What is the best way to price your massage therapy services?
Pricing a service is an art and a science. Find the right balance to your price that rewards you for your time and efforts, and also provides an excellent value for your clients.
The optimal price will maximize profit without making you feel guilty. And it will increase repeat business because your clients believe they are getting outstanding value.
Price is what you pay. Value is what you get.Warren Buffett
5 Common pricing models
The rate you charge is an expression of how much you feel your time and service is worth. Your time is valuable. You only get so much of it, and you can never get it back.
Also, consider your current costs and overhead, and future costs for growth and expansion of your practice, even if you are only vaguely considering scaling up. Remember all the costs and sacrifices that you made to learn these skills and get you to where you are today.
I’ve listed several pricing models with a brief description. The first two are the most common for a massage practice with limited overhead.
However some of these models really aren’t appropriate for a massage practice. I only mention them in case you hear them elsewhere and wonder if that is what you should be doing.
1. Rate pricing
Pricing based on treatment time is the most common method for massage therapists. This makes sense since time is typically the most costly resource used when providing therapy services. Determine what your time is worth to you. Then determine the % of your work time that you should be able to provide massage services.
For example: you believe your total average work time is worth $30/hour, and plan on working a total of 30 hours per week. That’s $900 per week gross revenue. If you plan on averaging 15 massages per week, then you need to charge $60/massage to make $900 per week. The other 15 hours per week are spent marketing your practice, and running the business side.
If you live frugally and work-life balance is important to you, then this scenario may work. Just make sure to consider all your overhead expenses. Remember, the goal is not to perpetually break even, but to make some surplus that you can invest for your long-term financial security.
2. Competitive pricing
Pricing your services using this model means seeing what prices similar services in your area are offered for, and then setting your prices within that range. It will be most profitable in the long run to price your services somewhere in the upper 2/3 of this range. Just be sure to justify your prices with exceptional quality of service and experience.
Pricing at the upper end of the range can accomplish 3 things. It will obviously increase your revenue per hour. But also, higher prices actually increase perceived value. And since there is a strong correlation between difficult clients and people who only want the lowest price, having prices on the high side will decrease number of clients that cause you headaches.
*For most massage therapy practices, a combination of rate pricing and competitive pricing works well.
3. Cost-plus pricing
With this model especially, it is important to know your costs. While providing massage therapy primarily costs you time and energy, your other variable costs are considered. These include: laundry, room set-up and cleanup, supplies, etc. This model works better for the sale of products though, where you consider the wholesale cost, plus markup.
4. Value-based pricing
This model bases your price on the value you bring to your client. It is a customer-centric approach that considers what they will pay for your services, and the value you bring into their life.
It is not really appropriate for a massage practice though. For one thing, it would be difficult to advertise your prices to potential clients. This model is better for a service business like executive coaching, where the value or benefit of the service can be very different to different clients.
5. Luxury pricing
Leveraging brand status, this model calls for premium pricing based on the perceived uniqueness of the business. Like receiving tennis lessons from Serena Williams, or personal coaching from Tony Robbins, a $4M Ferrari, or a $50,000 crocodile skin umbrella.
While these would all be high quality services and products, they would likely be worth the premium price only to certain individuals. This is based more on a want than a need. There are certainly more affordable options.
An important concept in economics is elasticity of demand. This states that the quantity demanded typically decreases when the price is increased. This occurs more with luxury items and non-necessities, which unfortunately, often includes massage therapy. Savvy branding and positioning can help to minimize this effect, and I’ll discuss these strategies more in upcoming posts.
Less common pricing models for massage practice
Donations. Working based on suggested donations is great while in school, and in most cases the only legal way to generate massage income before being licensed. It is also a popular pricing strategy of the hippies among us.
In some situations or industries this might be the best way to go. For example, it would be a great way to fund an organization that provides necessities within a community. But as a service provider, I reserve the right to decide what my time is worth. Don’t delegate this to someone else. You decide what your time is worth.
Project-based. This is often used in the creative world of designers, writers and builders. It could work for a massage therapist if there were set parameters. For example, a 3-day onsite massage gig at a large company, where you agree to be there 9am to 4pm each day, and employees come in as they are able.
However it may be better in this case to offer a discounted rate-based price, since 25-50% of the time you could be waiting for your next client.
Charging a fair price without the guilt
Some massage therapists, and other service providers, actually feel guilty about charging their clients fair rates. But the reality is that it is hard to be taken seriously as a professional unless your prices are within your local market price range. If you still have difficulty accepting payment for your services, consider setting a reasonable rate, then donating the money to your favorite charity.
A problem with charging rates that are too low is that people often associate value with how much something costs. They perceive higher value when the product or service costs more. So by charging low rates, a therapist could be inadvertently sending the message that he or she is inexperienced or offers low value service.
