Have you ever uttered any of these statements?
- “I don’t think my services are worth more than I charge.”
- “My patients can’t afford to pay more.”
- “My prices are in line with everyone else in my area.”
- “I literally can’t see any more people; I’m so busy.”
- “I only changed my price recently/I change my pricing every year/6 months.”
- “I charge more for a first appointment than a second.”
- “All my clinicians charge the same price.”
- “I’m busier than my associates.”
- “I don’t want to put my pricing on my website as it might put people off.”
- “I offer discounted appointments.”
- “My pricing is based on how things have always been done in the industry.”
- “I offer free appointments.”
- “I put my price up by £3.”
- “I offer packages to encourage people to stay in a treatment program.”
- “I need to increase my price but I’m worried it’ll stop people coming.”
- “I’m annoyed that my hairdresser charges more than me.”
- “I don’t make enough profit.”
These are just some of the things I hear on a daily basis and although I’ve become desensitised to it, it’s about time I tackle this properly.
And before I go any further, I get it. I understood on day one of working in this industry that, other than a few really mad chiropractors (seemingly it’s every profession now) who get people in for free appointments and scare the life out of them so they can sell 300 sessions to straighten out their spine, most MSK clinicians care more about patient outcomes than they do money. And not only do I respect that, I think people like you are genuinely what we need more of in society.
But here’s the issue. You can’t provide high-quality patient care if you’re trying to figure out how you’re going to pay the heating bill each month. Patients get cold too. You own a business. You need to make money. You have a responsibility to your staff to keep them in jobs and to make sure they’re making enough money and to your family to put food on the table.
There’s a happy medium that most of you aren’t hitting and hopefully, this article will convince some of you of that.
I’m going to cover two things:
- I’ll speak to some of the more common misconceptions and call out the foolishness.
- I’ll explore advanced pricing strategies.
But first….
Metrics + Measurement
It’s incredibly important that you understand the numbers when looking at any part of your business. You don’t buy massage oil if it costs £300 a litre nor do you allow the entire team to go on holiday the same week in March. So when considering anything around pricing, knowing your metrics and measuring them when implementing change is crucial. Bear that in mind when reading this article. If I say offer discounts, don’t do that if you’re at 98% capacity, conversely don’t increase your price if you have 200 appointments a week to spare.
Talking of Discounts...
and free appointments, if your business model is based on lead generation and getting people in for free or offering substantial discounts, then this article isn’t going to be relevant to you. And not to be rude, you probably need to get some lessons on how to run a business properly. And for any of you lead generation gurus pushing this nonsense on unsuspecting healthcare clinics, I’d love a debate on why it’s dumb, it just seems that no one’s willing whenever I enquire…But please do get in touch if you fancy it.
Okay, now we’ve got those two things clear, let’s look at misconceptions.
Just Because It’s How It’s Always Been Done, Doesn’t Mean You Can’t Innovate
One of the strangest things I see is this commitment to initial and follow-up appointments. It seems this is the only industry on the planet that charges more for a first appointment! The result? Potential patients are:
- Put off by the bigger number.
- Confused.
- Don’t care about the follow-up price because they all think you’re going to press their pain away on their first appointment.
We’ve built a lot of MSK websites and we have tens of millions of patients visiting our MSK sites. That’s a lot of data, and the data shows patients looking around and dropping off the page getting confused. “Why am I paying more, and what’s a follow-up?”
It also confuses people when they have 15 types of appointment all with “follow-up” on each appointment.
Here’s an interesting fact, the bigger the difference between a first and second appointment, the more expensive the first looks. As an example, if a patient comes to your site and sees:
First Appointment: £90 Second Appointment: £40
They are more likely to buy from a competitor whose pricing is £90 and £70. In fact, they’re more likely to book if your appointment price just says £90 and you don’t list a follow-up price.
"My Patients Can’t Afford to Pay More, I’m Not Worth More Than I Charge!" - #impostersyndrome
Cue patient walking out of your £40 appointment into their £150 an hour hairdresser and on the way home buying a steak and some wine from Waitrose for £65. Stop means testing your patients. And if they really can’t afford your time, then there’s this clever thing called the NHS which is lovely and free for them. And trust me, they can afford your time, it’s all about priorities. They would certainly find a way to afford the £100 call out for an emergency plumber if their water and heating turned off, wouldn’t they?
