How to Raise Your Rates | PoP 397

How To Raise Your Rates | PoP 397

Why do you need to raise your rates? When should you raise your rates? And how exactly do you raise your rates?

In this podcast episode, Joe Sanok speaks about why you need to raise your rates every single year, and how to do it, following from the Practice of the Practice YouTube series.

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In This Podcast

Summary

In this podcast episode, Joe Sanok speaks about how exactly to set your rates and why you need to grow your rates consistently.

Why should you raise your rates?

No matter what kind of business you have, every single year, you need to be raising your rates. Joe discusses seven reasons why you should be raising your rates:

  1. You are getting more experience.
  2. Your costs go up.
  3. It sets you up as an expert.
  4. You can spend more on clients.
  5. It frees up more time.
  6. It’s much easier to add on other people.
  7. You get to keep seeing people and not have a waitlist.

 

When should you raise your rates?

Joe shares some valuable tips on when to raise your rates:

  • What is your rate to begin with? Go on Psycology Today and look at other therapists in your area to see what they are charging. Go 20% higher than the average.
  • When you’re 60% full, that’s when you want to start raising your rates.
  • When you have a waitlist.
  • When you have a full-time job that you want to leave.
  • When you’re feeling burned out.
  • When you’re adding new clinicians to your practice.

The psychology of raising your rates

  • Make big jumps, not incremental changes. Look at your own psychology.
  • When you’re an expert, you have expert rates. Make sure your rates reflect your expertise.
  • Think of your rate with regards to your outcomes. Look at the outcomes and not the hourly. What is the value of the outcome?
  • By having higher rates, you’re stipulating that your service is of value and is something that matters and transforms lives.
  • Make sure it is worth it. Do extra things to make people feel special.
  • You want to have people that refer other people.

How to raise your rates

  • Raise your rates throughout the year for new people, from when you’re 60% full.
  • Tell your virtual assistant right away. Make sure you have a list of everywhere your rate is mentioned so that your VA can update all of these.
  • If there is a time of the year you want to see fewer clients, and you are willing to say no to people anyway, that’s the perfect time to raise rates for new people. You can always change it back.
  • It’s unfair to raise the rates of current clients throughout the year. In October, communicate new rates to current clients.

Useful links:

Meet Joe Sanok

private practice consultant

Joe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners that are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.

Thanks For Listening!

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Podcast Transcription

 

