So much of the time when I see a therapist saying they charge a certain…
Is Raising Your Rates Really The Answer?
Anytime a massage therapist mentions that they’re not making enough money or otherwise struggling financially, the very first thing I see people racing to say is “raise your rates”. This is the go-to answer for financial trouble for so many people.
Raising your rates is not the be-all-end-all answer to financial issues in a business.
Would raising your rates potentially help? Sure. But it could also hurt your business. Because how the heck does anybody know what you should do in your business unless they’re intimately aware of all the inner workings of your business??
So what’s the real answer when you’re facing financial issues as a business? Let’s discuss the reality of it.
Raising your rates may sound like a great and easy solution to financial woes, but it is most definitely not the first thing to jump to. So here’s the top 4 questions I want you to ask yourself if you’re facing financial issues as a business.
#1 Do you actually know what you’re making?
This is the first thing I go to, because I see a whole lot of therapists who think they know what they’re making but don’t have a good handle on their numbers at all. They’re transferring over just enough for this or that bill from business into their personal account as needed to pay something, and that’s it. They’re not taking stock of what’s really going on financially in their business pretty much until tax time. And if that’s you, I’m not trying to make you feel bad or anything, but I am calling you out…because it’s really hard to sustain a business like that long-term, and you definitely can’t set and reach big goals doing that sort of thing either.
So the first step in getting your financials under control, is to truly understand your financial situation, so you can then set appropriate and realistic goals for moving forward. Even if raising your rates really is the answer, how do you know how much to raise them by if you don’t know what your current rate is doing for you and what that rate increase would truly mean for your business. Know your gross and net income for the business. Know your total and hourly personal income. That’s the bare bones basics you need to have at the ready.
And that leads us to…
#2 Is that appropriate for the work you’re doing?
This is where a lot of people balk at me. I don’t like having this come-to-Jesus meeting with business owners I consult with, but it is necessary, so I do it. So if you’re not having a consultation with me where we’re working through all this stuff together, you’re going to need to have this come-to-Jesus meeting with yourself. Are you earning an adequate wage for the work you’re doing…genuinely. Yes, massage is wonderful, a good massage takes skill, and a great massage requires even more from the therapist. You need to be able to objectively look at the type of work you do, the benefits you provide to clients, the results you’re getting for them, the experience you provide, and the uniqueness of all that relative to the local competition. If you’re in line with most of the other therapists in your area on all those fronts, then your pricing needs to be along similar lines. If you’re entirely different than everyone else, then that’s when you pricing can increase dramatically. The problem I see is a lot of therapists are wanting to charge champagne rates for PBR services. Your skills, benefits, client experience, results, client load, and all that, has to be in line with your pricing. Charging more is perfectly fine, but you better back it up with your skills.
#3 Do you have healthy financial habits and a strong financial foundation?
Increasing your rates doesn’t necessarily mean you’re going to make more money in take-home pay IF you don’t have healthy financial habits and a strong financial foundation. You need to be able to control your expenses, accurately analyze what’s necessary and not so you can make cuts when possible, without hurting the business or client experience. You need to be regularly depositing into a savings account that you don’t touch. You need to save for large expenses instead of relying on financially risky “I-want-it-right-now” type of financing like high interest credit cards and loans. You need to regularly run your numbers and metrics to understand all the intricacies of the health of your business.
I see a lot of business owners charging exorbitant prices but still struggling financially because they lack healthy financial habits. Make sure you get your finances and yourself under control before just giving yourself more money to waste.
#4 Can your market support a rate increase?
This part, I tend to get pushback on too, for some reason. A lot of people are convinced that any market can support high prices. Every area has enough wealthy people who can afford it, right? Ummm…no. Not everywhere does. That’s first. The demographics and income simply aren’t there in every area. It’s up to you to do the market research to see if there is.
Secondly, not everyone wants to work with that particular population of the market, and that’s ok. You may have a very niche section that doesn’t fit those who can afford a much higher rate. The question then becomes, which is more important; the niche or the income? Because your rate is going to determine which of those stays and which changes.
So please, if you’re facing any financial issues in your massage business or you need to make more money…whatever it is, ask yourself these questions first. Because raising your rates may very well be the answer, but it’s most definitely not the first thing to jump to, because it’s not always the right answer.
If you need more help on setting your rates, check out my class How to Set & Increase Your Prices.