Why Underpricing Is Killing Your Cash-Based Clinic

By Doc Danny | Founder, Physical Therapy Biz

Let’s be real—most clinicians underprice themselves. Whether you're charging $100 or $300 per visit, your pricing sends a message. And if that message says “bargain,” you're probably attracting the wrong people, leaving profit on the table, and setting yourself up for burnout.

This isn’t about being greedy. It’s about pricing for effectiveness—for your patients, your clinic, and your future.

The $100 Session That’s Costing You Everything

When we start working with clinic owners, one of the first things we fix is pricing. Why? Because it’s the fastest way to increase net profit without needing more new patients.

Let’s break down why underpricing hurts you:

1. Perceived Value Is Everything

Price isn’t just a number—it’s a signal.

If you were hiring an attorney for a big legal case and one charged $100/hr while the other charged $500/hr, who would you think is better?

Exactly.

Patients do the same mental math. Charging $100/session when you’re delivering world-class care tells them, “I’m not that great.” Even if you are that great.

Same goes for feta cheese at the grocery store (true story from the episode)—when there’s no clear difference, people buy the most expensive one because they don’t want to be wrong.

2. Revenue Per Provider Is the Secret to Growth

Want to scale your business or hire staff? You need margin.

If your average visit rate is $150 and your competitor’s is $225, they’re generating more profit for the same amount of work. That means:

• Better pay for their team

• More to invest in marketing

• Nicer facilities

• Less stress scaling

The magic number to shoot for? $200/hour minimum.

And yes, it’s absolutely possible—clinics across the country are doing this every day.

3. You Can’t Scale on Low Prices

Want to step back, take a vacation, or even sell your clinic one day?

Then you need mid-level leadership—clinic directors, operations managers, maybe even a COO. But those roles cost money. And that money comes from profit.

Low pricing = no margin
No margin = no leadership
No leadership = you’re stuck in the clinic forever

You can’t build an autopilot business on budget pricing.

Here's the Good News

You have control. In a cash-based model, you decide what to charge—not the insurance company.

That’s both a blessing and a trap. Because most clinicians undervalue themselves.

But if you change your mindset and price based on the transformation you deliver—not just the time—you unlock:

• Higher-quality clients

• Better retention through structured plans of care

• Predictable revenue

• Long-term growth potential

Final Thought

What’s it worth to help someone play with their kids again? Return to their sport? Avoid surgery?

Way more than $100.

Want Help Raising Your Rates the Right Way?

We’ve helped over 1,000 clinicians launch, grow, and scale profitable practices. We can help you too.

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Podcast Transcript

 Danny: Look, we know burnout in our profession is a problem, and one of the bigger contributing factors to burnout is the amount of documentation and paperwork we have to do just to be able to do our job, and we're now able to help offset a lot of the time that you spend writing your notes through ai. We created a tool called Claire and Claire listens in the background while you work with your patients and it writes your notes for you.

How awesome is that? It is literally a game changer. It's gonna save you what we see four to eight hours a week in our testing and our training as we've actually built this up and train this specifically for physical therapists. That's a lot of time. That's a lot of time. You could be working out. It's a lot of time you could be hanging with your family.

That's a lot of time that you could be seeing more patients if you need more productivity. It's huge and it gets you a ton of time back doing something that we know nobody really wants to do, but we have to do in order to cover our own butts as clinicians. So if you want to test this out. Get 10 free notes to see how this works for you in your clinic.

Go to meet claire.ai, sign up and get 10 free notes to test it out and see how we can help save you 40 hours a week as well. Hey, are you a physical therapist looking to leverage your skillset in a way that helps you create time and financial freedom for yourself and your family? If so, you're in the right spot.

My name's Danny Matta, and over the last 15 years, I've done pretty much everything you can in the profession. I've been a staff boutique. I've been an active duty military officer, physical therapist. I've started my own cash practice, I've sold that cash practice and to date my company, physical therapy has helped over a thousand clinicians start growing and scale their own cash practices.

So if this sounds like something you wanna do, listen up 'cause I'm here to help you. Hey Danny Matta here and today we're gonna be talking about why underpricing is killing your cash-based clinic. So one of the biggest mistakes that I see with cash-based clinics or even insurance clinics that are taking some or have some variation of cash service, we'll call those hybrid clinics, is that they are typically under pricing what their cash services should be and.

When people come in to work with us in PT Biz, one of the very first things that we want to look at is, what are you charging? What's your sales process look like? Like how are you setting up the different tiers of your cash services? And one of the first things we do is we help them optimize that because it is one of the quickest wins that we can get.

In a business to help them really make more net profit almost immediately. And that's really what it comes down to, right? Like gross profit, gross revenue is how much money your clinic is making. Net profit is how much you're keeping. It's really important that you price yourself effectively for a couple different reasons.

