When it comes to pricing your services there’s a number of ways to go about it, but there’s two basic forms of pricing that you should consider; basing them on the cost or basing them on the value. Each has its own purpose and can give you different results in both clientele and profit. So what exactly is the difference here? Let’s dive in…
So, Cost-Based Pricing is simply when you take into consideration all your overhead and your desired profit per service, and determine the price you’ll sell the service based on that. For example, your overhead for an hour massage might be $30 and you want to make $40 of profit per massage, so your price should be $70. Easy enough? Usually, this also aligns with the pricing of your competition, and this is where you can get lost in the shuffle. When you are only a cost-based business, everyone is often charging around about the same rate, because your overhead is most likely similar. If someone will do it cheaper, they tend to attract more customers. If you had a dozen department stores in your area, and they all offered the same or similar items, you’re most likely going to go to the cheapest – that’s often the deciding factor when trying something new. Why not save some money if you’re getting what’s often seen as the same thing, right? The competitive advantage is the price, and that’s it – at least on the surface, of course.
But this is why we want to have value as our competitive advantage…
Value-Based Pricing on the other hand is much more subjective, because it’s not just about covering a certain cost or trying to stay competitive with your pricing. Instead, it’s building the value into what you’re selling. If you’ve watched many of my videos or read many of my writings, you’ve undoubtedly heard me preach about the importance of selling benefits over modalities, results over techniques. I just did another video the week before last on this very thing.
This is where we, as massage therapists, build in and express that value. People have to know what value your services hold. There’s not a whole lot of perceived value in “I give a good massage” or “this modality is really cool”. Instead, are you helping them perform better at their next athletic event? Are you helping them to escape the stress of life? Are you easing their chronic pain so they can live the life they want? There is immense value in these, and your pricing should reflect that. People are willing to pay more for something they know will give them the desired result, for an experience unlike any other, and for a fix to their problem. If you can deliver those results, give them an experience they’ll never forget, and fix their problem, then you can charge far above what every other basic massage office is charging, because you’re delivering something of much higher value. But you have to let it be known that you do so. I was able to charge twice what most in my area did for a massage, and still stayed booked out a year in advance – not because I had crazy fancy amenities or anything, but because the perceived value of what I offered was so high.
So don’t forget, when you’re working up your pricing structure, look at the value of what you offer. If it’s a great, albeit, general massage experience, then a cost-based figure may be suitable. But if you’re delivering something beyond that, value-based pricing is more than likely the way to go.
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