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I have a dilemma and would appreciate some guidance.  I am a sole practitioner currently work from home.  I have a full time day job outside the industry (hoping to transition to massage full time but that's another post).  I see clients evenings and weekends.  It has always been my mission to make massage affordable and because I have fairly low overhead I have kept my prices at $60 for 60 minutes and $75 for 90 minutes (located in the midwest).

My family is growing (boyfriend and his son) and I am considering moving my business out of the house.  I found a great location that is actually closer for the majority of my clients and the owner is giving me a reasonable deal on room rental since I only work part time.  I would be an independent contractor, setting my own schedule and rates.  The owner strongly recommends that I start charging $90 for 90 minutes to keep my prices in line with her staff.  I certainly wouldn't want anyone's client to jump ship because my rates are lower and I have no problem charging new clients $90.  But what do I do about my existing clients?  I can't very well bump their rates up $15 in one fell swoop can I? 

Should I increase existing clients $5-$10 for now?  My clients are spoiled and get good bang for their buck.  I know they will understand a price increase due to me having more expenses but at what point, and how, do I get everyone on the same price tier?  Thanks for your suggestions. 

Sharon

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I would suggest raising your price to $90 for 90 minutes. Give your existing clients some coupons and just tell them that as a result of your new location it is important for massage pricing to be consistent across the board. You can give them 10% off coupons..maybe give each client 3 coupons..that gives them time to adjust..for three massages their rate only increased by $6 dollars...and then they have time to adjust to the new price.

Also, you will get new clients who will gladly pay $90.....congratulations on your new spot!

Aloha Sharon,

 

One option is to raise your rates to $90 for 90 minutes for all new clients immediately.  Give your current clients 1-2 months warning about your planned increase and optionally tell them if the price increase would be particularly difficult for them then you will grandfather them in at their current price, or something in between.

 

I've raised my rates this way in the past and only had one person ask to be grandfathered in.  He's 87 and from what I can see could afford the higher rate  .  so what!  He's been my client for many years and its worth it to me to keep him on.

 

Aloha,

Barbara Helynn

 It has always been my mission to make massage affordable and because I have fairly low overhead I have kept my prices at $60 for 60 minutes and $75 for 90 minutes .... I would be an independent contractor, setting my own schedule and rates. 

So your "mission" goes out the door because someone tells you to charge more to avoid poaching their clients? Mission abandoned? Why not keep your prices where they are? It's YOUR decision, and the rent is reasonable (not sure why you mentioned this, as it is irrelevant to the decision)

 

My clients are spoiled and get good bang for their buck.

 

Either you are undercharging them -- in which case raise your rates -- or you are fulfilling your mission -- and should spoil your new clients too and keep your rates the same.

 

Thanks everyone for your insight and suggestions.  My clients often tell me I should be charging more so I guess I'll find out if they really mean it!  Thanks again.

When I raise my prices, that includes raising them to existing clients. I normally give about a 2-3 month notice that it is going to happen, by mentioning that in my newsletter and posting a sign at the front desk that effective ____(date) the price will increase to ____.

Since I offer package deals, I also mention that people can get massage at the less expensive rate by paying for 5 up front and getting the sixth one free.

The owner is concerned that people will jump from her existing ICs over to you because of the cheaper rate and that the other ICs there will be resentful of you undercutting their prices. If I were you, I would inform existing clients of the impending change and the reasons for it, and perhaps extend their present rate for a while longer or give them a smaller increase initially, and charge the $90 to all new clients. Giving the existing ones a coupon or two as someone mentioned above is also a good idea to help them make the transition to the higher rate.

Thanks, Laura.  I have raised my prices across the board to new and existing clients effective May 1.  I sent letters and emails to every client and included "Client Appreciation Coupons" to my regulars to aid in the transition.  (Thank you, Lucianna!)  I have received several email replies from clients expressing their joy that I will be located closer to them now.  Not one word has been mentioned about the price increase; only how happy they are that they won't have to drive as far.  I am very relieved and hopeful that I made the right decision.  Thanks, again!

At first, raising my prices is out of the choices but when the time comes that my business is low because I thought having more customers is the best choice but I was wrong and it took me a payday loan to help me pay for things while my business is low. Now, I realized that in any businesses, building a bigger consumer base is not necessarily the solution for growing a business. Instead, increasing the prices might be the very best bet.

There are only 3 ways to increase profitability.

 

  • Raise price
  • Lower costs
  • Grow volume

 

They are not mutually exclusive -- so you can do a little of all, not just one. But they are also inter-related. Growing volume can mean increasing costs through advertising. Discounting to grow volume may be less profitable in the end.

 

Lowering costs is hard for sole practitioiners and small practices -- there aint a whole lot there to cut!

I find this all comes down to the Law Of Supply & Demand. If the supply of your time is ample or the supply of others then the demand for services based purely off price will decrease. Often times as I have worked with other therapist they fail to understand that in today’s world massage is offered everywhere. I mean they are competing with Groupon/Living Social and other daily deals site all the time as well as the franchises. If your demand is high enough you can continue to raise your rate until your clients levels out, but your run the risk of running your client base off. So look at your schedule and see how many massages are you really wanting and willing to do daily? Based on this number what is the amount of income your seeking? I have gone thru the number a million times with students I mentor and can show them that unless they have a base (80% of the clients already to support their income) they are better off building a book of clients at a lower per massage rate until the demand for their services exceeds 30% of their maximum ability to schedule in a 60 day window. Being booked doesn’t been one week or even two weeks out. Being booked is 30 plus days of prescheduled and hopefully prepaid clients. Your income will be more stable, you rate of no shows will diminish, and your clients will elated with your fees and service. Good luck and hope all turns out well for you.

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