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Posted by Gillian Kenyon, Sep 15 2007 2:37PM

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Pricing and what to charge when you start out in business

It's that time of year when the students from last years courses are up and running their own small therapies businesses and looking for work.

How sad then , that many of these well trained and expectant therapists will be lost to the profession by this time next year - simply because they can't make a living from their intended business. It is critical to get your pricing right - but who do you ask to find out what to charge

From the feedback of our 80+ members, it appears that college lecturers have long gotten this crucial matter quite fundamentally wrong, indeed, I am told that there are some who are still saying £25-£30 per hour is good money..... it's not if you have to carry all the costs of marketing, administration and answering telephone calls, institute feeds, CPD costs, travel, room hire, rates, electricity, new towels, therapy product consumables, accountants fees, promotional leaflets, internet listings, insurance (professional indemnity, premises, contents AND third party). And then waht about recompense for your time ?.

After 7 years of members giving us feedback, The H Club can quite categorically suggest that getting the price too low is one way of jeopardising your business before it starts.

Now we have to be sensible about things. Each area of the country does have more AND less affluent areas and market pricing can be important. However, NEVR have I been told by a client that my prices are too expensive. On the other hand, I have had clients comment that they are surprised I work for as little as I do for the quality of service that I give them - some have even left me an 'extra tip' in my studio room in addition to the fee they pay me.

At The H Club, we have done our costing AND pricing research. Consequently we encourage everyone to recognise that whilst the 'black market' practitioners may be charging suicidally low rates, as professional practitioners with businesses to run and mouths to feed, we MUST NOT work for fees or at rates that cannot sustain our business long term.

At this time, across all members, our standard hourly list price for an hours work starts at £44 - far from the £30-£35 that most college lecturers are telling newly qualified people to charge, or the £20-£30 that is common amongst black-market and 'cash-in-hand' practitioners who are working solely for pin money.

Each practitioner can then choose to offer a discount for client loyalty, for special promotions, etc etc. We advise members NEVER to print a price on their publicity materials. If someone wants a therapy and has your promotional metarials, you want them to call you to make an appointment and you can often get them to do that when they call you to ask the price.

The constant focus on 'charging less than everyone else in the area' is quite detrimental not only to our profession, but also to your own business. How do you expect other people if you percieve yourself as worth less than them ?. By all means, ALWAYS agree your fees BEFORE you make an appointment with a client. But do NOT think they will only be visiting you rather than the person next door just because you are cheap.

Indeed, by not publishing our price, when we are talking to our prospective clients, we can then ascertain whether they qualify for a pensioners discount, a discount for disability or a surcharge for treatments on a 'mobile' basis or for particularly 'product hungry' treatments. All much too much to explain on a price list.

What is more, we keep the costs of promotional literature down and if someone picks up an old brochure, they don't get a nasty surprise when they book a treatment after our annual price raise (that's pay rise to you and me - everyone else gets one so why shouldn't we?).

If we truly want to be considered as the best there is, and we want everyone who receives our treatments to value it for what it is - let's not price ourselves out of business before we begin.

After all, how many of your clients go to the cheapest hairdresser they can in the area, irrespective of quality of service ? Taking the analogy one step further, if you look at the actual cost for one hour of 'stylist cutting time' in your local hairdressers (try it, multiply it up but do not include the waiting around time or the cup of coffee and waiting at the backwash - but the actual 'cutting' time) - how much do you pay? It will probably surprise you - it did me.

So folks, there is plenty of room for all of us, our fellow professionals in the hairdressing market have shown us that. Don't be suicidal with your pricing. Work it all out, include all your costs - including the electricity and soap for washing the towels. If you only worked 50% of the time you are prepared to spend at your therapies business, can you still feed the cat, pay the mortgage and keep yourself out of debt ?. If you can't, you aren't chargeing enough !.

For more information about how The H Club and its members help each other to develop thier businesses, please contact us by e-mail: TheHClub@Hotmail.com
Mike Colquhoun
Sep 26 2007 1:21PM
Hi Gillian Your a Heroine.
This so needed saying so if you are newly qualified be brave and set your prices as high as your aspirations to help people, if you've struggled by for years then up your prices, you are worth every penny. May I encourage you by telling you that after too many years in practice to care to remember and still loving every moment I charge £100 for a first session so there is plenty of room and I have no problem in filling my therapy room. Mind I am good and I am boastfull!
Was that the Toc-H I had to look at? No.
Rambling again Mike
Gillian Kenyon
Oct 4 2007 6:38PM
Thanks for your supportive and encouraging feedback.

It confirms my observation that cut throat pricing does not mean more business - it simply means out of business !.

Sensible pricing, covering costs and generating enough for a good living leads to steady growth and a sound business, such as the one you have clearly established.

Sadly, an example of this sad misunderstanding of the effects of cut throat pricing policy occurred yet again this week.

A few days ago I passed a member practitioner a client who had already agreed she was willing to pay £44 per hour less 25% with her 'new client introduction voucher' reducing the price to £33 for her first treatment. But leaving the follow up treatments at £44 per hour which the client had said was acceptable to her because she couldn't get this particular treatment local to where she lived and she was a non-car owner/driver.

Imagine my absolute horror to receive an e-mail from the practitioner to say she had spoken to the lady when making the appointment and told her that she was only going to be charging £20 for the hour as that was what other people in the area were charging.

The client immediately backed off, said that she didn't think this was exactly what she was looking for just now and said goodbye without making the appointment. I doubt that she will be back no matter how low a price that practitioner offers her.

With fuel costs spiralling and the UK economy and interest rates being uncertain, now is the time to examine our costs with great care and ensure that we maximise every opportunity to bring our treatment pricing rates up to a level that can sustain us, our business and our profitability.

as well as lokking at costs, there is also a further equation we must apply if we wish to grow a firm client base:

2 treatments at £20 per hour take 2 hours of our time
1 treatment at £40 per hour takes one hour, but both prices give us revenues of £40.

Given a 40 hour working week - at £20 per hour, we can do a maximum of 40 treatments. We can earn £800 but not have any time left to do our marketing activities and promotions. Thus we have no time left and are unable to generate new clients to replace those who move away with work, who decide they want a change, who find themselves without spare cash for treatments, or stop cmoning temporarily for whatever reason. Let alone the effects on our physiology that may arise from repetitive strain and lack of suitable 'rest' time between clients.

But given the same 40 hour week, we could still earn £800 if we charge £40 per hour. This pricing structure would, however, leave us with 20 hours in which to do our marketing and promotion work and grow our client base. Maybe even take on an assistant therapist to cater for the extra clients we been able to generate over and above the repplacement for the usual losses due to the already stated reasons above.

Remember that close business match, the hairdressing industry?. It is interesting to note that Vidal Sassoon didn't build his hairdressing empire by undercutting the hairdresser round the corner on price ! Nor did The Body Shop build it's retail empire by selling shampoos and bath products that are cheaper than Woolworths or Tescos.

So everyone, take a note from the £100 rate given above. I am definately considering reviewing my prices again after Christmas. Not just because I want an annual pay rise, nor do I want a massive empire> It;s simply that I believe that what we do is worthwhile and that my clients deserve my undivided attention - and I wouldn't be able to give them the best possible treatment and my undivided attention if I was wondering where the next months mortgage money was coming from.

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