How to Set Prices for a Complementary Practice
Setting prices can be an emotive topic for many complementary practitioners. You can attract a good flow of clients with amazing marketing, but if you don’t have your prices set properly, you could still struggle financially.
Pricing acts as a filter. Too expensive and some people are automatically put off, too cheap and your experience and the quality of your services will be questioned.
Your pricing is key to the success and sustainability of your business and your lifestyle. No matter what your intentions are in terms of helping people, you must be able to make money to thrive.
In this post, we’re focussing on services which are a key element of most practitioner’s business.
What do you need to earn?
Start by understanding how much money you need to bring home to cover your personal outgoings. This will show you if you need to subsidise your income while you get your business up and running.
How much does it cost to run your business?
Your overheads are the costs your business must pay for whether you see one, or one hundred clients. Make a list of everything that is a fixed cost such as professional fees, insurance, rent, staff, administration, marketing, subscriptions etc. This gives you the money required just to be a practitioner and run a business.
How much does it cost to provide your service?
This is the cost associated with providing your service to each client before you pay yourself.
Do you have consumables e.g. couch roll, creams or needles, room rent, travel, parking, refreshments, PayPal charges? Include every element as they soon add up and can make a huge difference to the profit you make.
There are likely to be some variables especially if you work from different places. Understanding your figures allows you to know the cost of working with each client which you then factor into your price.
What does your current business look like?
A quick reality check will help you to understand exactly where your business is right now. Answer the following:
- What’s your current business income?
- How many clients do you see?
- How many hours do you work?
Does your business cover the costs of running it? Is there money left over for you to pay yourself after you’ve paid your overheads?
What’s your capacity?
If you imagine your ideal business, what is the maximum number of clients you want to see? Make sure you’re being reasonable in terms of how many clients you can work with in one day.
Who are your clients/customers and how do they pay you?
If someone is paying you from their own pocket, they will have a different opinion to someone who is being funded by an insurance company or the NHS.
Talk to friends and family to understand what they pay or would be willing to pay for some external views.
What do others charge for similar services?
This is not to price match them. You won’t have the same financial requirements and you’re a different person with different experience and skills. This gives you a guide of the different offers available, the experience of the people making the offers and what clients pay.
How much should you charge?
You will need to test out pricing to see how it works for you. This is something that can be adjusted but you must start somewhere and being the cheapest isn’t always the best option.
Have a play with the prices, you know what your business costs are, what you need to earn and how much it costs you to see each client. Start to work out how much you charge for your services and what this means to the number of clients you need to work with.
As a rule, the cheaper you are, the more clients you will get but this will take up your time and energy. Putting your prices up will change the numbers you see but you will earn more money for fewer hours. Once you get to a point where you’re earning a good salary and have time available, you can do voluntary work as you know everything is being taken care of.
Working out your price
Knowing how many clients you need to see, and your business numbers will help you to set realistic prices. Use this equation to test out your pricing:
Overheads plus your income divided by the number of consultations plus cost per client
For example (per month):
- Overheads = £500
- Salary = £1000
- Number of clients = 20
- Cost per client £5
£500 + £1000 = £1500 / 20 = £75 + £5 = £80 per session
You can then play around with the numbers to identify what works best for you. Try working the figures backward if you have a set price and want to know if it works. So, if clients are prepared to pay £100 a session, what would that mean to the salary you could take?
£100 – £5 = £95 x 20 clients = £1900 – £500 gives you £1400 salary
What about if you wanted to set your price at a cheaper rate, what would that mean to the number of clients you would need to see?
£500 + £1000 = £1500 / (£50 – £5 = £45) = 33.3 clients
Making sure your price works for you and your business is the key to flourishing as a practitioner. If you struggle with your pricing, contact me for a chat to find out how I can help you.
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