Pricing for Profit

Pricing for Profit

Treatment Pricing

Clinic managing director Ralph Montague discusses how to determine the worth of your treatments and how to effectively increase your prices…

For many practitioners, one of the scariest questions of them all is, how much? Pricing has to be one of my favourite topics due to how people consistently underestimate their value and the fear it somehow drives in clever, competent people with whom I respect. Yet it’s one that in truth, is actually very simple. Yet, sometimes practitioners fear the pricing question more than any other aspect of running their business and its generally down to a lack of confidence that they will lose their clients to the competition and another favourite “it’s different around here, people just won’t pay it”.

In this article, I will explain what you should be charging your patients for the services you provide, the dangers of low pricing and how you can go about increasing your prices.

How Much?

A very common question that I hear is how much do I charge for my services?

The first fundamental factor of pricing is that what you charge your patient per treatment is not what you get as profit per treatment. For example, if you are charging £400 for a dermal filler treatment, only a percentage of this will actually be profit. You need to factor all your costs in, such as those shown in Figure 1. Arguably, the most important consideration is your profit!

Figure 1 is not an exhaustive list, but provides you with a comprehensive set of costs that must be covered if you want to stay in business. I don’t believe there is a set-in-stone profit percentage figure for our industry, as this will depend on your experience, your marketing/PR skills and your perceived expert status in the market place you operate in however Martin Norbury aka The Scale Coach an expert of systemising and scaling up businesses generally quotes 15% net profit as a good benchmark for a healthy profit.

The first mistake I see when it comes to pricing is when practitioners set a benchmark price according to what their local competitor is charging. For example, you may see that your nearest competitor is charging just £500 for a HIFU treatment, so you now feel that you have to drop your prices and match them. However, you may not have considered the fact that the practitioner down the road may have less training and experience than you, that they have bought a low-quality device, that their clinic may not be up to the same fit out and cleanliness standard as your clinic or that they may not actually have many customers and are desperate. The bottom line is that when setting your prices, you need to set the price for yourself.

So, how do you achieve appropriate pricing for you and your clinic? Firstly, decide what you want to earn per annum ie your gross salary or profits/dividends? Be realistic, but at the same time be ambitious and don’t get bogged down in any self-doubt that you may have. To get a good idea of what one should be earning I spoke with John Sellers of Arc Aesthetic Professionals who quoted the following level of earnings for those in the industry:

• Junior Aesthetician £20k
• Experienced Aesthetician £28-30k
• Junior Nurse £28-30k
• Experienced Nurse/Prescriber £40k
• Experienced Doctors £300-£500 per day plus profit share.

The above figures will vary based on London compared to the rest of the country. Also both John and I agreed to get an earnings level for a clinic owner varies so greatly it would be wrong to even attempt to quote a figure here.

Once you are confident that you know what you want to earn, you can then work out how much time and resources you have and what you can realistically deliver in a year ie how many treatments a day and how many days a week you’re going to work? Once you know this, you can then work out the prices you need to charge, factoring in your costs to get you to this figure.

So, for example if your are doing 4 treatments a day and the average price of the treatments are £500, you would simply calculate £500 x 4 = £2,000 per day (this is sales NOT net profit), multiplied by the number of days you are working ie 5 so 5 x £2,000 = £10,000 per week, once you have taken holidays out say 6 weeks per annum you are left with 46 weeks x £10,000 gives you £460,000 per annum.

Next add your costs in so total monthly outgoings eg rent, bills, broadband etc plus the average costs to perform each treatment will give you an approximate of how much you would expect to earn ie net profit.

Figure 1: Your possible expenses

• Rent rates, utilities, treatment staff, support staff, marketing, risk of complication and the time taken to resolve, insurance, trade bodies, consumables, capital repayment of equipment and machines, opportunity cost of capital, reinvestment back in the business and, arguably the most important consideration, your PROFIT!

Increasing your prices
Sometimes you may need to increase your treatment prices due to increases in costs associated with your business, so it is important to keep track of your running costs, as described in Figure 1. However, there are other times where you may just get to a stage where you would like to increase your prices to gain a larger profit. If there are no extra costs associated with your business, an increase in your services is pure profit. This could be used to help you to invest in growing your business, such as new premises, new advanced equipment or even a pay rise for you and your staff.

Another reason you might choose to increase your prices is to attract more ‘higher end’ patients. I have noticed over the years that the 80/20 or Pareto rule is most certainly in effect here, we find that 20% of clients generate 80% of the problems and they also happen to generally be the lowest paying customers. Obviously, there are some problematic wealthy clients but the most hassle generally comes from the lower end of the market. This is because that money is so much more significance to them, another way to appreciate this, is that someone worth £1m net assets, £500 is not significant to them as its only 0.05% of their wealth (they could afford 2,000 treatments) whereas a £500 treatment for someone whose net worth is £10,000 it becomes 5% (they could afford 20 treatments) of their wealth, so a big cost!

