E605 | How To Raise Your Prices

This week's Thursday episode comes to you from our PT Biz YouTube channel. If you have not had a chance to check it out, head to https://www.youtube.com/@ptbiztraining! Don't forget to subscribe!

In this episode, Danny dives into the topic of raising prices as a means to increase revenue without increasing overhead. He emphasizes the importance of physical therapists charging an average hourly rate of $150 in order to be able to expand their business beyond themselves and maintain low volume.

Furthermore, Danny encourages striving for a rate of $175-200 to allow for growth and hiring.

Danny provides two strategies for raising prices, the first being a silent price raise where prices are simply adjusted without explanation. The second is a reactivation price raise, which involves reaching out to prior customers with an explanation of the price change and offering them the opportunity to purchase one package at the previous rate.

He stresses the significance of painting a vision for the company and putting in the effort to reach out to prior customers instead of taking the lazy route. 

Danny concludes by encouraging physical therapists to take the initiative in raising their prices, as it benefits both themselves and their patients by allowing for fair compensation and improved quality of care. This episode offers valuable insight and practical advice for physical therapists considering a price raise.

This podcast is great if you already have a practice or you want to choose rates as you start a physical therapy clinic! Check out this blog post and our guide as well.

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Podcast Transcript

Danny: Hey, real quick, before we get started, head over to Facebook and join the PT entrepreneurs Facebook group. If you haven't done so yet, we have monthly live trainings going on there. There's an opportunity for you to join in the conversation instead of just listening to what I have to say on this podcast, as well as the people that I bring on.

And it's a really cool place to join about 6, 000 other clinicians that are. Honestly, trying to change the landscape of our profession through these cash and hybrid practices. One other thing that's really cool is we have a guide in there. That's a quick start guide. When you join, you can go and check this out.

There's about seven videos that we've curated that are the most common questions we get in the best case studies that we've found to really help you start, grow, and scale your practice up to seven figures. So if you haven't done so yet, head to Facebook request to join the PT entrepreneurs Facebook group.

You have to be a clinician. We're going to check you out. We don't just let anybody in. But if you are head there, go ahead, get signed up. We'd love to have the conversation with you in that group. Hey, what's going on? Doc Danny here doing a quick intro for this podcast. And this one comes from a YouTube video on the PT biz YouTube channel.

If you haven't checked it out yet, I highly recommend going over there. We get a better chance to give you a little more visual explanation of things that are going on, especially answering common questions that we get both within the coaching programs that we have. Our PT entrepreneur Facebook group, which has about 6, 000 people in it.

And we get a ton of questions that are that are in there as well as things that we've just noticed ongoing now with the clients we've worked with for the past five years, these big sticking points that we see, and this happens to be one of them. How do you raise your prices? One of the first things that we look at addressing with clients is are you a effectively packaging and pricing your services in a way that allows for scale, allows you to move past yourself and allows you to be really efficient with patients that are coming through the door.

So this one is all about how to raise your prices. And don't forget, check out the PT entrepreneur Facebook group, as well as the PT biz YouTube channel for. All kinds of other videos and training that can help you be successful in your cash based practice as a clinician trying to get out of the rat race of the high volume game.

So hope you enjoy and I'll talk to you soon.

So here's the question. How do physical therapists like us who don't want to see 30 patients a day, who don't want to work home health and have real student loans, create a career and life for ourselves that we've always dreamed about? This is the question, and this podcast is the answer. My name's Danny Matei, and welcome to the PT Entrepreneur Podcast.

What's up, guys? Danny PT Biz, coming back again, Caffeine and Cash Practices, episode five, I think. Now today is very important. We're going to talk about not just why, but how you raise your prices. This is quite possibly. The most bang for your buck that you're going to get from anything that I'm going to share with you.

Because if you already have a practice, one of the biggest wins you can have is to be able to make more money without changing your overhead in any way. Okay? So think about this. If you hire somebody say another clinician, they can see people and generate revenue. But you have a cost to fulfill associated with that, which eventually everybody, not everybody, most people are going to want to move to the point where they're hiring employees because there's passive revenue associated with that.

But in this scenario, let's assume you are a single provider. Maybe you do have other people. If you can raise your prices, you have an increase in profit with no increase in expenses. Okay. That's a very rare thing. To do in your business, you can cut costs in certain places, but for many of you, you're just undercharging and what we've seen, and this is historical for maybe the last five or six years, is that you really need to be at an average hourly rate, hourly visit rate, I should say, of 150 an hour in order to be able to scale past yourself and maintain low volume.

Okay, what we're seeing now, especially as things are getting more and more expensive. And the cost of living is going up pretty much everywhere is 150 really is baseline. You need your average visit rate to be somewhere closer to 175 to 200 to really put yourself in a good spot to be able to hire and grow.

