For 12 years, I've coached hundreds of independent medical professionals on business strategy.
And the one area they all struggle with is pricing their services. So naturally we often spend a good chunk of time working through that. One of the first things they learn is price is relative. What one person considers expensive, might be a bargain for someone else.
In this essay though, I'll share with you the 3 most common mistakes physicians make when pricing their services:
1. Price based off your competitors
Every physician going into private practice starts here.
We look around to what other doctors are charging and we price our services a bit lower than them. The problem here is we're letting our competitors determine how much we charge. Not only that, there will always be someone willing to charge less which devalues everyone's work.
A race to the bottom is one you definitely don't want to be in, much less win.
2. Price based off your cost of goods
The second mistake –particularly common amongst doctors in aesthetics– is calculate the cost of goods for each service or procedure and add 15-25% on top.
Again, the problem here is giving control of your prices to your vendors and suppliers. If they raise their prices, you either have to raise yours to compensate or it cuts into your profit. This pricing strategy also fails to account for fixed expenses like rent, salaries, utilities, insurance, etc… It's not an issue when you have a steady flow of patients but when you don't your entire profit goes towards paying that.
What's the point of owning a business if you don't get to keep any of the money?
3. Price based on what your patients say
This one usually happens after a year or two in business.
You have a few patients in your practice and, since they often say how "they can barely afford it", you assume your current pricing is a hard ceiling. What's more, some of them tell you their friend/spouse/coworker wants to become a patient but price is holding them back. And you take that at face value and wonder whether you should lower your prices…
Here's the thing: no matter how much you cut your prices, patients will always complain about the price.
Paradoxically, the higher you go, the less they complain.
If you are in private practice, what is your experience with the price of your services? Have you made any of these mistakes? Share in the comments or in my DM's!