E715 | Why You Should Charge What You're Worth

In this podcast episode, Doc Danny delves into the topic of raising prices for service-based businesses, specifically focusing on the physical therapy and healthcare industries. He highlights the importance of charging prices that align with the cost of living in the local market, in order to support competitive salaries for staff and ensure the growth and sustainability of the business.

Drawing from his own experiences and observations from a recent virtual event with his Mastermind members, Doc Danny emphasizes the need for business owners to overcome their discomfort and fears around raising prices. He stresses that pricing decisions should be based on objective financial realities and the necessity of providing employees with fair compensation, rather than solely on personal preferences or feelings of self-worth.

Ultimately, the key takeaway from this episode is that in order to build a successful and scalable service-based business, owners must be willing to charge prices that reflect the local market conditions and enable them to pay their staff competitive wages. By addressing the psychological barriers to raising prices, businesses can create a sustainable foundation for growth and provide their employees with opportunities for career advancement and job security.

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Podcast Transcript

Danny: 

If you need to pay somebody, let's say they need to make 100, 000 in your area, it's for it to be to match the cost of living difference versus maybe they need to make 80, 000 in Atlanta because cost of living is lower. You're going to have to get there by effectively pricing yourself. Hey, are you a physical therapist looking to leverage your skill set 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 is Danny Matei and over the last 15 years, I've done pretty much everything you can in the profession. I've been a staff PT. I've been an active duty military officer, physical therapist. I've started my own cash practice. I've sold that cash practice. And today my company, physical therapy biz has helped over a thousand clinicians start growing scale, their own cash practices.

So if this sounds like something you want to do, listen up, because I'm here to help you. What's going on? Dr. Danny here with the PT entrepreneur podcast. And today we're talking about, man, you got to raise your prices. You got, maybe you don't have to raise your prices, but you might have to. Most likely you do.

And let me give you a little context for why I'm saying this. We did our virtual live event here this week for our mastermind members. So we had about 200 business owners that were on a risk virtual event. And part of what we do is we actually sit down and help plan their business for the next quarter.

So I was jumping in and out of a couple of different groups that were going through some planning and on two, in two of the groups that I was in, I. Immediately realized that a business owner in each of the groups was grossly undercharging for where they were located. And at this point, we work with people all over the country in the U S and Canada.

So we're pretty, pretty clear on what people need to charge in certain areas. And it's not as simple as what do you think you should charge or what do you feel like you're worth? That's a very. Subjective thing where you have to look at is what does your area cost as far as cost of living for your staff, because in order to grow past yourself in a service based business, you have to pay people to fulfill on services.

So they're going to treat a patient. They're going to get. Paid to work with patients or to follow up with people long term, whether it's remote coaching or if it's recurring visits in the office or some variation of, a small group training or whatever it is that you do as far as your revenue streams are concerned, you have to pay somebody.

a salary and a compensation structure in order to work at your company. That's just the way it works, right? That's how service businesses grow. You can't just use technology and stack on technology to fulfill. Like you have people working with people. So because of that, you have to look at what you can afford to pay somebody.

If they work with your business and where I live is in Atlanta, Georgia, right? And Atlanta is an interesting it's an interesting place from a, from an economic standpoint, because the cost of living in Atlanta is still not that of many big cities In the U S so it's a big city, you're talking millions and millions of people but cost of living is still relatively low.

Housing is relatively low in comparison to bigger metropolitan areas, like a San Francisco, a New York city, Chicago, Baltimore Washington, DC, any of these sort of bigger more expensive They're going to have a fairly high cost of living. So with a high cost of living, it requires you to charge more money for services you render in different areas.

So Atlanta is a nice little sweet spot because it's a big city. But the cost of living isn't quite as high or if we look at a mid sized market like a memphis or I was recently in knoxville Some of this, you know mid sized cities that aren't quite as big like a san antonio would be a good example of this it's it's big but it's not as big as like a dallas or a new york city and cost of living is Less.

So because of that, those markets, you can actually charge like pretty close to what people can charge in more expensive, bigger cost of living cities, but it doesn't cost you as much for your staff. So they tend to actually be more profitable areas to own one of these practices, but if you live in a very expensive city, let's say you live in Boston, you're going to have to charge enough to be able to pay for your staff and really to pay for great staff to be able to.