In order to get there, you're going to be able to stair step your way up there by raising prices and for a lot of people they're charging too little. Okay, I've seen people charge as little as 60 bucks an hour as a physical therapist with a doctorate to work with somebody that's Far less than what insurance would even reimburse you for even the worst insurance is probably gonna still be more than that So we typically undervalue ourself.

So if you're gonna go from let's call it. Maybe you're at like 120 a visit Okay, you're just testing the test in the waters is where you feel comfortable you got to get up to 200, that's a big jump, right? So for some of you, that, that sounds scary. You don't want to do it. You can stair step your way up there and there's two ways you can do this.

All right. I'm going to talk about two strategy, two strategies that you have, the prices. And before we do that, let's talk real numbers in terms of how this is going to affect you. Let's say that you are charging 120 a visit and you can get your. That's 80 a visit different from what you're charging now to what you could be charging.

If you are seeing a hundred visits a month, that is 8, 000 in the month that you're going to make. That is an increase with no increase in overhead. That is 96, 000 a year in pure profit that you are adding to your practice by actually charging what you're worth versus undercharging for. Remember, keep in mind.

Literally the same amount of work. Why would you not do it? A. Maybe you feel bad. You feel like, yeah, people are exchanging their groceries to come in and work with you. That's bullshit. They're gonna choose groceries over you like 10 times. Because they gotta eat. They're not doing that. This is your money mindset.

Telling you that people are, scarce with things and that they can't afford it. They're not gonna go broke trying to work with you. People spend money on things they find value in, right? Number two. You don't feel confident in being able to charge that's sales. You got to improve your sales skillset in order to be able to charge what you're worth as well.

So those areas you have to get past. And once you do that, you have two strategies. Number one, you can do the silent price race where we call it, the undercover price race, and this is where you literally. Just change your prices immediately, right? You could wait for Monday if you want, but you could just do it today.

I did this one time with one of the first clients I ever worked with. And this was interesting because at the time I was doing all one on one work with the people I was working with. I only was working with like about five people at the time. I had a call with this clinician and he was charging 150 a visit at the time.

And he was in a pretty expensive area. And I told him, I said, listen, Dude, you need to be closer to 200. Like you need to raise your prices to 200. He felt very uncomfortable. So we met in the middle at 175. And I said, listen, the next person that you talk to, and that day he had somebody that was doing an initial phone consultation with him to see if they were going to be a good fit to come in as a client.

And I said, look, you're going to tell them your new price as of today, as of right now, it's 175, not 150. And if they say no, they balk at that, then I will pay you 175. So I'll pay you the amount that you were going to make off of one hour that person and he said, all right, I'll take that. He called that person.

They talked, he told them their prices and on the phone, that person agreed to attend visit package at his one 75 rate because he didn't have any packages set up. He literally just said, that's what it was. And that he had a 10 visit package, but it was the same amount and the person agreed to it and they came in and they did an evaluation and bought it a couple of days later.

So it's funny what we think is the limiter is usually our own self in terms of what we feel like we can charge and what we're worth. And as soon as you go through a price raising, you realize that people value what you do a lot more than what you value, yourself. Then it's very easy to step yourself up to where you need to be.

For your business, because keep in mind, it's not just so you could make more money. It's so that you could actually build a real business and ideally employ other people. In order to do that, you got to be able to pay them and hopefully pay them well. So you need to be making enough revenue in order to make that work.

So number one, you can do a silent price race. Just raise your prices. Don't have to tell anybody, your prior clients when they come back in, all you have to do is say, Hey, we're raising our prices. If you would like, this visit I'm seeing you for today is going to be at our previous price point and I'll work with you through the rest of your plan of care.

However it is that is that you've agreed to at this price point. But if you decide you want to come back and work anything else, it'll be at a new, at our new price point. Or you can tell them that you're going to do a package for them because they're already working with you at your previous rate.

And allow them to get a package before you raise your rate. Those are your two options that you have as you go through that. But I really like the silent price raise. You don't have to bounce it. You don't have to feel a lot of pressure around this. The reality is people aren't checking your prices.

You think people are hanging out on the internet just checking what you charge all the time? Dude, they got their own shit going on. They don't care. They probably don't even remember what you charge as well as you think that they do. So you doing a price raise can be very silent, can be very easy.

You just got to do it. The second option, and this is something that I really recommend people do if they want to get a big bump in cash flow. Maybe you want to do that. Maybe you're hiring somebody. Maybe you're trying to expand to a standalone space and you want to get a big bump in your cash flow, so that you can bankroll some of that, is you can do what we call a reactivation price raise.

So with a reactivation price raise, this is where you reach out to your prior clients. And you let them know that you're raising your prices, but because they have worked with you previously, you are going to let them have the opportunity to buy just one package at your previous rates. And you say, Hey, I'll let you buy a package of the previous rate.