 [JOE SANOK]: What’s the point of having a beautiful website that doesn’t attract the clients you want to see? As the worldwide leaders of website design for therapists, Brighter Vision sees this issue happen way too often. A nice-looking website doesn’t equate a successful website. The truth is, your current website might even be turning off potential clients. That’s where Brighter Vision comes in. Brighter Vision’s team of website designers will create you a website that is centered around attracting and retaining your ideal client so that you have a nice-looking website as well as a successful one. For a month free, head on over to brightervision.com/Joe. Again, that’s brightervision.com/Joe.
This is the Practice of the Practice podcast with Joe Sanok, session number 397. well, I’m Joe Sanok here, live in Practice of the Practice world headquarters at the base of the Old Mission Peninsula, here in Northern Michigan. Hope you’re do an awesome today. If you have just started listening to this podcast, I want to give you a special welcome because, you know, a lot of people have been listening for a while; we’re on episode almost 400, but I’m so glad you found us. There’s a lot of episodes for you to go through now that you love the podcast, hopefully. So, today is a special treat for you, a little treat. So, I’m bringing together four YouTube videos that we launched this month, all in one podcast about raising your rates. So, you’ll hear that I’m talking as if I’m on video because I was on video and the sound is a little bit different because it’s a different microphone. But if you haven’t checked out our YouTube channel, every single Tuesday we release a new YouTube video there.
It’s not just like podcast stuff, it’s extra content that goes beyond what we covered here on the podcast. So, you want to check that out. Also, we’re going to be launching a whole new e-course that’s going to walk you through how to launch your own podcast. We get tons of questions about this and we’re going to do actually a series of podcasts about podcasting. Go over to podcastlaunchschool.com. So, if you’re wondering should I, shouldn’t I do a podcast, if you’re wondering about the structures of podcasts, if you want to know about calls to action for planning a podcast, the actual starting of it, and then the ongoing marketing, this is probably going to be something you want to sign up for. So that’s over at podcastlaunchschool.com. More is going to be coming about that soon.
But today let’s dive into how do you set your rates? How do you raise your rates? How do you grow your rates? All right, here we go. In this video we’re going to talk about the seven reasons that you need to raise your prices. Wither you are a coach, a counselor, a therapist, massage therapist, no matter what kind of business you have, every single year, you need to be raising your rates. The first reason why you need to raise your rates is you are getting more experienced every single year. You’re working with your ideal client and that’s giving you experience as well. You’re hopefully reading books, listening to podcasts, going to trainings, and in lots of ways getting more and more experience. This is increasing the outcomes and the value of the work that you do.
So, if you’re not raising your rates, you’re not valuing yourself. You’re treating yourself like you were a year or three years ago by keeping those rates the same. So, raise those rates if only because you have the experience. The second reason to raise your rates is because every year your costs go up. I remember when I worked at a community college and every year we had to contribute more to retirement, more to our health care and we might get lucky and get a 1% raise. That didn’t even keep up with inflation. Research shows that the average rent goes up 3-5% per year, so your costs are continuing to go up. That’s another reason to raise your rates.
Number three is it sets you up as an expert. I mean, think about it. If you go out to eat and there’s a $10 hamburger and there’s a $20 hamburger and the person says, “This is an amazing hamburger. You have to try, it has an egg on it, it has bacon, it has cauliflower,” like whatever the thing is, you’re going to get that $20 hamburger because when you have that expert in front of you, you’re going to ask yourself, “What did I miss out on by not doing that?” The same is true in your private practice. However, it is that you work with people, people are going to see you as the expert if your rates reflect that. So even if you’re only 20% better than everyone else, but you’re 50% more expensive, people are going to walk away saying they’re expensive, but they’re worth it. They’re totally worth it. We got faster outcomes because we worked with that person.
The fourth reason to raise your rates is that you can then spend more on clients. You can buy books for them or handbooks or you can have special drinks or lattes for them in the lobby while they’re waiting. You can also pay people to follow up with them differently, create e-courses or other ways that you can support your clients outside of your typical time together. When you raise your rates, you have that extra time and that extra capital to be able to reinvest into the outcomes of your clients that you’re working with. Also, it frees up more time. Imagine someone was charging $175 per hour and then they worked 20 sessions per week and then they worked 48 weeks a year. That’s $160,000 a year. Now someone’s charging $125. That would take them 28 sessions, so you actually have eight extra hours for the extra money that you haven’t raised your rates in.
The sixth reason to raise your rates is it’s much easier to add other people. So, if you’re looking at adding clinicians or consultants to your health care practice, it’s so much easier when your rates are higher because then it’s easier to hand them off to other people. So, say your rate is 175 per session. You can say, “Hey, I am Jan over here who does it at 150 a session,” or you can have your virtual assistant do that. So, adding people is easier when you’re not at the bottom of the market or even the middle of the market. So, then you can add mid-level people and new people at a lower rate. So, it makes it much easier to fill up those additional clinicians or consultants that you have in your private practice.