To make a good living being great at what they do and that comes down to Essentially your average visit rate or the dollar productive activities. You have somebody do like I said, that could be virtual work That could be in person, performance work group performance work. It could be patient work.

Whatever it is It's a mixture of what you do, but you look at what does that employee generate on a monthly basis? And you have to back into a percentage of that for what you can do Pay them in order to be able to still other money that you make and put that towards overhead, reinvest in the business pay for taxes, to have those employees be able to pay for their benefits.

All the things that it requires to run a business. So you have to be able to charge enough in order to pay for these individuals. They're going to require a higher salary. So let's say you're in the Boston area and you want to hire somebody as a full time clinician. From what we've seen, you're really looking at 85 to, low hundreds, a hundred thousand dollar range in order for, to have compensation for somebody to work in a cash or hybrid based practice that is lower volume.

So if you need to pay somebody, let's say they need to make a hundred thousand dollars in your area for it to be to match the cost of living difference versus maybe they need to make 80, 000 in Atlanta because cost of living is lower. You're going to have to get there by. Effectively pricing yourself.

So you're gonna have to charge more. So when I see clinicians that are in markets that really support a higher price point than where they're at, the conversation of having a price raise for me is very black and white, right? It's like you have to do this. And but there's stress around it. There's a discomfort around raising your prices.

I remember when I went from 175 a visit to 190 a visit. I had the hardest time with that. It was so stressful for me to go up 15 per session. And I didn't have any sort of plans of care or anything like that. It's just like one off visits only. And I just thought, man, people are going to be so mad.

They're all going to stop working with me. They're going to think I'm greedy, like all these things. And I didn't actually have anybody say anything to me. About the price change at all. And, it just was all in my head for the most part. I was concerned about what people think, but they don't really care so much about your business as they care about their own life far more than they care about what you're doing.

So if that's not enough for you to just know, no one really cares. You have to think about the business that you're working towards. So if you are trying to build a company, that's going to be able to provide great jobs, benefits, a career for people with within your business, you have to make enough revenue to pay them really well.

That's the key. You want to have world class clinicians. You got to pay them like that. And the way that you pay them is by having enough revenue to pay them enough of a salary. Like it's just that simple. So if you have a hard time doing it for yourself, think about the people that you have to hire so you can pay them a really good wage, a really good income so that they can afford to buy a house.

They can afford to, go on a vacation. They can afford to, All of those things that comes down to your ability to effectively price yourself. For me, it was just interesting seeing it in multiple of the small groups that we were in and quickly realizing what you are way under where you should be.

And as we look at those numbers, as soon as you get yourself to the right place and you get past the discomfort of the maybe money psychology difference of where you're at and understand, How to sell people at the right price point that you should be at. Then all of a sudden you put yourself in a great spot to be able to take care of your staff.

And that's really what it comes down to. You have to do it not just for yourself, but for everybody else. And I think that actually helps more than than if you're doing it just for yourself, you're saying just for yourself, then maybe it doesn't matter so much, but we're trying to grow past yourself and you want to be able to support your staff in an effective way.

You've got to have an effective price points. You have to get past, maybe the discomfort of doing price raises from where you started to where, you need to be, and you could stair step that up. You don't have to do it all at once, but you got to get there eventually. And the best way to really get past the discomfort of that is to keep in mind that you are doing this so that your staff can live a life that they deserve, not necessarily just yourself, assuming you want to grow past yourself.

If you want to stay small and it's just a lifestyle business and never hire anybody, then, you probably can justify some lower price points. Maybe. Maybe you shouldn't, that's up to you, whatever you decide to do. But if you decide to grow past yourself, the revenue, the cash is what you need. When my wife worked for a nonprofit, they used to say no money, no mission.

And these are for profit businesses, but in a lot of ways we get the satisfaction of like nonprofit work because we're helping people with these real life problems. So listen, no money, no mission. And if you can't do it for yourself, do it for your staff.

Hey peach entrepreneurs, we have big exciting news, a new program that we just came out with. It is our PT biz 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 going to see and the average visit rate you're going to need to have in order to replace your income to be able to grow. Transcribed Full time we go through three different strategies you can take to go from part time to full time. 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 want to 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 want to take the small business association, a one day business plan.

It's going to help you get very clear on exactly what you need to do and when you're going to do it to take action. If you're interested And sign up for this challenge. It's totally free head to physicaltherapybiz. 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 going to 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 physicaltherapybiz.com forward slash challenge and get signed up today.