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Posted by Jemma Chloe Challoner Marsh, Nov 16 2007 5:57PM

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What should I charge

What price would you charge for a 45 deep tissue massage / sports massage ? I am due to have a meeting with a practice manager at my doctors surgery and he has said they would charge £10 per hour for the room. Any advice on your charges out their would be really helpful to help me prepare for the meeting.
Jemma C Green Somerset
Mike Colquhoun
Nov 17 2007 4:40AM
HI Jemma
If you look through the various forums you will find several enteries from Gillian Kenyon and her H club, one in particular goes into pricing quite deeply and is really helpfull for the novice. As a rule of thumb work out how much you would like to earn an hour then add half as much again and you might be near it. Most people in this industry charge far too little and consequently never earn sufficient to go full time and saddly most give up after a few years. The truth is if you don't value your service why should others? You will see she recommends at least £44+ per hour and I agree that is a minimum if you will take our advice.
Best of luck may the world beat a path to your door.
Yours aye Mike
Mike Colquhoun
Nov 18 2007 12:41AM
Hi Again Jemma
I was tired last night and didn't find the reply you were looking for, it is slightly down from this called 'how much percentage to pay for a room?' Posted by Sava Andric and Gillian gives a really good reply stressing that you are dealing with landlords, and the practice manager is just that, there to make as much money for the Parteners as they can. Make sure you get the best deal you can, read Gillian's reply and make notes to take with you it is excellent.
Knock 'em dead.
yours aye Mike.
Gillian Kenyon
Nov 24 2007 5:38PM
I have just read the latest article on the research into pricing from the survey early this year by EMBODY.

Having just returned from 2 weeks training in USA and was absolutely flabbergasted. The motto out there is:

'Remember: If you price your services at a low value, your clients will have a low value of your services'. How well those Americans put things.

The suggested £29.60 per hour pricing has been set on what is - in EMBODY's own adnmission - Hobby therapist rates !. Not all, but many of the repondents work less than 10 hours per week. They are probably those people who we know registration is trying to eliminate. They are those who are working in the 'black economy' - often not paying tax on their therapy cash income (saving them between 20% and 40% for a start), many with other jobs so this is just 'pin money'. They may have had superb training. They may have paid membership to a professional body and hold insurance, but they just can't make a living full time from their therapies - £29.60 says it all !

We must not allow this survey to blind us into false pricing. We should definately NOT base our prices around 'Hobby Pricing' at these low levels. Particularly if we wish to remain in profit and to build a business where we can be regarded as professional practitioners running a professional business with quality services being delivered and fair pay being received in return.

To support my arguments here, take a look at the internet. The £29.60 average from the survey is clearly out of all proportion to what is being listed in the very many internet advertised prices that are clearly observable and is no-where near what one would pay at any quality Spa, Hotel with Spa facilities, or Health and Leisure centre that I have ever visited.

Prices in the business and full time practitioner marketplace are clearly higher than the part-tme hobbyist charges. We all know that we wouldn't go to a dentist or doctor who was a Hobby professional - why should we expect our clients to do so ?.

To propose we adopt and base prices on a survey response of about 500 or so EMBODY members, when there are over 100,000 practitioners in the marketplace (given estimates I saw last week) is also somewhat flawed. Clearly we need to review market pricing but we also need to examine costs and what we need to earn to make a decent living.

At least the survey article admits that the £29.60 per hour does NOT reflect full time working rates of pay and charging rates. It does talk about future articles going more into depth about pricing - I just hope we can get a better basis than this survey has shown. As Mike so clearly states above, we should use sound business basics to determine our fixed and variable costs, to set margin prices and then mark-up prices which we would wish to achieve.

Sure prices need to be realistic but there is always a trade off - do you work flat out for 35 hours a week at £29.60 per hour or do you work, say, 23 hours (one third less) for the same money (using the The H Club 2007 rate per hour of £44).

Flat out, you have no time to rest those muscles you are using, to refresh your mind so your clients get the ultimate treatment. You won't have time to market yourself or build new business either. Oh, and what about doing the accounts, re-ordering, cleaning, laundering all those towels ?

