Raising Prices

Hi, This is Dave Kats, at therapist consultant and I have a tip for you.

You know, every so often you're going to have to raise your prices to stay up with inflation and to just make more income as a therapist. How should you raise your prices? Well, we suggest that you raise your prices less frequently but more substantially when you do. The reason we say that is we feel that the only people that really complain about a price change are those people who have been through two or more price changes with you. If they start at $75 and then you went to $85 and now a hundred, now $125, they start to feel the pinch of the growth.

Whereas if you just have a patient and they started at $125 and you raise to $150, that's logical because you have to raise some time. Only those people through two or more raises are the most likely to be concerned or complain about you raising prices. Now, how should you go about raising prices? Well, about two or three weeks ahead of time, you should post just a three by five card on the check-in counter where your patients check in that says effective and then give a date. Like, "Effective February 23, our office visit will be $150."

You put that there so anybody that comes in has time to react before they come back next time so they aren't surprised when they come in to see you. Post that about two or three weeks ahead of time. Then I would suggest that you raise your prices for everyone. Sometimes you hear a consultant say, "We'll just raise the prices for the new people." And that sounds good and works well in the short term, but in the long term, it doesn't work so well.

I could give you some examples. I remember when the average therapist was charging $35 an hour. You would pay $35 for an average session. Now, if you had patients that were still with you at that time, you wouldn't want to be treating them today for $35 a session. I'm a chiropractor by profession, I think many of you know that. When I started in practice chiropractic adjustment was $8. Now it's about $55. If I had never raised my prices, I'd had people in at $8.

When you raise them, raise your prices for everybody. Now, you may have some people that are below your normal price. For instance, let's say your raising from $125 to $150, but you have some people into the hundred, raise them accordingly, raise them from a hundred to $125 so you raise the whole group as a whole even though some may be on a different level of payment than the other, and then if anybody ever asked you about raising your prices-- I once had a person say, he was a minister.

He said, "I'm on a fixed salary--" He was a retired minister, he said, "I'm on a fixed salary, I can't go with price increases." And this is my response to him, I said, "Every so often, I raise my prices, I adjust my prices according to inflation. Every so often I adjust my prices according to inflation." That seemed to satisfy him, so that's the phrase you use if somebody asked you about raising prices, you say, "Well yes, every so often I raise my prices according to inflation."

Now, how much should you raise? I will tell you a very simple rule that we kind of have. If you're between $100 and $200 and you're going to make a raise, I would suggest $25 is a pretty typical raise. If you're at a hundred, you might go up to $125. If you're at $125, may go into $150. If you're $175, you may go up to $200. By the 25% increase in today's prices, it's probably a pretty good idea. Think about it.

Raise your prices less often but more substantially when you do. If it's been two or three years since you raised your prices, you may think about raising your prices just to stay up with inflation and to make sure you continue to grow as a therapist.

This is Dave Katz, thanks for listening.