Ethical osteopathy business and marketing advice delivered in a British accent. You’ll find me running, at the beach or inside our courses helping osteopaths create their perfect work-life balance.
At Osteohustle, we find that new clinic owners struggle with how to price an osteopathic treatment and often base it on local competition alone. Meanwhile, existing clinic owners debate the best times to increase their prices, how it affects current patients and how much to raise them. While ensuring the clinic is making a profit is essential for new and existing osteopathic practices. This article will share our experiences helping osteopaths set and increase their prices.
If you’ve ever asked yourself the following questions, you’ll find help in this article.
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Use this as a guide in setting osteopathy treatment prices and increasing them ethically.
Knowing how to price your services will help you generate positive cash flow (where more money comes into the clinic than out) and have a healthy business throughout your businesses life.
There are no hard and fast rules when pricing osteopathic treatments and other services. As the owner of your business, in theory, you could put whatever price you wanted on the services you provide. However, following this framework will ensure that you don’t underprice your services.
As a business owner, it’s your responsibility to make sure you can pay yourself, your staff, and your bills. Moreover, it’s essential to create a profitable business so you can continue to help patients for a long time to come. In a sentence, correctly pricing your services allows you to invest in growing your business and achieving your ideal work-life balance.
Osteohustle’s 5-steps to smart pricing:
The cost per treatment for osteopaths is how much it costs your business to perform a treatment. But not to be confused with how much you charge a patient for treatment. Therefore, it’s essential to understand how to estimate the costs involved in delivering a treatment as accurately as possible to make sure you’re covering your expenses.
Consider researching and guesstimating your expenses, including:
Once you have a list of expenses and their associated costs, take the annual expenses and divide them by 12 to get a monthly cost. Having this figure will give you a good idea about how many patient’s you’ll need to treat to break even, thus setting your prices accordingly to hit that target.
Throughout this framework, we’ll use our imaginary business called The Redwood Osteopathic clinic.
For The Redwood Osteopathic Clinic, our costs are as follows:
When considering how much to charge for your services, it’s essential to include a healthy profit margin. Maybe you’ve not heard of a profit margin before, but it’s the most important number in business. No business can survive for a significant amount of time without making a profit.
We often see osteopaths running their clinic at less than 5% profit before paying tax. As a rule of thumb, 5% is a low margin, 10% is a healthy margin, and 20% is a high margin.
Three factors occur when a clinic has a zero or low profit margin.
In our example for The Redwood Osteopathic Clinic, we’ll add 10% and 15% profit margins. Then, you’ll see us adjust this margin as we move throughout these 5 steps; this is just a starting point.
We now have a price for new and returning patients based on our fixed and guesstimated expenses and have added our 10-20% profit margin. So it’s now good to check your pricing against your competitor’s pricing for two reasons.
You can also comfortably and ethically price your services higher than your competition if you have an outstanding brand, provide a service that’s exclusive to your area, a unique selling point and/or many years of experience. However, as we mentioned before, you are well within your right to price your services at whatever you wish.
Now we know the average new and return prices of local practices, we have the option to match the local average, thus increasing our initial 10% profit margin prices of $93.50 and $88 to $100 (18% profit margin) and $90 (13% profit margin) respectively.
Right! We now have a rock-solid foundation of information to create an educated first price. You know what your competitors are charging, what each treatment costs the business to provide, and you have an idea of how much profit each treatment will make.
It’s time to use this arsenal of knowledge, play around with different profit margins and compare them to your local competitors.
We know that The Redwood Osteopathic Clinic will charge $100 for a new patient and $90 for a return. So that gives us an 18% profit for each new patient treatment and 13% on each return visit.
Come back to this framework often. First, block out a recurring 30-minute slot every 3 months to use this framework to review your costs. Then, if they need to be adjusted, block out another hour or two to implement the price change.
Check if your local competitors have increased their prices, and refine your prices as your costs change over time.
When changing your prices, consider everywhere your prices may be listed, such as:
Consider emailing your patients to inform them of any change in prices. And of course, change them in your payment taking systems/invoices/online booking etc.
On average, you should expect only to change your prices once a year. However, it’s crucial to conduct a quarterly review so you can be aware of any changes and act smart if necessary. Set your mind to start pricing, or check your prices based on this framework, opposed to guesswork.
This article has covered a 5-step plan on how to price an osteopathic treatment and increase your prices. We help osteopaths plan, build and grow their dream careers with coaching that supports you for years to come. Our coaching process involves getting to know your business as well as you do so we can understand your vision and help you achieve your goals.
We offer Osteopathy Business Coaching if you’re looking to set goals that matter, skip expensive learning curves, prevent burnout and become a better problem-solver. If you also want to avoid putting things off, stay accountable and transition your clinic into a successful business, osteopathy business coaching is for you.