Are you working hard, but just not making enough money? Have you considered raising your session fees, but decided against it for fear of losing clients? Are you aware that your rates are underpriced, but nervous to ask clients to pay what you’re worth? Raising your rates is an easy (and obvious) way to increase your income, and the process isn’t as scary as you might think.
The big fear with raising your prices is that your clients are going to leave you and go somewhere else. In truth, if you’ve been working at developing strong relationships with your clients, there will likely be no appreciable drop in client volume if you raise your rates.
Don’t let the fear of losing a client stop you from making sure each session is profitable. If this fear is stopping you from raising your prices, here’s something to try. Take a dozen client files at random. Look at each one and ask yourself: Will this person stop seeing me if I increase my prices 5 percent? 10 percent? 15 percent? 20 percent? My guess is that when you look at the reality of a fee increase with specific clients, you will see that most would tolerate a significant increase. You may even have some clients say they’re surprised you didn’t raise your prices sooner.
Profit Margin & Perception
The greater your expenses, the more dramatic the effect will be on your profits. This is very evident if you are contracting therapists. Let’s say you pay your therapists $35 for performing a $50 service and your clinic expenses are $10 per service, so your profit is $5. In this case, a 10 percent fee increase ($5) would mean a 100 percent increase in your profits!
The price of your services has a big impact on how people perceive the quality and value of your work. If you don’t revere the value of your offering and price it accordingly, don’t be surprised when your clients don’t value it either. In a way, you could be doing your clients a disservice by charging too little.
Announcing a Price Increase
It’s really not necessary to make a big deal about a price increase. Have you ever gotten a special notice from your dentist, podiatrist, or even hairstylist announcing a price increase? It almost never happens. Clients don’t like it when prices go up, but it is expected and tolerated.
At one point, we decided to raise rates at my Ryerson University clinic by about 10 percent, implementing the increase three weeks after the decision. No written notice was sent. Clients with bookings were informed by phone and anyone making new appointments was informed of the price. We didn’t have complaints, and the number of visits wasn’t affected.
The one time when a focus on price is beneficial is when you are tying it into a promotion (i.e., “Our prices are going up next month, but you can continue to receive massage at our old rates for another year!”).
So, what’s the best way to introduce a price increase to clients with minimum impact on your practice? Massage therapist Linda Gray asked me that question recently and showed me an email she was about to send her clients.
NOTICE OF PRICE INCREASE
Effective June 1, my rates will change to the following:
60 minutes: $60 (one of) Reiki, Tibetan Energy, Foot or Hand Reflexology.
90 minutes: $90 (one of) the above or Touch For Health. Each session includes goal/emotion balance.
120 minutes: $120; Modalities are blended for each person’s needs, giving a uniquely interactive and personally tailored session every time.
Portable Service. In town, $25 extra.
Out-of-town single booking. $50 extra. Groups of 3 or more clients—additional fees waived.
I am available for appointments on weekdays at two locations.
At The Touch of Gray: Monday and Wednesday from 9:00 a.m. to 4:30 p.m.
and Friday from 9:00 a.m. to 7:00 p.m.
At Apples & Dandelions: Tuesday from 9:30 a.m. to 5:30 p.m.
I am available for occasional evening and weekend appointments based on request and availability.
Special Offer: Existing rates are available for all appointments booked before June 1 and sessions received by August 31. This offer also includes all gift certificates purchased in the same time period.
Remember: Book 9 Sessions, Receive the 10th for Free
Here is what I recommended to Linda:
Instead of sending an email, write a letter. It may seem a little old-fashioned, but it’s more personal.
Write sentences that are conversational and that use an active tense.
Focus on the benefits of your sessions and help your clients see them, too.
If you don’t mind traveling, increase your travel fee and promote the benefits of home visits for clients. Convenience is worth the extra money for many people.
Always keep the focus on the client.
If you are doing a promotion, make a big deal out of it!
Use a price increase notice to reinforce the benefits clients get from using your services and remind them of the value
they get from seeing you specifically
and frequently.
Linda took the suggestions I gave her and came up with a new and improved version that she sent to her clients with a brochure detailing her prices. Notice how the focus is now almost entirely on the client and is chock-full of references to benefits. Every paragraph communicates value. There is so much benefit in seeing Linda that it makes the price increase irrelevant. In addition, her clients are now reading about something they find really interesting—themselves!
Dear Betsy,
I want you to be among the first to receive my new schedule so you can make plans for your body’s care in the coming year.
My specialties, as outlined in the enclosed brochure, are blended for your individual needs. You will have a personally tailored session each and every time so you receive the results you’re looking for.
To meet your busy schedule, I am offering a variety of times, sessions, and locations (my new location, Apples & Dandelions, is centrally located with lots of free parking). Or, if you choose in-your-home or out-of-town appointments, you are allowing yourself convenience and relaxation while eliminating travel and weather hassles.
If none of these choices suit you, please let me know and we can possibly set up an evening or weekend appointment. It’s important that you get the care you need, and I don’t want you to be in pain or discomfort because you can’t get away to see me during the day.
I’ve implemented a slight price increase this year, and I encourage you to utilize the old fee scale to its fullest. Packages of 10 sessions at the old price are good for one full year (until May 31 next year). Assure yourself of pampering for 365 days—or give them as gifts for your family, friends, or colleagues to use. Remember, the old price applies to single appointments and gift certificates that are prepaid before June 1.
My commitment for the coming year is to continue learning and to heighten the level of improvement you achieve during your Touch of Gray sessions.
Wishing you health and happiness,
Linda Gray
Will writing a letter like this really make any difference? Both letters are essentially announcements of price increases, so is it really going to matter how you break the bad news?
And that’s not all. Linda also said the letter simply reminded her clients she was there for them and that she’s talented. She received a number of return visits from previous clients and also got several new referrals as a result of the letter.
All these new and returning clients will continue to purchase at a higher rate than before, and that means more money in Linda’s pocket. If she was making $30,000 and increased her price 10 percent, for example, she’d end the year with an extra $3,000 in her pocket—with no added expense and no extra work.
A price increase can have a dramatic effect on your bottom line, especially when you use it as another opportunity to convey the benefits your service holds for your clients. If you’ve been thinking about raising your prices, maybe it’s time to muster your courage and make the change.