And as for not being worth more, if I could kick your arse, I would. You offer an invaluable service to people, you spent years studying and many of you spend thousands on CPD to stay up to date and continually improve your service. Quite honestly, I think you’re worth more than most GPs. Indeed, wasn’t there some research that FCPs tended to get better results with a physio in house? Less opiates prescribed and better outcomes?…
I’m So Bloody Busy!
If you’ve said this or if your clinic is full to the rafters and you haven’t significantly and continually increased your price then you’re doing it wrong. There’s this really simple concept called supply and demand. When something is in really high demand and the supply is limited, the price goes up. Unless the business is an MSK clinic it seems.
...This Doesn’t Apply to Me!! I Changed My Price and Increased It by £3!
Dear god. Well done you, you’ve increased your price by the cost of half a pack of butter. (I’m busy, I shop on Deliveroo, it’s expensive but allows me to write stuff like this and run a business).
The point is, a £3 change isn’t increasing the price.
Think of the last thing you purchased that wasn’t from a supermarket. A service, a restaurant meal, a pair of jeans, a holiday, a hotel stay, a plumber, a dental hygienist visit.
What did it cost you? No looking and cheating. £54? £251? £36? You don’t actually know, do you? And if I added £3 to the price, not only wouldn’t you argue “No way, I’d never have paid £54 instead of £51”, it also wouldn’t have made a blind bit of difference to your life. And most importantly, you would never have said “Christ, I’m not paying £76 for that call out to fix my drains, that’s ridiculous, let’s find somewhere that charges £73.”
If you’re going to increase your price, especially if you’re busy as above, then do it properly. Put some elbow grease into it and add £10/£15 on.
All My Patients Will Leave if I Put My Prices up Significantly.
First, I’d argue that £10 shouldn’t really be classed as significant but we need to look at this in two ways.
- New Patients
- Existing Patients
I am absolutely not suggesting you just go out and increase your price to your most loyal long-term customers. That would be silly. Either you keep the price the same for the length of their course of treatment or you have a timeframe where existing patients keep the same price. As a business, we increase prices all the time but always keep pricing the same for our most loyal customers which isn’t just a great way of retaining customers but it’s also a reward for loyal customers and a good marketing tool.
However, when it comes to new patients, they don’t know what your old price was! So changing it will make no difference to their perception.
Of course, you need to continuously measure and look at the impact the price increases have, but you might be surprised that changing your price by £10 has little or no impact at all and the massive increase in revenue mitigates any drop in new patients. I will say now that we’ve yet to see any negative impact from anyone increasing their price by £10 a session
I Already Changed My Price Last Year, I Can’t Do It Again So Soon.
Pricing strategies should be nimble, just because you changed your price yesterday doesn’t mean you can’t do it again today. Businesses all over the world change their prices daily, never mind monthly. Stop putting artificial barriers in place. Pricing is a strategy that needs to change according to any number of factors. An example is availability. This is basic supply and demand economics. If you simply can’t fit any more patients into the clinic then that’s high demand, low supply = price increase.
"Would You Jump off a Cliff if All Your Friends Did It?"
I’d hear this all the time as a kid. The answer is “of course not”, So just because every other clinic in the area has stupid pricing, that doesn’t mean you need to do the same.
It’s incredibly important to offer competitive pricing and be aware of what’s going on around, but that doesn’t mean you automatically have to match it. You may need to be lower, you may need to be higher. If you’re empty and the clinic around the corner is full and you have a £10 price difference then undercut them!
But if you are a clinic with huge amounts of history, an S&C facility, £50k of tech, 12 clinicians…
There are far too many clinics price matching against completely different businesses. You aren’t selling milk!
I Don’t Want to Put My Prices on My Website.
If you walk past an estate agents and you see “POA” on a property, I assume the first thing you do is think “Cook a cat, I need to go in immediately and arrange a viewing.”