We're gonna talk about three big ones. So number one. There's perceived value associated with what you charge, or a lack of perceived value associated with what you charge. Now, I want you to think about, let's say you're in legal trouble to some degree, okay? And you need an attorney to represent you or to help you with something that you're dealing with.

You talk to two different attorneys. One attorney, they charge $500 an hour. The other attorney. They charge a hundred dollars an hour. Which one do you think is better at their job? Which one do you want representing you? In a legal case, let's say this is an important thing that you have to get right?

Let's say your business is getting sued, or you have some sort of business litigation issue you have to deal with which one do you want representing you. Most people would assume that the attorney that charges $500 is way better than the one that charges a hundred dollars. In fact, if it was me and.

The attorney told me, yeah, I charge a hundred dollars an hour. I'm really good. I would think this person must be terrible. This is the lowest price attorney that I've ever heard of that I'm not gonna think to myself, this is a steel deal. I gotta go with this person because this is my business. I. I can't have you getting screwed up by whatever this legal issue is.

I'm going with a person that's 500 bucks. They're probably better. They probably have more experience. Now, what if I told you that both of these attorneys had the same amount of experience, the same court case record, like whatever, like they're the same. They're equivalent price psychology.

Perceived value tells us that this is better than this because it's more expensive. I had to go to the store to get feta cheese for my wife for a salad that she was making the other day. I didn't know there was like 15 different brands of feta cheese. No idea which one's the right one. Cow's milk versus goat milk.

I don't freaking know. No idea. What did I do? I looked for which one is the most expensive fe of cheese. Let's go with that one. It must be the best one. Price psychology, right? I didn't wanna be wrong and then have to go back up there and get a different one. So when you are under pricing yourself, if you are charging a hundred dollars per session, you are killing your business.

I know you think that you're not. I know you think that you're like doing the right thing and that might actually be a lot more money. Then you're used to making procession potentially than what you made if you were working somewhere else. But the difference between somebody charging a hundred dollars an hour and somebody charging $300 an hour, there is a massive perceived difference, assuming you can deliver on that, if you are a mediocre physical therapist, if you're not very good, cool.

Charge a hundred dollars. If you're world class at what you do, you need to charge what you're worth, and the perceived value of that is tied to it, whether you like it or not. So if you're fantastic. Charged. Like you're fantastic. All right? Otherwise, people will view you as less good or not as good as you are because you're not charging what you were, you are worth.

Just as if we're talking about our attorney case, 500 versus a hundred, gimme the one that's gonna represent me. Be better. This is my business. This is your body. Gimme the best person I can go to. I want the person that is charging the most, right? That means they are worth the most. Now, the second thing is your revenue per provider.

This is a big metric that we look at with businesses as they're scaling past themself. Now, if you're charging a hundred bucks a visit, $150 a visit, it's gonna be very hard for you to actually scale past yourself unless you do one of two things. Number one, massive amount of volume. So like multiple patients per hour, which would be considered a high volume clinic, which is what most people don't wanna do and what they're moving away from.

Or two, you have to have a lot of providers that are seeing people at that number, right? So you're not necessarily scaling through volume per provider, but volume in the clinic. And I don't know about you, but I would rather have three physical therapists that are producing the revenue of six physical therapists, because that's number one, fewer people to manage, fewer things that can go wrong.

And also I can afford to pay these three people I. Significantly more than I can afford to pay these six people because they're just not jittering as much money per provider. And if you look at revenue per hour, roughly of what we track, we need clinics to be at least at $200 an hour.

And I know some of you're listening to this and you're like, how? How is that possible? How are people charging and making $200 an hour on average for the visits that they have? It's happening all over the country. I'm telling you, in small markets, big markets, any niche you can think of, it's just a matter of you being able to sell and price yourself effectively.

And a lot of it's here. It's your mindset. You don't think you're worth what you're worth. If you don't think you're worth what you're worth. How are other people supposed to think that you're worth what you're actually worth? They can't. It starts with you, right? It starts with your own perceived value of yourself and that trickles down to your staff as you bring them on.

So if you're charging, let's say your average is $150 a visit versus me over here. Let's say my average is 2 25. I have so much more net profit 'cause it's the same amount of work. Keep in mind, let's say it's the same city, same overhead, everything's the same. I have more net profit that I can now.

Pay my a higher salary, have better benefits, have a better facility, reinvest more into marketing, have more net profit for myself as an owner. Like all of these things improve when you actually improve what you're charging. So you have a higher average visit rate per provider, which allows you to do a host of other things, and it's very hard if you're below $200 per visit or per hour.

The last thing. When we look at this, is your ability to be able to step back from your business and truly scale. So if you ever want to be able to step back from your business and create either an autopilot practice or a pilot or a practice that you are going to ultimately sell, which we call these home run clinics.