Truly business minded practitioner representatives with practical expertise do exist out there in the marketplace, we need our instutute to enlist their help in positioning our profession and discussing how to establish your pricing.

The survey was obvioulsy an attempt at this but has led to frightening results. As with all surveys (and I have had over 20 years experience of draughting, collating and analysing such things being a Chartered Marketeer in good standing in the profession) we need to examine closely what the results are showing and how they arose. We don't see anywhere what the max and min or the mode prices were. The survey only uses median prices - averages but for part-timers NOT full-time professionals! By the way, full time is at least a 35 hour working week for most people I know - even teachers and most people do considerably more !

It would be flawed logic to base your pricing on £29.60 per hour. Like oh so many other would be practitioners just starting out, who have taken such low prices when quoted them by their college turtors - you really do need to do your homework and calculate your costs first.

I am sure that EMBODY's forthcoming articles will demonstrate how the £29.60 Hobby Pricing would be going backwards for those of us who are trying to make a professional and highly respected business out of our therapies practices.

Even in the lowest areas the practitioners I know have been in excess of £30-£35 per hour for well over a year now. Most are up to between £40 and £60 for reflexology and aromatherapy, £40-£45 for any form of massage (sports therapy massage even being up to £100+ per hour), £60-£75 plus for nutrition and life coaching is £50 up to £90.

All it takes is to look at the internet to see what people are advertising to know that £29.60 is plain ridiculous !

I will be very interested to read what the forthcoming EMBODY pricing articles will say
about how to do this. If they need some help, I am happy to draft an article on it for them
Elaine Cawkwell
Dec 1 2007 3:46PM
Hi All,
I charge £30 per hour and thats with all the overheads i have to pay for my business and staff.
Take a good look at your area and all the possible competition near by to distinguish what to charge, is there a market for it in your area? why would they come to you and not someone that charges alot less?
There is a lot to consider when pricing your products and services.
I am one of those that would rather have 5 clients through the door a week paying £30 an hour than 1 client a week charging £40 per hour.
Its quite a hard question to answer as its up to the individual, the premises they are at, the location, the market for it etc.
Good luck in what you decide x
Gillian Kenyon
Dec 1 2007 7:13PM
It is interesting to read Elaine's comments.

Quite clearly she is identifying that there is a difference between what you may wish to earn as an employee and what you may wish to earn when self-employed or operating as a business owner and taking all the risks, down time and costs from your client revenues.

Elaine is quite right to state that there should always be an element of market pricing in whatever you do. The question being posed though is - if everyone else can sell their services for £5 should you also follow ?. If you think and sell your services cheap just because everyone else around you does - then you will be just as busy as they are. But will you be in business for long ?.

If you sell the same or even cheaper, you may be busier but aren't you actually just forcing the next person to sell cheaper than you ?. The downward spiral begins and continues. With 100,000 therapists in the country, how low can you afford to go ?.

If you wish to utilise sound marketing principles, don’t just look at what others are charging, do your own research. What are people prepared to pay for YOUR service?. How can you make them come to you in the first instance and how can you keep them loyal to you so they come back year after year after year ?. If people consider your service is the best fit to their perceived needs and meets their specific requirements, they are bound to be prepared to pay that much more for it than a generic, ‘same as everyone else’ treatment..

If the clients you seek simply want a service that is the same as they can get anywhere else, for the same or less money – then they will pay whatever is around but don’t think you will retain client loyalty. You won’t. Those clients will be as happy to go to anyone else as to you, no matter how friendly and cheerful you are. You need to establish a differentiator to keep them loyal to you (otherwise known as a ‘Unique Selling Proposition’) and it is this that clients will pay for and stay for.

But back to the question ‘How much should we charge ?’. As this is Elaine’s first year as a member of EMBODY I am not sure if she has yet witnessed all those thousands of practitioners who have started out in business simply to fade away and find other careers within less than a two or three year timescale – disillusioned and hard up. I note from her web-site that she is actively discounting hard to try to encourage new clients to her new shop.

Since starting in practice myself some 7 years or so ago, I have sadly seen numerous superb practitioners leave the profession. As a part-time college lecturer this past 5 years, I am always saddened by the loss of so many student graduates who leave college with excellent qualifications and training in their therapies, bags of enthusiasm and great ideas, only to find themselves unable to make a good living from their therapies.