The last reason to raise your rates is that you get to keep seeing people and not have a waitlist. A waitlist is a terrible idea. What that indicates is that you’re about to burn out. When you say, “I’m only going to see 20 people and after that I have a waitlist, ” what happens is those people are going to move on to someone else and move on to a different private practice. I want you to retain those people. So how much do you need to charge in your private pay practice in order to feel like you can show up for that 21st session? If people want to work with you, they should be able to work with you or you should have clinicians that you can hand them off to. Raising your rates is one of the best ways for you to not have a waitlist, to make more money and to work fewer hours.
For more tips on how to raise your rates, this is part of a four-part series on raising your rates. Make sure you watch all the other videos. If you have questions, please comment below and make sure that you subscribe to this series. In this video, I’m going to give you six tips on when you should raise your rates because it matters when not just if. So, the first thing you want to consider when you’re looking at when to raise your rates is first, what is your rate to begin with? Before you even look at raising your rates, you want to look at first, did you set your rates correctly to begin with? You want to go into Psychology Today if you’re a private practice therapist or look at other people in your area and see what they’re charging for private pay. So, I’m assuming if you’re raising your rates that you’re doing a cash pay business in some way instead of an insurance-based business where you have very little power over raising your rates.
So first we want to make sure that your base price that you started with when you started your practice is correct and we want to go 20% higher than the average. Why 20%? Because we know that if people look that everyone’s at $90 a session and then they look at someone else that’s $120 a session, they’re going to make a natural assumption that that person is better. I want you to start on the right foot with people thinking that you are better than your competition. So set your rates at about 20% above the average clinic. Now when you do that, what you’re going to do is you’re going to get fewer people, but you’re going to get higher quality people that refer other people to your practice. So, from the very beginning, start at 20% above the market.
So next after you set your rates correctly at the beginning, when you’re 60% full, that’s when you want to start raising your rates. It’s not going to be when you’re completely full, it’s not going to be when you have a wait list, it’s not going to be when you’re 99% full and totally burned out. It’s when you’re 60% full and we’re going to talk in other videos exactly how to do that throughout the year and then how to raise your prices with your other clients every single year.
The third time to raise your rates is when you have a wait list. I never want you to have a waitlist. I would rather you raise your prices and take on fewer people to be able to push yourself instead of having a wait list. A waitlist is an indicator to someone that you don’t want to see them, and that reputation in your community is not what you want. And so, what you need to do is not have a waitlist. If you have a waitlist, you need to raise your prices. If 195 isn’t enough for your session, raise it for 250. If that doesn’t feel good enough, raise it to 300, 350; whatever it is that you want to raise it to so that you see that one extra person. That’s going to set you up as the expert and it’s also going to allow you to see fewer people and attract your ideal client.
When you have a full-time job and you want to leave it, that is one of the best times to raise your rates because you have so little risk. You have that income from that full-time job coming in and so you can take risks that other people can’t. You can invest in consulting or mastermind groups or optimization of your practice. You want to look at what is the very best use of your time. So, having low paying clients is not what you want to focus on when you have a full-time job, especially if you’re trying to leave that full-time job. So, you want to push the limits of how much people will pay as you grow your practice. Now when you’re doing that, of course you want to do it ethically, you want to do it in the right way, and in some of our other videos, I’m going to be talking about that, but when you have a full time job, that is one of the times that you absolutely want to be raising your rates.
The fifth time to raise your rates is when you’re feeling burned out. If you’re like, “I don’t want to see people anyway. I’m going to just like stop taking new clients.” Well then if people say no to you raising your rates, it’s exactly the same. But what happens when people say yes? What if you make a massive jump and we’re going to talk about that psychology of it in a different video. What if you make a massive jump and all of a sudden people say yes to you? How’s that going to feel for you? How’s that burnout going to feel if you know that you could have been making 50% more? When you do that, when you’re feeling burned out, you’re saying to yourself, “I don’t really want to see new people anyway.” So, you might as well raise your rates then.
The sixth time that you should be raising your rates is when you’re adding new clinicians to your practice. So, if you know in the next six months that you’re going to be adding clinicians to your practice, that you’re going to be adding new consultants, new, different; new, different, that sounds crazy. If you’re going to add people to your practice, you want to look at it and say, I can’t be the lowest paying person. I just talked to someone recently that was charging $90 per session and starting a group practice. There is no way that she’s going to be able to fill up these other people and that they’re going to get paid a rate that they’re going to stick around. So, she needs to raise her rates so that other people that are joining the practice can come in and can also get a higher rate because your takeaway from starting a group practice is going to be higher if they have higher rates. That’s how the math works. So, make sure you look at all six of those reasons and say to yourself, “Yes, I want to raise my rates.” And these are the reasons of when you should do it.
