Your mental health practice focuses on helping people – meeting with clients and understanding their behavioral health needs. You didn’t get into practice to spend hours on behind-the-scenes tasks like bookkeeping, invoice management, and price-setting.
However, all that accounting work is a vital part of the job.
Setting your prices can be a complex process. You have to take a variety of factors into account and even then, you can miss the mark.
Prices should be based on your personal and business finances, the competition and local marketplace, and a strategy that helps you reach your goals.
Why Accurately Pricing Services Matters
Pricing your services requires a careful balance. You don’t want to be too high or too low and you’ll need to generate enough revenue to cover your living expenses and provide for your preferred lifestyle.
The balance is important. Today, there is an extraordinary demand for mental health services, especially with the ongoing stressors brought on by the COVID-19 pandemic. However, pricing yourself outside of the competitive landscape in your practice area can mean losing business.
Cash flow is another important consideration. Cash flow is the management of cash on hand. For mental health providers, cash does not always flow in a consistent, predictable manner. Among other factors, there are delays in getting payments from clients and insurance reimbursements can be irregular.
Pricing your business to accommodate your cash flow is critical so you have enough on hand to pay your bills.
Tips for Pricing Services Accurately
Where to start when pricing your mental health services? It can be a daunting proposition. Here are a few tips to navigate the pricing process.
Know What You Need and Work Backwards
Begin with your business expenses by assessing what you need to cover the following:
- Office rent
- Practice insurance
- Marketing
- Staff
- Incidentals
- Etc.
Add in what you need to sustain your lifestyle
- Rent or mortgage
- Car payments
- Loans
- Food
- Clothing
- Entertainment
- Etc.
This work will establish your baseline expenses. From there, also consider savings and retirement planning.
These calculations will give you a good idea of what you need to strive for to succeed financially.
Next, you need to calculate the number of sessions you need at various price points.
Analyze the Market
The market in your practice area will drive much of what you can afford to charge. Start by looking at what other practices are doing in your region, with providers that offer similar services and have the same credentials. Knowing what others charge will help you determine what’s practical and competitive in your marketplace.
Clients will choose mental health services with an eye towards price, just as they would for other goods and services. You don’t want to be too low or too high compared to others.
Another approach is to speak with your clients directly. Ask them what they are comfortable with paying, able to pay, and willing to pay. Getting a sense of the value of your services from those you serve can be insightful.
While you should not base your entire pricing strategy on these conversations, they can help to guide your decisions.
Rethink Your Current Pricing Strategy
Traditionally, mental health professionals are very accommodating when it comes to pricing their services. Look at what you offer now – sliding-scale pricing based on income, packages for various services offered, or a set flat rate for each session. Does your client base use all of the pricing options you offer? Are others more popular than others?
Understanding what you offer now and how effective it is can help with pricing in the future.
Knowing the percentage of clients – and your income – that comes from different pricing options is important. What you’re offering now may not be the best mix, based on what you learn about the marketplace and from your own clients.
On the other hand, instead of adjusting your current prices, you may need to consider different pricing strategies if you are not offering them today.
Let Experience Guide You
Setting the right prices for your mental health practice helps you understand your finances and plan for your future with confidence. Predictable, understandable, and reliable forecasting for cash flow allows you to cover your expenses and live the life you want to live.
At Leichter Accounting Services, we can help you set the right prices for your practice so you can reach your personal and business financial goals.
Let us help you with your accounting and budget forecasting needs, assisting with your invoicing and payroll services to let you focus on helping clients. Our personalized services and technology solutions include cloud-based services, allowing you to access your finances from wherever you are at any time.
We work to understand your business, your goals, and develop a pricing strategy that matches your personal and professional needs. Contact us to schedule a free initial consultation to help your mental health business thrive.