How much should I charge?
Setting your prices is HARD. Knowing when to increase your prices is HARD.
If you retail products, you buy them in at a certain price, mark them up to factor in your profit margin, and that’s the price you charge. Easy. Pricing aesthetic services isn’t quite as simple.
Read on to figure out how to price your aesthetic services.
How much?!?
The expenses that go into each aesthetic treatment - products, prescriptions, expertise, consumables, professional registrations, insurances and other business overheads mean that settling on a pricing strategy is tricky.
So, how do you price your services?
And how do you know if/when you should put your prices up?
5 things to consider when determining your pricing
1. Your Costs
There are two types of costs you need to know, direct and indirect. By knowing your direct and indirect costs, you can understand how much you need to charge to cover those costs.
Direct costs: These are easy to quantify. The are the direct costs incurred delivering a treatment. The cost of products, consumables, clinic hire/rates, prescriptions.
Indirect costs: These are harder to pinpoint. They’re typically business overheads e.g. rent, rates, insurance, professional registrations, marketing, equipment hire/leasing, broadband/phone costs.
2. Your Competition
What are your competitors charging for a similar service?
How would you pitch yourself against them? Are they more/less experienced? Is their clinic more basic or more boujee? What kind of products are they using?
This should not be the only method to price your services. Your business costs might be vastly different to theirs. A profitable and sustainable pricing strategy for them, might not be the same for you.
Don’t be afraid of charging more than competitors. If the products and service you provide are superior, make this clear in your marketing to help justify your pricing.
3. Your Value Proposition
When you know your target customers, you will understand how much they value your services and where that value lies.
As a newer practitioner, you should market your qualifications and training clearly, as this helps position you as a trusted and reputable practitioner.
As your business matures, and your patient base expands, you will gain a deep understanding of the specific value you provide to your patients and be able to lean into this. You will learn their wants, needs and budget, which will enable you to hone your pricing.
4. Your Time
Many aesthetic practitioners fail to consider the cost of their own time. The longer you have been practicing, the more each hour of your time is worth as your experience, expertise and reputation grow.
How much would you get paid an hour working for someone else to deliver the same service? That’s usually a pretty good guide to what you should be factoring in for your time.
5. Your Profit Margin
This is key to running a business that actually makes money.
Once you’ve factored in your costs, the market, your perceived value and the time invested, you should then add in a profit margin. You can determine what this is, as a rule of thumb a decent profit margin for a small business is around 10%.
It’s up to you to decide what your services are worth and how they fit into the local market.
People are willing to pay a fair price for a great service. If you do phenomenal work and take amazing care of your patients, they will not have a problem paying for it.
Pricing is not set in stone. You can, and should, amend your pricing throughout the lifetime of your business.
Can I put my prices up?
There are two clear indicators you should increase your prices.
You’re always busy
A good indicator of being able to put your prices up is that you are often fully booked, people are waiting for appointments and you’re having to turn people away.
It’s clear that you have a valuable service that people are willing to pay for and the majority are likely to be willing to pay a little more to get treated by you.
You’re consistently running at a loss
If you’re treating patients and at the end of each month, you’re still running at a loss, you need to either increase your pricing, reduce your costs or both.
If you’re struggling to figure out your numbers, click here for a handy calculator.
Simply download it to your device, add in your costs and charges and it will help you figure out your most profitable treatments, your annual and daily costs and your daily gross revenue.