Hey, we have four videos in this series, all about raising your rates. Make sure you watch all three of the other videos. I just said that kind of weird. Make sure you watch all four videos because what we’re doing here is, we’re giving you a full spectrum approach to raising your rates, when you should do it, how you should do it, what’s the brain research behind it? When you sign up for these videos, it’s going to help you be able to raise your rates, make more money, and work fewer hours.
In this video, I’m going to be talking all about the psychology of raising your rates. So, let’s talk about the psychology of raising your rates. So first I want you to make big jumps, not incremental changes. Don’t go from 115 a session to 120 per session. Why is this? The first psychology we want to look at is your own psychology. Imagine you go from 115 to 120 and the next 10 people say yes to that. How are you going to feel? “Okay, I made a little bit of extra money,” but imagine that you raise it from 115 to 150 and the next 10 people say yes. How are you going to feel with that? You’re going to say, “Holy cow, I’ve been leaving a ton of money on the table.” You’re going to feel like people really value you, they understand you, and they see your worth. So, when you make big jumps that are 25 or $50 per session, rather than just small five or $10 jumps, it’s going to help fuel you and your professional development.
Number two; imagine you went to see an expert for therapy, consulting or something else. Say it was Dr. Julie Gottman or Astair Parral, these famous authors and you were going to do some 45-minute sessions with them and they were 120 bucks a session or 90 bucks a session. You would probably say, “What is going on? You are this expert.” Now, they may have sort of their own personal mission where they choose to have low cost counseling, but for most of these experts, if you hire them for consulting or hire them to work with you, you’re going to pay hundreds if not thousands of dollars an hour. When you’re an expert, you have expert rates. Now, all of us are experts. Only 9% of the United States has a master’s degree. In any room of a hundred people, most likely you are the expert on mental health if that’s your area of discipline. You’re already an expert. That doesn’t even include all the specialties and experiences that you have with clients. So, make sure your rates reflect that expertise.
We also want to think about our rate in regards to outcomes. Once I had a consulting client that worked with people dealing with narcolepsy. Now most of these people, because they would fall asleep, had to have an extra person come with them. As well, they would come either during the Workday or they would come after work or before work. So, when we added up how many sessions it took to really kind of cure this narcolepsy, it was only about six sessions. So, we looked at how much she was charging. Now imagine she was charging $100 per session. So, she does that in six sessions, so that’s $600 someone’s paid. Now, if we look at how much time off work they need to take, how much time their friend or family member driving them has to take when we actually broke it down compared to the average therapist that was working with the same clientele, we figured out that her worth was actually $800 per hour.
Now that made it a lot easier for her to say, “You know what? I’m going to jump from a hundred bucks an hour to $200 an hour.” And people still said yes because outcomes were there. Look at the outcomes, not the hourly and not the time in the chair. What is the value of those outcomes? And that’s going to help you with the psychology of raising your rates. So, people buy things that make them feel special, exclusive and that they’re getting results. And so, by having higher rates, you’re saying this is something that matters. This matters more than the cost of having your plumber come fix your stuff in your house or an electrician that’s going to come in and no dissing on those occupations. But you’re helping people transform their lives. And so, by raising your rates, you’re saying, “This is something that matters.” This is something that you’re investing in and this is something that is going to help you transform in a way that just your typical clinician wouldn’t help you. People feel special, they feel exclusive, they feel like this is something that’s really worth investing in.
The next part of the psychology of it is that you need to make sure that it is worth it. So do extra things that are going to make people feel special. When I had my private practice before I sold it, we had a drink refrigerator when people came in and it had all sorts of fancy drinks; kombucha, coconut water. We had Frappuccino’s. All sorts of things that they felt were special. Now may have cost me a dollar or two for each of those drinks, but we’re charging significantly more in our sessions. So, what we did is we created this environment that felt exclusive. It felt more like a spa than it felt like a clinical office. Now, when you do that, when you reinvest in people, when you take some of that money and give back and you have better customer service, the overall experience is better.
I mean, think about all the brands that are out there that are two or three times more expensive than the typical brand. Both brands help you in some way, but people choose the exclusive brand because of the extra features. Now it may be only 20% better, but they’re willing to pay 50% more. Lastly, you want to have people that refer other people. So, they’re going to be saying “They’re expensive, but they’re totally worth it.” You want to be able to have people saying that, and when you attract that ideal client, they’re going to brag to their friends when their friends have similar issues that you work with. So, raise your rates. And in the next video we’re going to talk about exactly how to raise your rates.
In this video, we’re going to talk all about how to raise your rates. All right, so let’s talk about how to raise your rates. So, first, let’s talk about when. So, you want to make sure that you are raising your rates throughout your whole year for new people. So, when you’re at about 60% full, that’s when you want to start raising your rates. Don’t want to wait until you’re 80, 90% full, you’re burned out, you have a waitlist. Those are all terrible times to raise your rates. You want to start raising your rates before you’re feeling all of those things. And so, when you get to that point that you’re saying, “I think I’m going to want to see fewer clients soon,” that’s when you want to start to raise your rates.
