A touchy subject for all massage therapists. When do you do it? How? What do you say? This question was recently posted on LinkedIn's Massage Therapists & Bodyworkers group:
I would like to hear what other therapists tell their clients when they ask why you've raised prices. (or if they complain about it). I raised my prices last year from $70 to $80/hour. I was underpriced for my area, now I'm competitive. I own the business so about 30% of my clients tip but I don't count on it and it isn't expected or considered in my financing. We all know why we have to raise our prices: 1) To stay competitive and not under-value our work. 2) To pay for the increases in the cost of doing business so that our profit margin remains the same. People who are employed get annual 'cost of living' raises. we don't unless we raise our prices. I am resentful of people who don't understand this, and have a hard time coming up with a concise, professional way to explain. I certainly think I'm worth the raise, so that is not the issue, and I'm not defending that. Thanks!
Cass Vertefeuille Garrett of Greenleaf Therapies, LLC
First off, Cass has it right. When we're self-employed, we are the ones who have to give ourselves a cost-of-living adjustment. I think that Cass has already presented some good reasons why we need to raise prices, but let's take a look at the thought process behind it and the when and how of increasing rates.
Why Raise Rates?
The thought process here is a simple one. Our prices aren't static, as our clients often seem to think they are, and like we MTs can even fall into the trap of believing. There are lots of factors that drive our pricing, some of the most obvious being: inflation, increased cost-of-living, increased costs of doing business, having increased experience, training, or specialized skills, and so forth.
Because these expenses aren't static, neither can our prices. We need to build that mentality into our business plans and practices. Ideally, we should also build this into our clients' expectations. Think about the example of a client who wasn't informed that they might be sore following a massage who then becomes sore afterwards. The are upset because it was a surprise and worried that something might be wrong. The same can happen with your business practices. Build in the expectation that prices will change periodically to reflect the current economic environment and it won't be such a nasty surprise when it happens. I'd include this expectation in your policies from the very first appointment with your client.
When to Raise Rates?
The knee-jerk response to this question is "when you need to" and that is a valid answer. But it is also an answer that implies a lack of planning or control. While you do need to be responsive to factors such as rent increases and the like, that shouldn't necessarily be the only reason to look at your rates.
My recommendation is to develop a process to systematically examine your pricing structure. Earlier, I used the word "periodically" to describe when rates would change (nice foreshadowing, eh?). That means that there is some kind of established and regular time-frame for when the rate changes occur. I go with a yearly period, but you could go shorter or longer if you'd like.
This evaluation should take into account all of the changes to your personal business climate over the course of that period. Some examples:
- Taxes - increase or decrease?
- Expenses - personal and business
- Inflation - don't overlook this one!
- Local changes in the market - competition, new regulations...
Inflation alone means a pay-cut every year if you don't adjust your rates. A 3% inflation rate means you essentially earn that much less in spending power that year. Over a couple of years of static pricing, that really adds up!
Generally, I would suggest that you factor all of the cost increases in and figure out the percentage that impacts your real income (not dollar amount, but buying power). If it's not too big, you can hold off tacking on another $5 onto your rates, but then plan on it for the following year. Just make sure that you establish a schedule - a fiscal year, if you will.
How?
This is probably the one most MTs have the problem with. How do I actually break it to my clients? Won't they be resentful? Will I lose clients? These are common fears.
As far as resentment from your clients, nobody likes to have prices go up, but it's a fact of life and if you have prepared they way with client expectations it won't be as big of a deal. And losing clients? Maybe. But if a client leaves because of a small and realistic price increase, they weren't there for you, the health of your business, or the results you deliver; they were there for price alone and you won't miss them. That's a reason why I only use low introductory rates with caution - it fosters an relationship where the most important factor is your low price relative to the competition. If you do have some clients that truly cannot afford your new rates but you want to keep in your practice and they need the work - try including these clients in part of your planned charitable giving. All individuals and businesses should plan on giving some of it all away, either for free or at cost. It's good for everybody. Set aside a certain number of appointments a week (I shoot for 10%) that you can either give away or perform at a reduced price. That way the cost to you is limited, accounted for, and planned on. Everybody wins.
Breaking the news is not the most pleasant of tasks, but like other forms of boundary enforcement, it is necessary. It should be done in the spirit of both acceptance of the fact it must be done and compassion for how it affects your clients. It should be delivered firmly and clearly, with compassion but not regret or apology. Some suggestions that I posted on the LinkedIn forum:
You might try something along the lines of:
"Dear valued client, As I'm sure that you are well aware, the current economic environment has placed additional pressures on all businesses. Unfortunately, my practice has not remained isolated from these pressures and in order to continue to operate soundly I need to increase my rates to (insert your new rate schedule). These new rates are effective on (date). Thank you for your continued support."
Or...
"Periodically, I must adjust my rates to reflect changes in inflation, cost of living, and operational expenses. As a result, I will be increasing my rates to... on (date)."
Promote It
As a teacher, I've had to deal with from time to time is change - curriculum changes, textbook changes, procedural changes - and times of change can be stressful to students (and clients). The important thing when you are implementing a change, even a rate change, is to promote the positives. Sometimes it icludes an explanation about why, sometimes you just emphasize the improvements. With rates, it could be as simple as "to continue to provide the same level of service in the face of rising costs". Your students, and you clients, will pick up on your attitude about it and it does influence how they feel about it. If you are positive, it will move their feelings about it in a more positive direction. If you are negative, they will fight you on it. And if you are wishy washy about it, they will feel they can get you to make exceptions and special allowances.
One thing that can turn the change more positive is to tie in the rate increase with a promotional period. Give a date for when the new pricing takes effect and allow your clients to take advantage of getting in some more appointments at your current rate. Even allow them to buy packages or gift certificates at your current rates up until a certain date. This can have the effect of increasing both the amount of business and having money in your pocket up front. If you worry that things might get tight, you could restrict the discounted certificates to certain times or days so it doesn't interfere with your full-priced business.
So to summarize, make sure you regularly evaluate your pricing and make sure that your pricing is optimal for your business climate and meeting your needs. Be positive, firm, clear, and compassionate about how you communicate a rate increase to your clients. Expect you may lose a few, but most will understand and the ones that leave aren't the healthiest clients for your practice anyway.
Good luck!
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2 comments:
A good and useful blog post and well to keep in mind for all service providers, not only massage therapists. Thank you for posting this.
The only thing I don't find quite clear is doing small regular steps in increase instead of bigger increases. Most can cope with a $5 increase without too much trouble, and if that happens every year or other most adjust since everything else do too. A $10 seems as a lot even if it only happens every 2nd year. It's about psychology too. Some numbers seem large, others small. Though increasing too often and clients won't know what to expect from you. Hence the warning as is well described as well.
Thank you for your comments, Pia!
I agree with you. A $5 increase is not too hard to bear, and most MTs would rather do it in some kind of "round" increment.
I may not have been clear, but I propose exactly what you say - maybe $5 at a time. What I don't recommend is little frequent adjustments. It would be better to do $5 a year than $1 every couple of months. I'd really suggest establishing some kind of "fiscal year" that clients can build in to their expectations.
An excellent point about the psychology. One large change would be pretty drastic. $5 is a good number. Hopefully an MTs business environment won't force them to make those more drastic increases.
Thank you for helping me to clarify.
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