When I ask what practitioners are having trouble with at the moment, or the one thing they wish they knew more about when they started, the subject of prices usually comes up.
When you first start out as a therapist, you probably worry about setting your prices too high and not getting any clients. In fact, knowing what to charge in the first place is more of a concern.
Do some market research
Having a look at what other therapists are charging for a similar service is ok and will give you an idea of the market rate in your area. This is known as market pricing and ensures you are charging the market value.
Remember though that what someone charges in the middle of the city will be different and generally a lot higher than out in the sticks, so keep local(ish) when doing your research.
Consider your costs
Known as cost pricing, the number is arrived at through working out what your business costs (expenses) are and then adding some profit on top (because you want to make some money, right?). If you do this though, you’ll probably end up at quite a low figure, much lower than market value unless your costs are extravagant (and, if so, why are they?). It’s ok to make a profit (look out for a blog post on this).
Do not charge the lowest rate
You may feel more comfortable charging a low rate – after all, you want to care and help people, but charging too low is not a good idea for several reasons:-
- You devalue your services. People value good health and you also need to place a high value on the fact that you have trained well and can help people to feel better. Be proud of what you do and know that what you are doing is worth while.
- You devalue the industry. Good health is worth paying for and many therapists know this and charge accordingly. They have trained hard and worked hard to build up their clients and rates. The health and wellness industry is absolutely not snake oil and you very much do help people improve their wellbeing.
- You want to make a living. Yes, you want to help people but you also have to make a living. You will have paid a fair bit of money for your training course and may have left a corporate job to start out as a therapist. Remember that you also have taxes, national insurance, business insurance, sick pay, rent and other expenses to cover – things were you wouldn’t have considered as an employee.
- In business people will always undercut. Don’t be that person because then someone will undercut you. Remember, if something is low in price, it’s often assumed it will be low in quality too.
But it’s ok to charge an introductory rate
If it still feels icky to you to charge what others are charging because you are inexperienced, then by all means charge an introductory rate with a view to increasing it after six months. Make it clear that prices will increase after a certain period of time because a) this holds you accountable so you will increase them and b) introduces scarcity – people respond if they think something they want won’t be there after a certain time or at a particular price.
But, again, do not charge a very low rate for the reasons stated above. You can also explain to clients that you are charging an introductory rate for a short period, in exchange for case studies and testimonials.
In any event, there have been many studies on the psychology of pricing pointing towards the ‘middle price’. In a therapists case, all other things being equal, if someone is new to therapy and find three therapists charging three different prices, they will most likely opt for the middle one.
Also, according to a study published by the Journal of Experimental Social Psychology, people will pay more for something that boosts their self-esteem particularly if that item is considered a luxury (whether we like it or not, some people do deem therapies a luxury).
The 9 Factor
Something you may like to think about when considering your pricing is the 9 Factor. Look around the shops and online and you’ll so many prices ending in 9. The figure 7 is also common, particularly online. Rather than a coat costing £40, it will be marked at £39 or £39.99. An online course probably won’t be £200, but instead will cost £197.
These are called ‘charm prices’ and have been shown to affect people’s buying behaviour. William Poundstone in his book Priceless looks at several uses of ‘charm prices’ and found that on average sales increased by 24% as against those items with a 0 at the end.
How did you come up with your pricing? Have you ever tested your prices to see what works best for you? Comment below or in the growing therapists community online.