However, simply increasing your prices won’t automatically attract higher paying patients. If you are to increase your prices, you need to ensure that you are also offering higher quality and value. For example, you need to ensure that your treatments, your results, your aftercare and the whole overall feeling of the service you provide is creating high value to your patients. This doesn’t need to be expensive to up your game, for instance you could offer everybody a high quality smoothie or bottle of mineral water, all treatments over £300 get your favourite anti-aging cream which you may sell for £40 but actually only costs you £15, you could up the game of your fit out, for only a few thousand pounds spent on decoration and furniture, you could really improve the feel and luxury of your clinic. Saying that you could have just been way too cheap in the first instance and now you are a fair market price! Then, they will be happy to pay for your services.

Will I lose patients?

Yes, you are likely to lose some patients if you increase your prices. However, this isn’t always a bad thing as you are likely to lose price sensitive patients who may only be with you for your low prices, and who may not see you for the value of the services you offer. I appreciate there maybe a few whose unique selling point (USP) is cheap but cheap does not build a long term business as when the next cheap persons comes along they simply take away all your cheap clients!

In business, I have found that there are many issues with having customers whose main or only concern is a low price:
• The cheapest often gets the cheapest customers.
• The cheapest customers often complain the most.
• Those who complain the most, in general, are often not happy generally.
• Those who are often not happy, blame others for their unhappiness.
• Those that are blaming others for their unhappiness are not going to be recommending you to their family, friends or colleagues. Just moaning about you to them!

I have also found that if you have a high percentage of patients who only care about price, your time is spent dealing with their tiny problems, for only a small price, which is a waste of your precious time and energy.

You want to attract patients who love coming into see you and who really appreciate the results that you create for them. Ultimately, these are the ones who will boast about you to their friends! However, if you’re in the volume game ie “stack ‘em high, sell them low” I wouldn’t do more than a 5% rise as your customers are too sensitive to any increases greater than this.

How to increase prices?
After you have determined that you would like to increase your prices, whether it be to allow for funds for business development or to attract more high-end patients, the next step is doing it efficiently.

First off you need to determine by how much and your level of confidence to do so, if you are not confident, I would look at perhaps starting off by only raising prices by 5% to 10%. However, look what happens to your net profit per £100 when you raise your prices by just 5%, let’s say your net profit was 15% per £100, so you made £15 profit, if your prices are now 5% more you have increased your profits to £20 or a 33% increase in net profit! Simple but effective. If you were to raise them by 10% the above increase in net profit would be £25 of a 56% increase in net profit.

If its been sometime since you have raised your prices an increase of 20% to 30% is not unrealistic.

Clients will have a limit to both the number of times you put up your prices eg if you go for a small amount annually this could annoy people if done every year and also if you try and do it by too big a jump in one hit ie more than 50%. So a balance needs to be struck. Every 2 to 3 years is a fair amount to put your prices up if looking to do so by only 5% to 10% each time.

Whenever you consider rising your prices, you always need to look after your existing patients. One way you can do this is to introduce a new, increased price to only your new patients. This way, your old patients stay happy, and your new patients would not know any better of the old prices. American Express provide a 12 step guidance on how best to increase your prices, with timing it right, adding extras and reducing the offering the top pointers for us in aesthetics.

I once increased the price of our microneedling treatments from a flat fee of £299, to £399 for a small area £449 for a medium to large area. These prices were regardless of whether the treatment was for stretchmark removal, skin rejuvenation or acne scarring. We decided that this price increase was to occur only for new patients. We then determined which of our existing patients we really wanted to keep, and which we did not or were not bothered about. As a team we sat down and went through all the consent forms for the last few years and discussed who we would prefer not to treat anymore and came up with a few names that we didn’t proactively get back to, so gently fading them out. In addition we took their email out of our CRM system so not to accidently email them! When our existing customers, whom we wanted to keep, decided to book another treatment, we informed them that prices had, in fact, gone up. We explained that the new prices were £399 and £449; however, we said that as we valued them as patients, they could still have this treatment at the old price on this occasion. We then informed them that we would only increase the future price for them slightly, telling them that they would only pay £349 next time for the same size area they had had previously. We found that this approach worked extremely well, and not one person had a problem with this. They were actually very grateful that we were only charging them a bit extra. Yes, they were grateful to us for us increasing our prices! We applied this process to all treatments we increased the price of eg fat freezing and High Intensity Focused Ultrasound (HIFU).

For the existing patients whom we were not desperate to keep, the ones that always had some problem with life or expected hour long phone calls regularly, we put the price up to the new amounts. Yes, we lost some patients, but we were not that bothered as the ones we did loose, were not our idea of the ideal customer, and those that stayed were now paying more, so we were being compensated for dealing with people who perhaps weren’t 100% our ideal customer.


So why are people hesitant about putting their prices up? Are you scared that by putting your prices up, you will lose all your customers? In a nutshell, if your service and offering are that bad in the first place then you’re right, you will do! However, if you are confident that you are providing high-quality services, then even if you do put your prices up, your patients will keep on coming back. Those that do not, are unlikely to be your ideal patient and are more likely to instead be coming to you for your low prices.

When it comes to pricing, ensure that you are choosing your pricing according to you and your unique business – ignore the competition! Focus on you, what profit you want to achieve and what you can realistically offer.

About the Author

Ralph Montague is managing director of The Skin Repair Group, a national training and aesthetic equipment supplier which operate two clinics in the South West. He is the author of The Profitable Clinic, and currently putting together the UK’s first independent public offering for aesthetic companies to join.