Practice Management Blog

Is it Time to Raise Your Rates? [+ A Step-by-Step Guide on How to Do it Right]

This article is based on the Power Talks webinar “Is It Time to Raise Your Rates?” hosted by Damien Adler, co-founder of Power Diary and Head of Customer Success, and Gerda Muller, founder of Private Practice Success.

All practitioners at some stage (usually once a year or so) have to grapple with the question of when (and how!) to raise their rates. Many put it off for as long as possible because talking about, or even thinking about, money can be uncomfortable.

The good news is that you don’t have to come up with all the answers yourself. We’ve done a lot of the heavy lifting for you based on Damien’s personal experience as a private practice owner, and Gerda’s many years of owning a practice and coaching private practice owners around the world.

Let’s take a look at the dos and don’ts below to equip yourself with the knowledge you need to take this step professionally and successfully!

Why Pricing is Important

This way of thinking may come as a surprise, but the truth is that setting appropriate rates allows you to better help more people. If you own a group practice, incorrect rates will make it harder to hire and retain practitioners, and you won’t be able to afford administrative staff to whom you can delegate work. The wrong rates will also have the knock-on effect of causing you to work long hours to get everything done, making a healthy work-life balance more difficult to achieve.

Whether you run a group or a solo practice, you can’t avoid the fact that costs are constantly rising. And at some point, you may run out of time to do the cleaning, bank reconciliations, and more. Then, you’ll need to pay someone else to do it, which will require money you might not have.

In other words, charging the right amount for your services produces a win for everyone involved.

Know Your Worth (Or Something Like It)

When determining what to charge for your services, it’s essential to know your worth. But what does that mean?

Well, it’s not about you or your self-esteem. It’s about your clients. Clients don’t specifically pay for you; they pay for the value they get from the service. So, charging the right amount is about knowing what you offer, how to talk about it, and showing a client what they’ll gain from your services.

Break Through Psychological Barriers

Let’s face it. Some clients will complain about rates no matter what you charge, and you can’t keep everyone happy. Also, you’re probably overestimating the number of people who will react negatively to changes.

Apply fee increases to everyone

Don’t make the mistake of increasing rates only for new clients. Moreover, don’t give in to the thought that people won’t be able to afford your services. During the first session with a client, you can assess the situation and give them an idea of how many sessions might be needed to get them where they want to be. Then, it’s up to them to decide whether they’d like to move forward with you.

Be upfront and consistent from the start

Always charge your full advertised fees. If you make sure that the conversation focuses on their goal, how you’ll be able to help them get there, and the financial responsibility associated with that, you’ll find that clients see the value and will make a plan to pay for the sessions. Reducing fees and limiting the number of sessions with a client can be a disservice to them. Limiting sessions can result in a negative experience – the feeling that they’re failing or that something must be wrong with them because they’re not improving. If you make sure that a client knows what’s required from the start, what they do is their choice. If they decide what you offer won’t work for them, refer them to someone else.

Don’t assume

Don’t make assumptions about people’s ability to afford your services just because you know something about their circumstances. But, if someone can only pay for a certain number of sessions and wants to move forward, you can narrow the focus of the treatment to what can be done based on the evidence. Make sure they know this from the get-go. That way, you will never be in a position where you’re apologetic about the situation.

Being financially comfortable supports good practice

Don’t put yourself in a position where concern about finances distracts you. It will reduce your ability to have an impact. Private practices with the right rates make money and give you the freedom to make exceptions in very unique situations, but you can’t apply a discount to everyone. Some people will always undervalue your services, but if you’re modelling this, you’re causing your own problem. The right rates are achievable if you communicate through your messaging and marketing. This doesn’t mean you have to stop giving back, it means you put on your oxygen mask before helping the person next to you.

4 Questions to Ask Yourself Right Now

How Much Should I Charge?

People usually do market research to see what everybody else is doing before deciding on their rates. Or they’ll ask a supervisor or even a Facebook group how much to charge. You can do this too, but it shouldn’t be the only basis for your decision:

  1. Look at what it currently costs you to run your practice. The numbers won’t lie.
  2. Then, work out your break-even point (how many clients you need to see to cover the cost of running your practice).
  3. Next, consider the cost increases you’re likely to have in the future. One way is to look at what it costs you to run your practice in the last six months and then add 10%.
  4. Decide how much profit you want to make.
  5. Once you know how much you need to cover your costs and achieve your profit margin, work out how much you should charge based on your current capacity. (Remember to account for cancellations and no-shows.)

It’s not your responsibility as a practitioner to absorb cost increases on behalf of clients. This will make your business unsustainable. When practitioners charge the correct amount, this puts pressure on policymakers and insurers to bridge the gap. If prices are increasing everywhere else, your clients expect you to increase fees too. Clear and professional communication from your side will go a long way towards their acceptance.