Elaine is absolutely right to point out that like herself, practitioners should base charges on costs rather than how cheap someone else is. Clearly, if Elaine is paying staff out of her £30 and making a profit, they must be working for far less than £30 per hour.

Evidence seems to suggest that salon owners and spas are paying anything from £5.50 to £11 per hour to their therapist employees. The reason for this is clear. They are honourable business people who would not otherwise be in a position to pay for the costs of running the business, paying their taxes and making a profit for themselves as well as providing employment for others if they paid more.

So what are all these costs and why are wages so low and how does this impact on how we should set our price?. Lets take a look at just a few of the things that come to mind immediately.

Capital Costs
These are incurred for items having monetary value, which can be realised by selling them. Things you MUST have else the business could not exist in the form you have it. It could include:
- premises (outright purchases)
- costs of equipment
- computer costs
- furniture
- and other capital assets
Without your Capital investment, you would not be able to function – the minimum you would need are a treatment couch/chair and covers even if you work from home. If you are mobile, don’t forget you will need a car or other transport, if purchased it goes here, if leased/rented it is an overhead cost.

Overhead costs

Overhead costs are expenses not directly related to the services and products you provide to your clients. They are sometimes referred to as ‘indirect’ costs.

Fixed Costs
If you didn’t have any clients come in for a while, you would still be expected to pay out for these expenses.
- their premises (mortgages, leases or rent)
- loan interest / bank overdraft interest payments
- business rates
- lighting
- heating
- water rates
- towels, bed covers etc
- buildings and premises maintenance and repair costs
- costs of staff not directly involved with delivering the service – ie the receptionist
- accountants fees
- marketing fees
- advertising fees
- annual electrical appliance testing fees
- employers professional indemnity insurance
- employers liability insurance
- staff training

Variable costs
Variable costs are those directly associated with the services you deliver to your clients and the products you may sell them, ie the more you sell, the more the expense.
- laundry bills
- travel costs if you visit clients
- stationary
- postage
- costs of products consumed during treatments
- costs of products sold to clients
- wages for productive revenue generating staff hours plus staff costs during the down-time between clients (if you pay them) or other employee costs when paid ‘as required’
- employers National Insurance contribution on staff wages
- Value Added Tax (relates to revenue)
- business profits tax (relates to profit on revenue)
These costs can be spread directly across the client hours you work as they vary depending on the client hours worked. Hence an hourly cost value can be obtained for each.

Don’t forget – those discounted price treatments and those free promotional treatment hours are also mounting up these associated costs but the direct revenue from such promotional sessions is not necessarily covering them so should be viewed as a marketing overhead - a 'loss leader'.

If mobile, your time in travelling to and from clients should also be taken into account and divided into the treatment price to reduce it to an earned rate per hour involved in travelling and delivering the service.

It is worthy of note that with regard to VAT, as soon as a business has a turnover of in excess of £64,000 in any 12 month period it has to pay over 17.5% of it’s income to HM Customs and Excise. At £30 per hour, that is 2133 hours in a year or 41 revenue generating hours per week. Taking VAT alone, £30 per hour soon turns into just £25.54 to cover all the costs and to generate wages and profit.

With regard to National Insurance, if you're self-employed
- you pay 'Class 2' NICs at a flat rate weekly amount of £2.20
- you also pay 'Class 4' NICs as a percentage of your taxable profits - you pay eight per cent on annual taxable profits between £5,225 and £34,840 and one per cent on any taxable profit over that amount
- if your earnings in the 2007-2008 tax year are expected to be less than £4,635 then you may be entitled to the Small Earnings Exception (SEE), meaning you don't have to pay any Class 2 NICs - you can apply for SEE for the 2007-2008 tax year on form CF10 although this can, in some instances affect your ending state pension and needs careful advice

However, for salons and spas, employers National Insurance adds 12.8% to the wage bill for employees whose weekly pay is in excess of £87 – on a 37.5 hr week that would be anyone earning more than £2.32 per hour which is below the minimum wage. For those working say, 10 hrs per week, it would be payable on the equivalent of £8.70 per hour. So, for every hour an employee who works 10 hours per week is paid £8.70 or more, a further £1.11 has to be paid to the government. That £25.54 is now down to £24.43 less the £8.70 wage ie it is now only worth £15.73 and that assumes the employee is working 100% of their 10 hours generating full price revenue.