Another problem with charging rates lower than normal market rates is that it screws over people that depend on this business to make their living. Just like Wal-Mart has put a lot of Mom & Pop local shops out of business. This happens when charging low prices (because of cheap, overseas labor), not paying their employees fair wage, and offering low quality merchandise. It also devalues the service and alters customers’ expectations.
If your prices are low, you might also feel taken advantage of and resentful. These feelings tend to manifest into a drop in quality of service. Prices that are too low may also send a subconscious message to yourself that you don’t believe in the value of what you do.
However, having a higher price will likely make you feel more obligated to provide the absolute best service possible. This will lead to happier clients and more referrals.
Relationship of your brand and price
Establish your brand as one that represents top tier service. Not just by having trendy or artsy decoration, but also by being the kind of business that your clients go leave and tell all their friends how awesome their experience was.
Never try to be the “low cost leader”. Competing based on price is a sure way to drive yourself and other practice owners in your community out of business. When competing on price, you have nowhere to go but down. It’s a “race to the bottom”. Clients for these businesses typically have high price sensitivity. This means that if you raise the price even a little, they leave for someone cheaper.
Also, be careful not to fall into the trap of basing your rate on what you think your prospects want to pay. The best long-term clients will usually be glad to pay a little more for a more enjoyable setting, prompt and reliable service, and a skilled and attentive clinician.
How you present your services influences the perceived value and reflects on your brand. If your massage studio, marketing materials, and customer service are poor quality, then people will only be willing to pay rock bottom prices, if at all.
However if you show close attention to detail in all aspects of your practice and provide exceptional quality of service, then people will be willing to pay a premium.
When and how to change your prices, without losing clients
It is difficult to raise your rates once clients get used to paying a certain price for your service. A good rule of thumb: if you can barely keep up with your client schedule for 2 consecutive months, consider raising your rates.
A good mantra for a successful practice is “price high and justify”. Set your prices toward the high end of your local market, and justify this by providing the best experience possible. Always give more than what you get paid for. This is how you warrant higher rates.
Without justifying your prices by offering additional value, higher prices would just be overcharging. A sure way to drive away clients.
When you do decide to raise your rates, give your clients notice ahead of time. Also be sure to give a reason that is set in a positive tone, not “due to inflation…” or “because my rent just went up”. Instead, offer something else of value to offset and justify the price increase, that the client will notice benefit from. Even if it is something small.
Ideally this would be something that offers your clients long-term benefit and you only have to pay for once (so no repeated or variable costs). Something that doesn’t take any of your time. And something with a payback period of less than 2 months. It doesn’t have to be a big investment. Here are a few ideas: a new table or linens; infrared Bio-Mat; install a client shower; improved website with convenient online booking functionality; hydrocollator; cold plunge tank or other cryotherapy equipment; or an improved lounge area for before and after treatment.
Any improvements to your practice also gives you good reason to contact all the clients you’ve worked with to tell them about it and how it will benefit them. You will most likely see a surge in business because new things are valued and interesting to people.
A word on offering discounts and promotions
Try to keep your rates consistent. Any change in prices should be justified in a way that makes sense to your client. Just like giving a reason why you intend to raise your rates, you should offer a reason for any discounted price. Otherwise the inferred message will be, “I can’t get enough business, please come get a massage…”
People want to go to therapists that are in demand, because it suggests that they are good at what they do. If you start offering a lot of discounts then it invalidates your usual rate.
It’s ok to run a short-term promotion to jumpstart your business, but try to meet at least 2 or these criteria:
- Promotion is tied to a recognized event such as a holiday or business anniversary, etc.
- It will be offered for a limited time; usually 1-2 weeks
- Offer the promotional rate in return for some client effort such as: referring new clients, participating in a client survey, and providing written testimonials for your marketing.
“What if a new client wants to negotiate?” If this happens, stick with your current rates, but simply state that you have lower priced options like a 30-minute massage or shorter chair massages available at shorter durations. This would also be a good time to bring up package discounts if you offer this (recommended).
As you know, packaged or bundled pricing involves offering a reduced price for purchasing multiple sessions in advance. There are many ways to set this up depending on your niche and volume of business you do. I recommend experimenting with different package amounts to see what works best for your practice.
Other things to consider when establishing your prices
- You must believe in the value of the service that you are offering.
- Running a massage practice usually involves getting paid for only 25-50% of our time. Because there is a lot of unpaid activity
- Be transparent with your pricing or it will reflect poorly on your brand.
Helpful hint for new solo therapists: The reason employee therapists get paid less is because they basically just show up to provide the message. They don’t have to do all the ‘behind the scenes’ work of running and promoting a business. As a practice owner, much of your work doesn’t pay directly, but is still necessary to have a successful practice. Approach your practice and your pricing strategy with this in mind.
Please post any comments below. What pricing difficulties have you run across?