Should I Conduct Market Research?

It’s fine to do market research as long as it’s not the only thing you use to set your rates. You do it to get a sense of what the market is doing. And if you end up being more expensive, that’s okay. Your job is to communicate the value of what you do and ensure that you market your services. However, if you end up charging a lot less than other practitioners, some research will help you update your offering. Cheap pricing isn’t the best strategy for attracting your ideal clients.

When is the Right Time to Raise My Rates?

Most practitioners think that rate increases should happen at the start of the year. But, that’s not when clients are most accepting of changes. Keep in mind that people tend to spend a lot of money in December, and in January they face credit card bills from December’s festivities (back-to-school expenses in Australia as well). So if your fees are going up during this time, it may end up being a quieter month for you than normal!

It’s better to increase rates on March 1 because by then, the effects of December spending will have worn off. Generally, increasing fees during holiday times doesn’t work well because there’s often a natural break in treatment. As a result, adding a perceived barrier can result in a permanent break in treatment. People are more likely to re-engage with their appointments after the holidays if you book them ahead of time and send out reminders and newsletters to keep you front of mind.

How to Communicate Price Changes

Once you’ve decided on your rates, you need to communicate them. A good guideline for communicating changes is four to six weeks in advance. If you give too much notice, they may disregard the information because it’s not relevant yet. Just as with cancellation fees, clients should see price increases coming. In addition to talking to your clients about it, you can put flyers at the front desk, send them at least two emails, put notices at the bottom of invoices, send a letter with any mailed invoices, and post about it on your website and social media.

With Power Diary, you can send an email or SMS notifications in bulk and include links to your website with more information about rate changes.

Use Template Letters

If you want to write to your clients about price increases, Gerda shares two effective templates:

Scenario A: “Catch Up” Fee Increase

If you haven’t increased your fees in quite a while and need a significant rate increase, this is the template for you. It provides extra context for the changes you’re making.

Scenario B: Annual Fee Increase

It’s best to increase your fees annually; once you get into the habit of doing this, your clients will start to expect it.

To view these templates, here’s a link to the relevant section of our webinar replay.

Manage Your Team’s Perception

It’s essential to proactively manage the perceptions of the clinicians and administrative team in your practice. You want to avoid people making incorrect assumptions, especially if a practice seems to be doing financially well.

It’s true that as a private practice owner, you don’t have to explain yourself. However, if you want your team to be fully behind you, give them insight into what’s happening in the business. They may be surprised to find out what the biggest overheads are, and sometimes something like stationery is a significant cost for practice. It’s also not a bad idea to talk to them about profit margins because you’re running a private practice, and not an NGO or a charity.

A good accountant will tell you that your employees should bill three times what they cost. One-third of that money will cover direct employee costs, and another third will cover operating expenses. The other third gets divided into thirds, of which one is for expansion, the next is for working capital, and the final third is profit.

Sharing this information with your team will help them understand why KPIs exist. Of course, with contractors, fees work differently. But try to avoid people jumping to conclusions. Trust your team and set the record straight. But there’s a line – you don’t need to share your profit and loss statement with them; just enough information to create a context for your actions.

Tips for Handling Objections from Clients & Referrers

Some clients will object even if you do everything possible to alleviate their concerns about rate increases. Anticipating this will allow you to have your response ready when it happens. Often, people will pay, but they’ll want to let you know that it’s an inconvenience. That’s okay. It’s not your job to rescue them. But it is your job to listen, to let them talk, and to let them feel validated. Don’t shy away from that discussion because, most of the time, the client just wants to be heard.

Clients sometimes prefer to have this discussion at the front desk instead of with the practitioner themselves. So prepare your administrative staff as well. They can round off the conversation with, “Are you still good for that appointment? 2 p.m. next week with so-and-so?” If the person can’t afford it, there may be another practitioner in the practice who charges a lower rate, and you can refer the client to that person. Otherwise, you can help them seek an alternative solution like a referral to another practice, an NGO or public health service.

Action Summary

  1. Understand your pricing and where you sit in the market
  2. Know your psychological barriers and change your mindset
  3. Find your formula for success
  4. Create an action plan and timeline for adjusting your rates
  5. Communicate appropriately with current and new clients
  6. Prepare the team – communicate the “why”
  7. Have a plan in place to deal with objections


With all of these tips on how to set your rates, you’re ready for success, so there’s no reason to put it off any longer; you’ve got this! And remember that Power Diary can help smooth the communication process with templates.

If you’re not an existing Power Diary customer, sign up for a free trial today!

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