The following article is from our Summer 2014 issue of The Hypnotherapist journal and has been reproduced with the kind permission of the author. The article is still very much up to date and is posted as a blog following a number of enquiries from therapists about pricing structures.
Pricing for Success by David Morrice
My name is Dave Morrice and with my company, "Lifechoices Hypnotherapy" I am entering my fith year of business.
These days, I generally work (with my clients’ permission) with my dog Freddie, a Cavalier King Charles Spaniel, in the room and remarkably, he goes into hypnosis at the same time as the client but that's another story.
When I started my business, I faced the same challenges that we all face: how to attract clients whilst gaining experience in a highly competitive market and most importantly, how much was I to charge for my time.
I had various ideas (many of which proved to be wonderful learning experiences, i.e. wrong) but when I started in practice one of those ideas was to run a promotion with Groupon and while I had to commit many hours to seeing clients at very low margins, it seemed like a good idea at the time.
To begin with, I offered a variety of "deals", that became progressively less expensive according to the number of sessions that a client would buy in advance. (I was reliably informed by the sales person that no-one would buy the five session deals.) I wasn't trying to make much money using this multi session sales pitch, I was trying to show clients that hypnotherapy isn't magic and that it takes more than one session to sort out a sometimes life-long problem.
Among the other things that I had heard were anecdotes about various businesses that had literally drowned in customers, which made it impossible for them to serve each customer in a timely manner; so I put tight limits on the number of single and three session packages that I was prepared to sell and a looser limit on the number of five session packages that I was prepared to sell.
The day of the promotion arrived and within one hour the hit rate of visits to my website had increased two-hundred fold. The phone started to ring with people trying to bypass Groupon and deal with me directly. Within the first day, I had sold over 100 hours of sessions through Groupon at a discounted rate. That night I didn't sleep much as my anxiety levels were, as you can imagine, quite high. The next day, the multi session deals sold out and I had only room for three single session appointments left in my diary. This was the opposite to what I had intended and I found myself committed to about 150 hours of Groupon appointments that were in addition to my other clients but at a rate payable to me that was barely above the national minimum wage.
I called Groupon and stopped any further promotion then sat down with a cup of tea to reflect on my predicament.
Things happen for a reason and to cut a long story short, I had to get organised; not just in a way that we all do when we start our businesses, but in a "military precision" kinda way, with strategic and realistic goals for what I was trying to achieve with each client; tick box forms and contracts that spelled out both mine and my clients’ responsibilities: policies for lateness or for cancellation of appointments, etc. etc., including CORE scoring to measure a client’s improvement from session 1 to session 5; and the "Luscher Colour test" to obtain insight into what clients may not have told me initially.
For me it was a bit of a nightmare as I'm a creative type and I tend to avoid detail but the learning process (in retrospect) was fantastic.
What happened next and what were the lessons learnt?
Clients started to book their sessions and in one of my earliest weeks I had committed myself to over twenty five hours of consultation with time added on for pre-session preparation and post-session notes, leaving me feeling like a limp lettuce! (I didn't do that again).
With the three and five session clients, I set achievable goals at the outset; always starting with an hour of relaxation to get the client used to my voice and the surroundings and always using the premise of under-promise and over-deliver. I was successful in all cases.
Two really interesting observations that I made from the “deal” experience were that not one of the clients who had bought a single session actually bothered to turn up for the appointment and not one of the clients who had bought a five session appointment ever came back and purchased another appointment at full price. However, there are still many clients out there for whom price is a barrier. For instance, I have one client who pays me "everything she has" as a disposable income - a fee that is still less than my lowest quoted rate but I am proud to say that she has achieved more than most and that the work that we have done together has literally changed her life!
That said, with Groupon I had (and still do have) 100% satisfaction feedback from my customers who bought the deals and were kind enough to give feedback.
Would I do it again and what happened afterwards?
No, but only because I don't have to! Would I recommend the promotion to others? I think a cautious yes, but only to those who are aware of the pitfalls and have huge amounts of energy.
In my opinion, discounting can and sometimes does, reduce our own and our clients’ potential for success and hourly rates that are set too low tend to give the impression that we are just not that skilled but neither is it about setting a rate and not going below it, as it’s never just about money.
While many therapists use discounts to attract clients I have a price list that varies during the day and at the weekend. In the morning, I have one rate; a higher one in the afternoon and one that is higher still for evening appointments. I also practice on Saturday mornings, if I need to, and that rate is higher still. My average rate multiplied by my number of clients is the total that I need or require, to prosper.
The most important lesson that I have learned from my early days of building my business is that there are many clients out there who just cannot afford our full professional rates and whilst I do not now offer any discounted sessions, I do offer sessions at different times of day at different rates. So, if a client can attend at 10.30 on a Monday, Wednesday or a Friday morning, I charge almost half the standard charge that I make for evening appointments or for Saturday Morning appointments and there are other price breaks in between.
The rationale behind my pricing structure is three-fold:
One other useful method of setting prices is the one that I use as the criteria for charging for my smoking cessation treatment.
For example, my charges for my “stop smoking protocol” are based on the same sliding scale as that of my hourly rate charge: I charge double my hourly rate for the initial session, (because the session is twice as long) whilst selling the “stop smoking success” as a four-session package. Each additional session is then only booked and paid for ONLY if the client needs it.
While almost 80% of my clients stop after that single session, the ones that are still smoking, don’t feel as if they have failed and simply book and come back for the second session and while the vast majority stop after that, only the odd one needs a third session.
Each additional session is only booked if the client needs it and because they can save my fee that can provide the additional motivation of “toughing it out” and because my clients save money on not coming back to see me, it has increased my success rate up to almost 100%
My approach to pricing has worked very well for me: all of the people that I have had the privilege to help routinely recommend me to their friends and family at a rate that is more profitable to me. They have helped me to launch my new business and the success of my pricing structure has allowed me to make a living from hypnotherapy.
I don’t discount my prices but I do offer access when clients need it and if money is an issue, they are motivated to make an effort to see me at a time that suits me. This condition that I set is also a great motivator that almost guarantees a successful outcome, as clients have been asked to and are making every effort to attend.
Because I am busy, I have also gained a huge amount of experience and routinely, I now take less time to research and prepare the treatment techniques that I use to address the varied needs of my clients.
At a recent peer supervision meeting, we talked about treating clients for free to gain experience and the strategies described above would work in those cases too. Ask your “volunteer" to come at a time that suits you; ask them to make an effort and you'll see success achieved much more quickly.
Finally, if I have one piece of sage advice to give to you, my peers, it is to make sure that your client understands that real change requires effort as change that comes too easily has less value than change that is hard fought for.
Should anyone have any further questions or require any resources or advice, please do not hesitate to contact me directly.