Practice Management Blog

How to Price Your Health Services

As a private practice offering health services, deciding on your pricing can be one of the most difficult steps to take. Whether you’re just starting out and need to build up a client base, or perhaps you’re running an established practice and haven’t updated your pricing in years, making time to clearly think through your pricing can have a huge impact on the profitability of your practice, as well as the quality of your care. Here’s why…

When you train as a health professional, almost all the education you undertake is related to your profession. Chances are that other business skills such as marketing, cost analysis, and pricing will only have been touched on briefly, if at all. But successful practice management means knowing exactly what you need to charge in order to grow a successful practice.

On top of this, pricing is often a particularly challenging area because, as a health professional, you most likely have a natural tendency to want to help people and introducing money into the equation can feel awkward. Especially because charging market-related rates means that you will, by definition, exclude some people who need your services. But think of it this way – if you don’t charge high enough rates, you won’t be able to meet your expenses and grow to serve even more people. Or perhaps you won’t even be able to stay in business – which means that you won’t be able to help anyone!

So, how exactly should you set your rates? Here we have 3 methods that you should use in combination… 

1) Look at Your Competitors

No, you don’t want to just copy your competitors’ rates, but it is important to look at what they charge and how their practice is perceived. Then, think about what you want to communicate about your practice in comparison.

If you’re just starting out and want to build up your practice, it might work to charge a bit less than your competitors. Or, if you want to position yourself as the leader in your field, setting your rates above the competition will help to communicate the message that you are a premium provider.

To find out what your competitors are charging, you can:

  • Visit their websites to check if they’ve listed their fees;
  • Ask friends what they are paying for similar services;
  • See if competitors have listed their fees on sites like Avaana that allow you to book appointments with providers.

2) Analyse Your Costs and Capacity

To calculate the prices you need to charge, it’s also important to take a close look at your costs. This is not just the marginal cost of seeing one extra patient, you also need to factor in running costs, depreciation on equipment, and all expenses incurred with providing your services. These costs need to be distributed over the number of hours that you reasonably (or conservatively) expect to be seeing paying clients.

Confused? Here’s exactly how to do it…

Step 1 – Understand Your Costs

Add up all of your monthly costs including…

  • Running costs – employee wages or payments, rent, raw costs of products, banking fees, practice management software, utilities, and marketing;
  • Depreciation – how long will your equipment last? So what does it actually cost you per month? Make sure you factor this in;
  • Your wages – how much do you really need to pay yourself each month?;
  • Taxes – don’t forget to include these!

Step 2 – Your Billable Hours

Think about how many hours you can reasonably expect to bill in a month. This should take into account:

  • The number of hours you are available to work;
  • What percentage of those hours that can be used to see clients;
  • How many hours per month have your recently been billing?

Step 3 – Your Minimum Rate

Then, take your costs, and divide them by your available hours, and there you have it – the minimum rate for your clinic. And from there you can apply a mark-up, but now you know your break-even pricing. Of course, it’s best to build in a buffer here as it is likely that not all your available appointments will always be booked and some of your assumptions might be wrong, especially if you are still building up your practice.

Simply put:

Revenue needs to cover all expenses. So, your hourly rate should be greater than:

Your Monthly Expenses / Number of billable hours = Your minimum fee per hour

If you feel that you would like to offer discounts, bulk billing or concessions for certain clients, then you also need to factor these in so that you can offer these discounts and still meet your cost commitments.  In general, discounts should really be true exceptions (and not applicable to half your client base), so they should:

  • Be limited to a small number of clients, or set appointment times;
  • Fulfill a set of requirements in order to qualify.

Knowing your minimum fee is an empowering step for practice owners to take as it shows that you have an in-depth understanding of what is needed for your practice to continue to be viable. This will give you the confidence to charge at least that amount because otherwise, you won’t be able to pay yourself, and the practice will not be able to continue operating. It also means that you are less likely to offer concessions because you understand the implications. 

3) Understand Your Value-Add

Most, if not all, health professionals have years of training and experience, not to mention a commitment to ongoing learning and up-skilling in order to offer clients the best possible care.

Setting a higher session rate sends a signal about your business, your commitment to quality service and your confidence that you can add value to your clients. Consider that charging more per session means that you can work fewer hours, which will have a positive effect on your ability to give your clients the best possible care (and help you to avoid burnout at the same time).

So, in addition to looking at your competitors and your costs, it’s also important to think about the value you’re adding to your clients and how much you should be able to charge for this. What are their alternatives? Does your service improve their quality of life in some tangible way? How could you frame your pricing so that your clients see the true value of what you’re offering?


To set the prices for your health practice services, we suggest looking at these three areas and come up with actual numbers (estimates) based on each approach. Then combine these amounts based on your goals for the practice and you will almost certainly have a lot more clarity on how to price your health services.

Keep in mind that pricing your health services is an art, not a science! However, a good rule of thumb is that if 20% of your clients think you’re too expensive, and 20% think you’re too cheap, you’ve probably got your pricing about right.

Taking the time to consider your pricing will make it a lot easier to stick to the rates you’ve chosen because you’ll know that your prices position you in the market, will allow the practice to stay solvent, and are a fair price for the value that you add to your clients.


Do you know of any practice owners that need to re-think their pricing? Please share this article with them to inspire them to align their pricing with their goals and give their practice the best chance of continued success. 


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