And then after that, we're going to raise our rates to where whatever it is you're going to be. But we appreciate you as a prior customer and I want to give you an opportunity to buy. A package, limit one. Don't let him buy more than one. It'll put a little bit of scarcity on it and probably increase the likelihood that they actually buy one.

So you can reach out to people. I recommend that you do a direct email one to one. Don't send a blast email out, especially if you have less than maybe 200 clients. Let's say you've worked with a hundred people. You're going to be far better off emailing each of those people with some sort of individual component that is specific to them.

And you have notes on all these people. You have an unfair advantage. You have their name. You have all the notes that you have. You've worked with them one on one for hours, right? You should be able to say, Hey, how's your little poodle fluffy doing? I know he had a little leg problem or something like whatever was going on.

Just checking in on him, right? How's your son's golf going? How's that triathlon that you were going to do? Make it specific to them. Give them something that resonates with them because the life. And it's far higher when you do that versus if you just say, Hey, we're raising our prices. Click here.

If you want to talk to me about getting a package before I raise my rates, that's generic people knowing they're being marketed to when you do things like that, versus if you're checking in on them, see how things are going. Hey, by the way, I just wanted to let you know. We are raising our prices. We appreciate you as a customer.

We'd love to give you an opportunity to buy a package of visits at our previous rate before we do if you would like to do that, please let me know. The price of our business is going to go up at this point. And you don't even have to tell them why. I think people are like, Oh, I need to justify why I'm going to do it.

Oh, I need to like give them reasons. You don't have to give them shit for a reason why. You're doing it because it's the best thing to do for your business. That's why. And if anybody asks, you can say, Hey, we're in preparation to grow. And expand and build into a bigger facility, we've got to increase our revenue so that we can so we can do that to hit the vision that we have for our company and ultimately help more people and no one's going to balk at that because that is actually what most people are doing with this, right?

It's not necessarily, Hey, I want to buy a BMW, so I want to raise my prices so that I could go get this, luxury car. People aren't going to like that as much, right? You got to paint the vision that you have. And ultimately you don't have to say anything. You just have to let them know that they're doing it.

And you are giving them the opportunity to get your services at what is a undervalued rate. And they probably know that. They probably know that. The first time I raised my prices, I actually had a patient that asked me, or told me, he was like, Man. I was wondering if you were going to do this because he felt I was far undercharging, I was charging and just didn't want to tell me because he felt like it was a steal.

And we only went from 175 to 195. That was our first price raise. It was 20. So it doesn't have to be a lot, but even like little jumps like that make a big difference. So you don't have to go straight from 150 to 200. You can go up, 20, 25 and step that up over the course of six to 12 months.

If you don't feel comfortable making that big jump, but if you do, you can go straight to 200. If that's what you want to do. Either way, you have two options. You go the silent route, sneak it in there, and it's just, it just changes just as simple as that. You just decide, all right, cool. I'm charging this now.

That's one of the beauties of this type of business model. You decide, or you can do a reactivation campaign. And if you're going to do that, I highly recommend you individualize it to that person and you reach out to them, your email to their email, maybe text them. If you have that kind of a relationship.

And see if they're interested in getting a package before you raise your prices. Don't send a blast out through something like a MailChimp or whatever because your open rate is going to be low. Your response rate is going to be low in comparison to an individualized email. And if you have a hundred people, it's going to take you a few hours.

No doubt to look that up. But the return you're going to get on that is going to be astronomically higher because you're going to get a much higher conversion percentage. Then if you just send a blast email, which is a lazy way to do it that's not it, dude. Don't take the lazy route. Take the route that is not as automated that other people are not willing to do.

And you're going to get far more business out of that than if you just go the easy route and you make one email and you hit one button and everything gets blasted out. People can tell. Take the the slower path, the harder path, try harder, get more people in, do it the right way. Raise your prices if you're going to do it, one of these two ways, but I highly recommend that if you are not averaging in most markets between 175 and 200 a visit, you need to look at this as a serious strategy you need to implement within your business relatively soon.

Everything has gotten more expensive. You feel it. I feel it. Everybody does. And for you to be able to compensate yourself and your employees at the way that they need for what their life dictates now, groceries, gas, all kinds of stuff, you need to make more money and you charge your worth, period.

These are two ways to do it guys. I hope you like this one. I hope you got a lot out of it. If you're interested in learning more, head to physicaltherapybiz. com. You can check out what we're doing over there. Case studies of clients that we're working with, all kinds of free resources you can download in there.

Our goal is just to help cash-based practice owners win, hybrid practice owners be able to have more cash within their business and not be as dependent on insurance companies. And ultimately allow you to work with patients the way that you deserve and that they deserve in a setting that's one on one with low volume and you not get burnt out.

So if that sounds like what you're interested in, head to physicaltherapybiz. com. And as always, thanks so much for watching. We'll catch you next week.

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