Taking Elaine’s price to the client of £30 per hour, if she wasn't working aloine and was employing others, she would now have all the following costs to cover from her remaining £15.73: laundry bills, stationary, postage, costs of products consumed during treatments plus the fixed costs of premises, loan interest / bank overdraft interest payments, business rates, lighting, heating, water rates, buildings and premises maintenance and repair costs, costs of staff not directly involved with delivering the service – ie the receptionist, accountants fees, marketing fees, advertising fees, annual electrical appliance testing fees, employers professional indemnity insurance, employers liability insurance, staff training, telephones etc etc etc

So how does all this affect the way we determine our price ?. If the price you charge per hour is greater than the variable cost, then the margin will absorb part of the fixed costs. After a certain point, profits will be made.

This is based on the principle known as ‘marginal costing’ and explains how some people can sell their services very cheaply – they have such massive client throughput that the small contribution over and above that of the variable cost adds up the more clients are on board.

So, why is all this important ?. Well, if the selling price is less than the total expenditure on fixed and variable overheads the business is definitely going to make a loss. It doesn’t matter how much or how little you charge your clients – you won’t be around in business for long.

More importantly, if the hourly charge is less than the variable cost per hour worked, the loss will increase as more clients are taken on. It won’t matter how hard you work – you won’t stay in business and the more clients you have, the worse the situation will get.

So, if you are going to charge low prices – make sure you can guarantee to get and keep loads of clients and have plenty of people working for you at below marginal cost.

To get clients AND more importantly, to keep clients, you will need that USP – and there is the crux of the matter.

If you have a USP, no matter whether you work on your own or whether you are a salon, spa or clinic employing other therapists, your clients will be willing to pay what you ask and not just a figure based on how low everybody else prices a similarly named generic treatment.
Mike Colquhoun
Dec 1 2007 8:03PM
Hi Elaine
I did sneak a look at your web site, liked it very much map, blog, prices, remedial massage, season's topic and horse rider specific great stuff.
I've started with something nice so you know what comes next, please don't take offence but.
Being a bit pedantic I know but taking your own figures you aren't going to survive with five clients a week at £40 let alone £30 but extrapolate £30 *5 = £150, £40 *4=£160 plus an extra hour to give to clients and to cleaning premises, washing towels etc: doing the books and working out the advertising to ensure customers next week. And don't fall into that trap of money off for everyone O.A.P.'s, students, income support, old uncle tom cobbley and all.
Now try real figures for a bad week 20 clients *30= 600, 20*40=800, I can pay my rent as well as all those jobs and be fresh, to get to my income you've still got ten patients to do, 6 at thirty but you're giving away so many cheap rates that you need at least ten more, by the time you've done the rest of those jobs you're going to be exhausted.
Going bust is easy, working yourself to death is also an 'easy' option, at your prices you are relying on income support from Hubby! Not running a business. Sorry to be brutallly honest but your advice for someone starting out and trying to earn a full living from this business is poor to say the least.
I feel you can't have read Gillian's excellent advice. Not the one above this where she has gone off on a bit of a rant, well so have I, but the one slightly down from this in reply to 'how much percentage to pay for a room?' Posted by Sava Andric.
Just had a look at this season's topic, if you really want to learn how to help M.E. Fibromyalgia and such track down my web site and have some fun, then organise some friends for a class.
Now I'm advertising!
Be a good boss, one who pays well for shorter hours. This motivates staff who remain enthusiastic which brings in custom.
A bad boss pays poorly and expects long hours, demotivating staff and then wonders why their competitors seem to make more money.
Life expectancy for businesses in this industry is short, less than five years average.
I'm sure you've worked out why I think that is. To start where you have is no great mistake but up those prices by more than inflation for the next three years or you'll not last.
May you have much success
Yours aye Mike
Elaine Cawkwell
Dec 2 2007 12:01AM
Can I say as a new member, i am quite taken aback by my reply to a question that was : what would you charge for a deep massage? £45 per hour?
It didnt state anything else about how to set up, keep, or maintain a business, hence why i myself didn’t want to lecture in my reply.
I have virtually said have a look at the market around you, location blah blah and see what the rate is, which is pretty good advice to the actual question asked.