Not being open and honest about your pricing is criminal. I know there are some quite prominent gurus out there that advise against open pricing, and I suppose if their clinics actually made some money there might be some evidence that it works but they don’t and it doesn’t. People want to know what something costs. They don’t want to go through hoops just to find out your price. If you were looking for a haircut and one said £200 for a cut and style and the other said “call us to find out”, the chances are you don’t even consider calling.
If your price is much higher than everyone else’s, be proud of it. Justify it, explain to patients why. It’s going to cost you a lot more to hire me for consulting than pretty much every other expert in the industry. And I’ll be open about it because I can justify it.
Of course, if you’re charging £195 for 30 mins by a new grad who’s an expert in cupping and your nearest competitor is £90 for 45 mins with a sports medicine consultant, then you’re a crook and you have bigger problems than whether or not to put pricing on your site.
“I Wish My Associates Were More Busy, Everyone Wants to Book with Me.”
It’s very rare that I hear this and then find out that the clinic owner charges more than their associates. Why is it in every other profession in the world you pay for someone’s experience but in MSK you pay the same for the owner of the clinic and a new grad?
If you want me for a day of consulting, it’s £3.5k + VAT. I own the business and have many years of experience in the corporate world and, more importantly, I understand the MSK market if not better then as well as anyone else from ‘outside’ the industry with my experience.
Let’s look at some basic pricing strategies.
Cost Plus Pricing
I feel silly even including this but unfortunately, I must, given how many clinics have never considered it. The concept is simple, calculate all your costs and add a margin to ensure you’re profitable. The margin will essentially reflect your net profit for the month/year. Hypothetically, if you see 100 patients a month and the total expenditure to provide care is £5k then charging £10 as a margin per patient will generate you £1k. As a rule of thumb, a really well-run business should be running at a profit of 30%, so if you make £100k a year in revenue then your profit margin should be £30k. This is AFTER paying yourself as a clinic owner. Of course, if you’re working a business model based on self-employed clinicians and paying 50% of revenue then hitting 30% is almost impossible which is why generally the most profitable businesses work on PAYE. This, however, is another topic.
Penetration Pricing
This is usually a strategy for newer clinics or clinics looking to get into a product or service when others already offer it. Essentially, you decrease your price to generate more interest and get traction quickly. It’s important to understand that this isn’t about discounting or being cheap. It’s a strategy that every company uses. Uber is a great example. Remember the days you could get an Uber for £4? Not anymore. We did the same, charged next to nothing to get clients in and build our brand and service. So if you’re a newer clinic or introducing something new, don’t be shy coming in low. I see a lot of new clinic owners charge exactly the same price as established competitors, the argument being “I’m a better physio and my clinic is better”. I’ll be honest, that’s probably not the case on day 1 and even if you are, no one cares and no one’s going to know because patients prefer established businesses. Give them a reason to use you.
An important note, this is not a strategy if you’re established and can’t get patients through the door. Pricing likely isn’t the issue.
Pay What You Can
Again, this is for smaller and less well-known clinics. If a patient calls and says they can’t afford your price, don’t be scared to negotiate and ask what they can afford. There’s nothing wrong getting yourself busy in the early stages with lower-paying patients. If you asked us for a discount in our first week, you’d have got one, we needed to pay the electricity bill, we’d take whatever we could. However, remember this is a short-term strategy, you’re not a charity, and you can’t be offering your services for peanuts when you have full-paying patients ready to come in.
Owner Pricing + Tiered Pricing
There is absolutely no argument for charging the same price across all your clinicians. None. Tiered pricing is something every clinic should do, and patients will expect it because it happens in every other industry. The greater your experience, the more you should charge and often it’s not about time served but your ability.
Your best clinicians that are always busy should be at a higher price point than your new grads and moreover, as a clinic owner, your price should be right at the top end. If all your competitors charge £80 or your standard charge is £80, make yours £120. Don’t mess around with £2 price differences, make it meaningful.
Membership Pricing
Offer memberships where patients get various benefits. This might include guaranteed appointment times, shorter cancellation periods, communication by WhatsApp, lower appointment prices, one free massage a month.
We’ve seen a lot of clients generate significant recurring income with this strategy.