Next, when you’re ready to raise your rates, tell your virtual assistant right away; that second, text them, “I’m raising my rates.” For example, if you’re at 150 per session and maybe your intakes are 175, I want you to text them right away and say, “My new intake is 200 and my sessions are 185.” Do a big jump so that you feel the emotional impact of people saying yes to that. And so, take that action right away, but it’s really important that your virtual assistant has all the places that you list your rates. It’s super embarrassing to raise your rates, only to have someone go to Psychology Today or to your website and see that they’re half the price. You don’t want to have that happen, so make sure that they have access to all the places so they can go update it.
It’s a terrible use of your time to dig through the website or dig through Psychology Today. Use something like Last Pass so you can share your passwords securely with them. They can get in there and make those changes. So, make sure you do it right away. Don’t think about it. Just say I’m feeling like I want to see fewer clients soon and then make sure you do it.
Another thing to consider is maybe there’s a time of year you just want to see fewer your clients. So maybe summertime your kids are home, you want to see fewer clients. If you would say no to people anyway, that’s the perfect time to raise your rates for new people to just say this rate is $250 per session. You may hear them say, “That is mind blowing.” But I see people every single day in our mastermind groups and our one-on-one consulting that keep raising their rates and they keep being able to do it because they have the expertise, the outcomes, and the growing confidence. They may not be there, but they’re growing in their confidence. And so, we want to do these experiments.
Next, you can always change it back. So, if it’s a two-week experiment where you’re going to raise your rates and see if everybody says no, okay, two weeks of people said no. You can always have your virtual assistant say, “You know what, there’s one sliding fee spot at his original 150 per session.” You can always do that. All right? So, after you do that, so throughout the year you’re raising the rates. So maybe in March you go from 120 to 150, and then in September you go up to 175 and then towards the end of the year you’re at 195. Now you may still have clients that are at that 100 or that 120 and they went into the year at that rate. It’s unfair to them to raise their rates at each time. I want you to keep them consistent throughout the year.
But in October, that’s when you send an email. The email that you send, it might have a year-end summary or it might say something like open enrollment. When you send this email, what you want to say is, “Dear John?” No, that’s cheesy. “Dear Skylar. It’s been great working with you in therapy. I feel like we’ve made tremendous progress. I wanted to let you know about a few adjustments in the price in the coming year. This is due to raises and rent, overall expenses and my expertise growing. Current clients are paying 195 per session right now. You came in at 120 and it doesn’t seem fair to jump all the way to that, but on January 1st I’d like to adjust your rate to 150 per session. Now I went into counseling to help people and to help you have awesome outcomes. So, if this is going to be a problem for your therapy, we can talk through if we want to change the frequency of therapy, wrap things up by January 1st or have a discussion about that rate. I want to make sure I continue to help you.” Every time I’ve sent this email, I’ve never received pushback.
Now I know sometimes people do. You have that conversation with people and then you raise the rates on the first of the year. Every single year you want to be raising your rates, and if you’re not, then you’re making less money every year because of inflation and your costs going up and your professionalism is going up, but you’re not charging for it. So that’s how you do it. Also, when you’re adding clinicians, you want to raise their rates as well. So, make sure that they’re coming up with you. It looks super weird if you’re 225 a session and they’re $75. So, make sure that they’re up within about $50 of where you’re at if they’re established; maybe $75 per session lower than you if they are brand new. So, if you want more private practice tips, if you’re a coach, if you’re a counselor, massage therapist, chiropractor, our YouTube channel has a ton of tips on how to network, brand, market, all those things it takes to run a private practice. Also, I have a podcast called the Practice of the Practice podcast. We would love you to subscribe to that too. I’m sure we have some buttons all over the place for those sorts of things.
Make sure you subscribe to this channel, comment below, give it a thumbs-up, ask questions, push back. If you disagree with me, I’d love to hear that as well. Put that in the comments below. Have an awesome day. I’ll talk to you soon.
So, go out there, raise your rates, evaluate it, do all that I talked about. Next week we are going to be talking all about hyper-niching and then the week after that I’m covering the five biggest questions I get over and over and over and it’s going to help you in private practice. Don’t forget to head on over to brightervision.com/Joe. I’m just going to read that in there because I screw it up all the time. Head on over to brightervision.com/Joe and you can get access to that one month free of Brighter Vision. So, if you want an amazing website, do that.
Thanks so much for letting me into your ears and into your brains. Have an awesome day.
This podcast is designed to provide accurate and authoritative information in regards to the subject matter covered. It is given with the understanding that neither the host, the publisher, or the guests are rendering legal, accounting, clinical, or other professional information. If you need a professional, you should find one. And thanks to the band Silence is Sexy for your intro music. We love it. 

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