I do take offence to Mikes reply regarding MY financial situation and virtually saying I rely on my husbands wages to survive? You dont know me or my financial situation or how much i pay the receptionist or anything about my business.
I have three rooms at my premises i rent out which covers my rental overheads. I pay £6 per hour to my receptionist who works part-time which is a great going rate in such a poor town, in fact, people are pretty lucky to have a job here (Blackpool) statistics show that,(you could now do some research into what people charge in our area for massages and what people pay staff in this town, just order a blackpool gazette on line Thursday issue, the going rates here are absolutely appalling, I stated to my receptionist before taking her on that to start it is £6 per hour, after the first year in business if successful, the rate will go up to £7) the other therapists at the premises as well as myself do the reception duties when our paid receptionist isn’t on the premises. MY other therapists are self-employed so i dont have to pay them anything. I have had businesses before and done extremely well from them because i go into it 1000%, I have done very well and bought houses to rent out and land that i have my own private stable yard on in a extremely sought after location because of businesses I have had in the past. Iam mentioning this to show you i do very well at what ever i choose to do, i go at it full pelt and love it which is a bonus in any career move people wish to take.
I had a very good client base mobile for a few years so chose to have a premises (as family ties weren’t as hard) to attract more as in passing trade and because i took on too much mobile work and wasn’t getting home until after 11pm at night, now I have work then home which is a much better balance for all around, I was very busy because of the offers I have for clients, every night I had homes to go to, this is when exhaustion WAS kicking in-because of all the other commitments and clients, hence why I chose to look for a premises.
I choose to offer special rates here there and every where because of the poor area we are in (DHS area) i have been open just four weeks and already have EIGHT new clients as well as my mobile ones that now come to me instead of me to them. The ME (2)sufferers i now have because they couldn’t afford the person they used to go so opted for no treatment what so ever over a period of time, came through my door after reading my rates on our window and couldn’t believe it, they booked and now re-book, they don’t lose out in therapy that satisfies them. These are new clients. There are many many elderly people where my premises are situated so i obviously relate to them in offering my 'cheaper' rates , this is what i call researching your area. I have sold 3 gift cards in the past 4 days, I got my first ever tip from a client on friday which was such a bonus, in fact he has re-booked for a fortnights time. Just because i charge cheaper rates (have to because of the DHS and OAP area I am in) doesn’t mean i offer a cheap rate service. I gave a 60min treatment to a lady that did a fly on the wall sneaky visit on behalf of an advertising company and she is coming back in january to do an editorial 'new year new you' as she was impressed with the service and loved the contemporary feel.
Im not saying we're great, but i have only advertised in 2newspapers in my area on just two inserts, i have all these new clients and super feedback, I’m lucky, but it isn’t all down to luck, its exploring every possible avenue, so i am doing something right. I don’t know if I’m going to be here one year or ten, but does anybody? I find the latter reply quite an off putting one for someone wishing to start out and my advice to anyone wishing to- would be- take the plunge, at least you can say you have tried! i have already met some lovely lovely people, i haven’t even been open one month. I would also wish to add, I’ve been told clients like me because I’m not a money grabber and they feel like they actually matter which brings me onto something else, i have also turned away a potential client by asking them to seek permission off their doctor due to treatment he recently had on a back problem that i wasn’t quite happy with, if i can sleep at night by offering a great service and have people re-book and be happy AND leave a tip all within just four weeks of opening, i am so very very happy. Yes i know being kind hearted to people doesn’t pay the bills, but hard work does! Surely you must know that if i have taken the plunge into the proper business world by way of premises, then i had money to put into it! (My very own money by the way, not the banks, not the husbands, he has enough to pay out than fund my shop, or provide for us totally), I have always earned my own money, always been independant and lets just say, can quite easily live off what i have earned and made over the past few years to help fund my new venture, you don’t go into thing naively when it comes to businesses, just basic, music licence, data controller licence, insurance can be daunting for some. Im not rich, but im super at managing things and always have been, I don’t let things like money get in the way of a venture, I go at it,do what I can, if it doesn’t work I didn’t do it right, because im this way out, it makes me work so hard and put my heart and soul into it. Word of mouth is 40% of anybones new business especially in this sort of work. We offer a professional yet friendly service which obviously works.
I will read up about ME in more depth but for the time being my two clients say i can use them as case studies whenever I want and to phone them up anytime in between bookings. Iam interested in studying the science behind it but anything else, im leaving to my ladies as at the end of the day, they are the real life living study which beats studying it in depth at this stage. Like all therapists, we never stop learning, our clients help us learn without even knowing it. I have been doing mobile work for nearly the past 5 years, I think I have an idea of what the people in and around our surrounding areas like to pay or don’t go for treatments at all.
If i last 12months, i'll be so happy because ive tried and like many people around me, they say i couldnt have done anything better. I was told by a great guy don’t expect to draw a wage in your first 12months, taking this into consideration, I worked like a demon prior to it, saved what I could then put into the place I am now in. Im enjoying my time, if someone is energetic about a project then help them along, wish them good luck tell them what they want to know but don’t go on and on and put them off, its different for everyone and you dont know a persons circumstance. They may have someone helping them by giving them an injection of cash to start them up for all we know, all we can do is help them along their way and hope they work it out themselves and learn. I have a therapist that rents one of the rooms off me, she charges good basic prices for our area to build up a client base she hadn’t had previously, she charges these basic prices due to area, location, product, demand etc and she has no outlay other than her insurance and rent to me! Doesn’t stop her charging a nice comfortable rate either! She has lots and lots of enthusiasm too, the very first step to getting somewhere in life I think.
Quite rightly i take offence to someone saying i will burn out in the first year, sponge off my hubby, im a rubbish boss because i pay rubbish money,virtually bad at business because i offer special rates? dont the big boys do that everywhere, just look at your general high street? now they arent burnt out are they? told me to seek advice on his website for ME, did i ask for that advice? i will learn all i wish to in my own time. I suppose you are a rich therapist?
Elaine x
Mike Colquhoun
Dec 2 2007 3:13AM
Elaine
I'm so sorry to have upset you so very much. You're self employed, I was meaning be nice to you. However I am so very sorry to have annoyed you and critisised you so harshly. It was not menant to be nasty it was intended to help. Please forgive me
Yours aye Mike.
Caroline Tipler-Rowlands
Feb 20 2008 10:10PM
Hi

