How Much Do Your Treatments Cost You?
A helpful tool to set your prices for long-term success
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Money, money, money. I hear from many holistic practitioners that it is top of mind, sometimes because they’re in survival mode making ends meet, other times because it’s a key factor in deciding what is a clever next career move, or it might just be that they feel like they’re missing a strategic approach.
And not surprisingly, some of our most read articles in The Well are about pricing. You can find them here:
Of course there’s lots of different ways to look at this, from personal beliefs about money to diving into spreadsheets that show you the exact numbers. Today I’m sharing a very specific tool to help you get a clear understanding of your pricing, so you can plan for the future and the now. Instead of taking a guess when setting your treatment prices and hoping for the best, calculating your unit costs gives you a clear insight into the economics of each treatment, consultation or product you sell.
From this place you can decide on a treatment price that you’re happy with for yourself and your clients. And you’ll also be able to see what a change in treatment price does to your income, considering all the costs you make for each treatment.
Would you like to offer discounted pricing, set up treatment packages or increase your pricing? Knowing your unit costs will help you decide on pricing with clarity.
It will also allow you to understand which new expenses you’ll have the money for, and are worth it to invest in your growth and professional development. Whether that’s a different space to rent, a new training course, a professional membership, or a commission on new bookings you receive on booking directories like Circe.
From making ends meet to a plan for the future.
Knowing how much each treatment costs you will show you how much of a difference it makes to your monthly numbers when you up your current prices with say a £5 increase. An increase like this might take you from financial survival into new breathing space, and as a next step to a stage where you can put aside a certain amount a month or year to invest in your career to grow further. Likewise, it will also show you exactly how low you can price your treatments, while still making a living for yourself.
Whether you work for a clinic, or run your own space, understanding your finances both in helicopter view and to great detail is important if you’re aiming for long-term success. Setting your prices too low will leave you feeling resentful towards work, setting your prices too high might leave certain groups of people out.
But in the end, your pricing is completely personal to you - so do what is aligned with your values, your preferences, and your situation. Whatever pricing you decide on, looking at your unit costs helps you create a clear financial picture and plan ahead with more certainty.
Unit economics
The official description of unit economics is ‘a way to measure profitability by looking at the costs and revenues associated with each unit of a product or service’. In your case this would be measuring the economics of a single treatment or programme you offer, whether that’s in-person or online, and what is left over after you’ve deducted your product costs, marketing cost, and any other costs you incur on a regular basis.
The formula: Cost per unit = variable cost + fixed costs / total units produced.
Fixed costs include production expenses that don't change based on the number of units produced. These include rent, your salary, insurance, marketing, and professional memberships. You’ll divide these daily, monthly, annual fixed costs by the total amount of treatments to get to an average cost.
Variable costs include expenses that change based on the number of treatments given, like the cost of the physical products you use per treatment, from oils, paper, acupuncture needles, cleaning products. If you offer online consultations these costs will naturally be lower.
Whether you use your existing treatment numbers, or do the math based on your forecasts or new growth goals you’ve set - this calculation will help you analyse if your pricing is sustainable for you, and find the price point that’s best in the long-term.
Need a helping hand?
If you’d like support with your pricing, positioning or a strategic plan to get you to long-term success, you can schedule a Strategy Call with me here.