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Pricing massage therapy is a combination of what drives your target market to spend, how your overhead affects net profit and where your competition has set the bar.
By Donna Shryer, November 17, 2016
Other factors are less concrete, including your own expertise and experience and the client’s understanding of the role massage therapy can play in their health and well-being.
Finding a way to balance the objective measures with those that are less tangible and more subjective can help you set prices that grow your massage therapy business, increase your client base and boost profit—while still staying true to the passion that first brought you to the massage therapy profession.
The art of pricing begins with defining your target market. “It’s the foundation of a successful business,” explains Lisa Champagne-Minyard, Thrive in Five program manager at Women’s Economic Ventures, a Santa Barbara, California-based organization devoted to the economic empowerment of small-business owners. However, conflicting truths can sometimes define the same target market. Setting prices that reflect all of your market’s defining characteristics is where creativity comes into play.
Amirah Boyo, a massage therapist and owner of I Need A Massage in Desoto, Texas, made a decision to price her services below average. “I built my business in a middle-class community, and my goal is to help my demographic use massage therapy as a proactive approach to health care. But to reach my goal, I had to set my prices a little lower,” Boyo says.
To control prices but also make a living, Boyo designed a membership program for her practice. Members are automatically charged a regular fee each month, which guarantees them a monthly massage and a reduced rate for additional massages within the same month. Non-members pay more for a massage.
The membership program boosted Boyo’s client base, so she instituted a second savings plan—WOW coupons. Clients can purchase three massages for a further discounted rate, with a limit of two packages per client.
Creating discount packages that inspire clients to spend began with detective work. Boyo headed to local gyms and day spas to get an idea of how some other local businesses handled membership programs. I Need A Massage’s resulting discount programs may not net the profit per massage that her competition gets, but she closes the gap with a larger and consistent client base.
Laura Hametis, massage therapist and owner of Laura’s Massage and Spa in Lincoln, Nebraska, also finds that package deals inspire clients to buy. When clients prepay for sessions, they earn additional free minutes; the greater the number of sessions purchased, the more free minutes clients earn.
And Hametis isn’t shy about helping clients see the logic—as well as the savings—behind her package deals. “When unexpected expenses pop up and people tighten their belt, one of the first things to go is a massage. I tell my clients that if they prepay for sessions, no matter what happens next month, their massage is covered,” she says. “People like the idea; I do, too. It helps keep me booked so I can maintain competitive pricing and don’t have to raise my costs.”
When considering pricing, knowing how to charge for your experience and hours of continuing education can be difficult. So, you might think about building that value into your current pricing structure so you can simplify the options for your clients without selling yourself short.
In Largo, Florida, Gary E. Aldrich, massage therapist and owner of The Aldrich Touch, agrees that simplicity in pricing is less confusing than slicing and dicing prices. “A long menu of services and prices can be pedantic,” he says, “and it makes your business seem too much like a hair salon.”
The science of pricing hinges on one primary equation: income minus overhead equals a profit margin you can live on. If things don’t add up, you’ll be in the red and out of business before year’s end. The science behind a pricing strategy requires time and number crunching—but the science itself is straightforward.
Listen to your competition. The simplest way to nail down your pricing strategy is to check out the competition. Sybil Waggamon-Baker, owner of ComprehensiveVitality, Inc. in Columbus, Ohio, decided on pricing after doing extensive research in her community. “I visited 10 different places, got a massage, looked at their pricing, asked a lot of questions and compared each therapist’s training and experience to mine,” she recalls. “Eventually, I found a price that’s fair—and my clients agree.”
You can also turn to the internet. “About two years ago I charged less for a one-hour session, but I looked at my competition’s websites and saw they were charging more,” Aldrich explains. “In some cases, the higher-priced massage therapists didn’t even match my 30 years of experience.”
Aldrich dug deeper, searching “massage therapist” along with his ZIP code and surrounding ZIP codes. He found the average cost for a one-hour massage hovering around the national average.
“I went with the average rate for a basic relaxation massage. If I need to address therapeutic issues, I charge more,” Aldrich says.
When your competition raises their rates—and you feel inclined to do likewise—consider giving loyal clients time to adjust. “If I feel it’s time to bring up my prices, I don’t raise my current clients at the same time,” Waggamon-Baker says. “I don’t want to price out my loyal and retired clients, so I may choose to raise their prices down the road or keep them where they started. If someone’s on a fixed income or their budget is really tight, I take that into consideration."
Another way to determine your pricing strategy involves a simple math equation: Gross annual income (total income for every service before deducting expenses) minus fixed annual costs (overhead) equals net income (the amount available to pay your annual salary and cover non-recurring business expenses).
Fixed annual costs are expenses to run your business, which typically fall into two categories:
Monthly expenses include rent and utilities if you have a private space, supplies specific to massage therapy, which may include amenities such as candles or flowers, and vehicle expenses if you travel to clients.
Annual expenses include license renewals, business permits, continuing education and income taxes.
There are also one-time expenses, which include rarely-made purchases, such as your massage table or reception-room furniture. Eventually, you may upgrade or replace these items, so remember to add them in with your business expenses as needed.
If gross annual income minus fixed annual costs produce a satisfactory net income, then you’ve got a good pricing strategy. If it’s not sufficient, there are ways to increase your net income.
Robin Faux and Jim Swaagman, massage therapists and co-owners of Cloudcroft Therapeutic Massage in Cloudcroft, New Mexico, use intelligent scheduling to lower overhead expenses. Although they have a base of operation, their business is mostly mobile, meaning they travel to the client. Their clients are spread across New Mexico—with the farthest located 250 miles away in Santa Fe. There is an upcharge for appointments 100 or more miles away, but it’s a flat fee and not exorbitant. Faux and Swaagman can afford to maintain competitive prices because they book clients in bulk—so to speak—which offsets driving costs.
“We schedule all clients in a particular town on the same day,” Faux explains. “For example, when we head to Santa Fe, we see several clients and that helps balance out travel expenses. And when a referral from Las Cruces calls to book an appointment, I say, ‘I’m in your area on Tuesdays and Thursdays. Which day is best for you?’ So I let the client know from the start that we’ll gladly come to their home, but preferably on certain days.”
Shadowing the art and science of pricing is the massage therapist’s heart, which means that your price strategy needs to be nimble. “I’ve coached massage therapists before, and they are a very compassionate group. So there’s this internal dilemma! They want to lower their prices so they can help as many people as possible—but then they’ll go out of business,” Champagne-Minyard says. “My advice is to set boundaries. And if you wish to consider donating massage therapy, too, price your business so at any given time you can afford to work with X amount of clients who pay a low or no fee.”
However, Champagne-Minyard adds: “Don’t just give away your expertise. When you help a client, ask them to pay it forward. Maybe they can volunteer at your favorite community charity. It doesn’t have to cost a penny, but it does put value on your talents.”
Sliding scales, reduced pricing, extended sessions—these “gifts” can drain your income if allowed to snowball. If controlled, however, they feed your compassionate self. As Hametis explains: “If I know a client doesn’t have the income to cover my price, I may slide the cost down. I don’t advertise that, but I do it.”
For Aldrich, his pricing structure is a starting point. His finish line is nimble. “When you’re on my table and I feel you need additional work, I might work on you for another 15 or 20 minutes,” he says. “There’s no additional charge. I take as much time as I need to address the client’s problem adequately. I believe in providing excellent care that gets results. For me, it’s a calling.”
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