I do hope both Elaine and Mike get to know each other a bit more :) I really appreciated all you said Elaine in your reply ... and Mike I read your comments with the sense that you were doing it with a good heart and to help people just starting out. From Elaine`s reply it is clear she knows all the pitfalls and also is excellent at monitoring what is happening and its cost effectiveness.

Truly I believe that both of you have so much energy, experience and genuine caring that I reckon that as a combination of advise I doubt very much that you would would disagree with each other on a more detailed level.

So please please do both continue to post ... I got a lot out of reading both of your comments and analysis.

It seems that Elaine has made a considered and business like and professional decision based on a well thought out plan of promotion and client care.

From Mike`s contribution I get that please don`t undersell yourselves out of fear. Do what Elaine is doing in the professional way that she is doing and continually seeing opportunities and monitoring her decisions. My guess is that Mike would say plan plan plan, and if you are going to give special rates let it be because of research and professionalism as displayed by Elaine. Not because you have not done a proper plan and or are scared.

And what is clearly a strong message coming through from both Elaine and Mike ... take care of your clients, relate to them as individuals. If you do that, and are professional in your planning and don`t hide your head under the pillow when it comes to being financially aware - you will make it. Especially when you have the resource of such people as Elaine and Mike to draw on for free :))

Caroline Rowlands

p.s. I`m not a wiz on IT and have used a template to put together my website. If Elaine and Mike read this I`d be really grateful for your feedbacka and critisms/advise
re how my site grabs you www.reikipathway.com

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