In order to do that, you have to have leadership in place that is running the day-to-day, that is making decisions, that is growing the business that you know, that, that are running the systems in your place that you've developed within the business for you to take a step back and not necessarily be as directly involved.

And it, where it is a autopiloted clinic where maybe you're involved a day or two a week or maybe even less, or if you wanna sell, you have to have mid-level people, leadership level people involved in order for someone to wanna buy that. Otherwise, they're essentially buying a your role in the business, which they may not want to do.

A true investor would want an income stream that they're purchasing, not necessarily a business. They have to run. So for you to add value, to add true scale to your business, you have to have enough profit, enough revenue for you to hire, office managers and clinic directors and maybe regional directors or a true like COO operator in your business.

If it, as it gets that big to where you now have leadership infrastructure and not necessarily just staff, right? Because staff is gonna fulfill, not necessarily. Run the business, a mid-level person is gonna have a different skillset, a more expensive skillset, and they're gonna need money to be paid in their salary or in compensation that has to come from the business.

So if you're undercharging, you're never gonna get to the point where you're actually gonna be able to bring these people in that are mid-level people that are going to allow you to take either a step back or create an entity that has enterprise value that can be sold. So this trips you up in so many ways and it's the one variable that we literally.

All can change almost at any point in time that you want. You can readjust your pricing whenever you want. That's actually one of the advantages of these types of businesses. It's like insurance isn't telling you what to charge. You're deciding that. But it's also one of the negatives because most clinicians, we grossly undervalue ourself.

Even though like my intellectual property attorney will charge $650 an hour, we and we feel bad about charging a hundred fifty, two hundred, two hundred fifty, three hundred, we're not even close to this person yet. We help people with their vehicle in life, their body like for God's sakes. What is that worth?

What is it worth to get back to being able to plane with your kids? What's it worth to be able to. Play that sport with your friends, that's like your third place, and that's your community. What is it worth to learn how to take care of your body long term and add meaningful years onto people's lives?

It's worth a hell of a lot more than you're charging for it, and you are the one that has to make that decision and really start to adapt and realize that you're worth a lot more than you are. And if you don't, these are the problems you're gonna run into. So you are going to have lower perceived value.

People are not gonna think that you're worth what's you're worth, even though you're really good, you're charging like you're not that good. Two, you're gonna have lower revenue per provider. You're not gonna be able to pay your staff as much. You're not gonna be able to have as nice a facility.

You're not gonna have, be able to have as nice of benefits. So you're not gonna have as good of attraction of potential. Staff to work with you and or retention. And the last thing is you'll never really be able to scale to an autopilot clinic where you can take a step back and or to have true enterprise value in your business.

'cause you don't have mid-level people that are able to truly run the business so that you have something that's more valuable and or more hands off. These three things can be addressed and adjusted by truly charging what you're actually worth. Now if you need help with that, if you don't know where to start or you don't know, like what you should be charging or how to do that, or any of that stuff.

We help people do this every single day, and we've helped literally over a thousand clinicians face to face, really be able to start grow scale these businesses. So if that's something you're interested, head of physical therapy biz.com, you can take a look at what we do. If you can look at some of the clinics we've worked with, this is our wheelhouse.

We help people with it every single day for you. You gotta get comfortable with charging what you're worth. That starts with you that can start right now. Make the decision to make the change. I hope that this helps you and as always, thank you for so much for listening and for watching, and I'll catch you in the next video.

Hey, peach entrepreneurs. We have big exciting news, a new program that we just came out with. That is our Pt B part-time to full-time, five day challenge over the course of five days. We get you crystal clear on exactly how much money you need to replace by getting you ultra clear on how much you're actually spending.

We get you crystal clear on the number of people you're getting to see, and the average visit rate you're going to need to have in order to replace your income to be able to go full time. We go through three different strategies that you can take to go from part-time to full-time, and you can pick the one that's the best for you based on your current situation.

Then we share with you the sales and marketing systems that we use within our mastermind that you need to have as well. If you wanna go full-time in your own practice. And then finally, we help you create a one page business plan. That's right, not these 15 day business plans. You wanna take the Small business association, a one day business plan that's gonna help you get very clear on exactly what you need to do.

And when you're gonna do it to take action. If you're interested and signing up for this challenge, it's totally free. Head to physical therapy biz.com/challenge. Get signed up there. Please enjoy. We put a lot of energy into this. It's totally free. It's something I think is gonna help you tremendously, as long as you're willing to do the work.

If you're doing the work you're getting. Information put down and getting yourself ready to take action in a very organized way. You will have success, which is what we want. So head to physical therapy biz.com/challenge and get signed up today.