless it was the only vehicle left in the state, it would be difficult to sell. Yet, in financial terms alone, 20K is obviously cheaper than 30K. And they will both get you from A to B.
The moral is, be the Porsche Macan!
The takeaway
You are a therapist. You have the skills and tools to profoundly transform people’s lives. You deserve to be paid accordingly!
If you’ve been holding back on a price increase, it’s time to consider a sensible, informed business decision. Working through the numbers should help to ease any fear or guilt and determine appropriate rates.
Once decided, plan a communication strategy and apply it.
In the transition, practice understanding, calm, and firmness.
Once applied, know your worth. Don’t apologize.
This is your life. You have the right to enjoy a fruitful, fulfilled existence where you receive suitable recompense for your hard work and dedication.
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