Peak and Off-Peak Pricing
If you go to a gym at peak times you pay more or you want to call out a plumber before 9 or after 6pm they’ll charge extra. If you find that you’re always busy at 9am and 1-3pm is quiet, implement pricing to reflect that and encourage people to come in off-peak. This doesn’t mean you have to charge more for your peak time prices, but it might be that you reduce your daytime prices by 30%. This all really depends on your current pricing, so there’s no hard and fast rule. But if you’re charging £45 for 9am and you’re oversubscribed, then charge £60 for 9am and £45 for daytime.
Demand Based Pricing
If your clinic is consistently busy, it’s a sign to increase prices. The higher the demand, the higher the price should be, conversely, don’t start increasing your prices if you’re half-empty. All too often we’ll see really strange pricing strategies not at all in line with what the market is telling the clinic. It’s pretty simple really, responding to the market is a crucial part of your pricing strategy.
Value Based Pricing
MSK Podiatrists tend to be really good at this, partly because of the nature of the service (nail surgery, Swift, etc.) but every MSK clinic should really think about charging against value. An example might be offering a price for specialised treatments using various types of technology. I don’t want to go down a rabbit hole here of discussions around efficacy and health tech, but if you’re going to offer specialised treatment especially with tech that you’ve invested in, then charge for it. The number of clinic owners that spend a small fortune on Laser or Shockwave and never charge for it is astonishing!
Performance Based Pricing
This is a controversial one and not one that I’ve yet seen implemented, but I wanted to put this in here, perhaps to generate some discussion if nothing else. One huge issue for MSK clinics is the balance between being commercial/profitable and at the same time providing excellent healthcare. Clinics are punished financially for getting people better more quickly, which leads to a conundrum. “How do I do my absolute best yet remain profitable?” The argument is that the clinicians that do a worse job, generate far more revenue and profit. This is nothing new. Consultants within the technology sector routinely implement corporate systems that are an absolute pain because they simply make more money by doing so.
So how could we implement performance-based pricing to tackle this issue? One option would be to charge more based on the outcomes achieved. For example, you could offer a basic fee with the potential for an additional charge if the treatment significantly improves the patient’s condition within a specified timeframe.
There are lots of practical issues to think about here and I’m sure a lot of arguments why this couldn’t work, but it’s an interesting concept worth exploring. If anyone has any thoughts then shoot them my way by email.
Service Level Pricing
Differentiate pricing based on speed and convenience. For example, faster appointments or immediate service could be priced higher. The obvious example here is an emergency appointment. This could also apply to out of hours pricing, bank holiday prices or even high pricing at the weekend. It’s always puzzled me that another industry quirk is charging the same price no matter what. If I call out a plumber on a Saturday or an emergency electrician at any time, I expect to pay more. So should your patients. This leads me on to another slight tangent if you aren’t offering emergency or out-of-hours help, then think about it.
Package Pricing
This is the idea that you charge a discounted rate for booking a package of appointments in advance. I’m going to leave it at that as I dislike this strategy for many many reasons, however, this is an entirely separate article and needs a fair amount of discussion in its own right. I may do a podcast/article on this at some stage if there’s enough interest in it.
What I will say is this; there are people in the industry who I respect that believe strongly in package pricing so I am open to being convinced, but from my experience and at a base level, it rarely sits well with clinics nor patients and is often more of a sticking plaster to cover other issues than a legitimate business pricing strategy.
Key Takeaways
Don’t be scared about changing your price, increasing it or being innovate with your overall pricing strategy. As I always say to clients “you can always change it back”.
Without spending some time with you, the reader, examining your business in more detail, it’s very difficult to give any exact advice on what you should do. However here are a few things that I’ve yet to see clinics have any issues with implementing.
1. As the owner of your business, your price should be higher than everyone else’s. So increase it. Especially if you’re the busiest person in the business!
2. If your follow up price is more than a 10% difference to your initial, increase it so it’s closer. An example would be if your initial is £60, your follow up should be no less than £50 and preferably £55 (if not the same price)
3. If you have a range of clinicians with different experience then offer tiered pricing.
4. If you’re consistently at a capacity of 85%+ then increase your price by at least 10%.
