Every healthcare practitioner needs to find ways to keep existing patients happy and attract new patients.
Patients satisfaction cannot be left to chance. Each patient must be treated the same way, the best way, everyday. Medical practice need to design simple systems, easy to implement. These may involve a measure of automation others require some form of accountability from each staff member. Either ways, patients satisfaction and experience must be a priority.
One of the questions that comes up most frequently from our clients is how to price their services appropriately. It’s a good question, and one that can be challenging for many practitioners. Balancing on the fulcrum between earning a profit and seeming reasonable, especially when patients’ health and well-being is on the line, can be a tricky proposition.
One thing that can help you straddle that divide is setting up a tiered pricing system that allows patients for whom cost is the primary concern to benefit from your services while offering others the opportunity to pay more for additional services.
The Benefits of Tiered Pricing
Before we talk about how to decide on the specifics of tiered pricing, let’s review some of the benefits of structuring your prices this way:
- If you offer a flat price for your services, patients who feel that the amount doesn’t fit their budget will never call you. When you offer tiered services, you encourage questions. What is included at each level of service? Having a patient on the phone – or in front of you – allows you to explain what each level of service offers so that patients can weigh the benefits of each one.
- Tiered prices can offer a good entry point for patients who might not be sure that your services are going to help them. For example, a lot of patients step into a chiropractor’s office for the first time with some uncertainty about its benefits. If you offer them a relatively inexpensive way to try your services, you give them the opportunity to see what you can do for them – and to upgrade to a higher level of service if they desire.
- Tiered prices offer your patients a choice, and people are hard-wired to prefer having choices to not having them. Sometimes, patients can feel stuck if they have only one option in front of them. They can buy the service in question and find some relief, or they can decide that the price is out of line with what they will get in exchange and look elsewhere. When you offer more than one price point, you empower patients to choose – and that makes it easier for them to spend.
- Sometimes, having three price points (such as a gold, silver, and bronze level) can help steer people to the middle tier. A cognitive bias known as Anchoring shows that people tend to attach value to products and services based on what they are told they are worth. If you price your tiers properly, you can do a lot to encourage patients to avoid the bare bones option and spend a bit more than they would have otherwise.
- Providing tiered services also sells the idea of exclusivity. There’s a reason that airlines offer so many tiers of preferred service for their customers. It makes people feel important to be considered a gold member. There’s no reason you can’t take advantage of that tendency in your patients.
Tiered prices might not make sense for every practitioner, but even if you think this strategy won’t work for you, you might be able to get creative by packaging services together.
How to Price Your Tiers
Once you have decided to move toward tiered pricing, the next step is to figure out how to tier your services. To get an idea of how it might work, let’s look at a very simple example for a therapeutic masseuse.
Let’s say that the masseuse normally charges $100 for a one-hour massage. That amount might be fair in terms of the market and the amount of effort required, but some patients might see it and feel that they can’t afford it. How might the masseuse rework her services into a tiered system? Here’s one possibility.
- Bronze massage – 30 minutes for $60
- Silver massage – 45 minutes for $75
- Gold massage – 60 minutes for $100
By pricing the massages this way, the masseuse sends a subtle message to her patients. She is telling them that a half-hour massage is worth $60. That’s the first price they will see when they visit her website or view her ad. A very simple calculation tells them that an hour-long massage would be worth $120. When they view the other prices, they seem like a bargain by comparison. A new patient might be very likely to opt for the 45-minute massage because it’s only $15 more than the half-hour massage.
If you offer a range of services that patients frequently purchase together, such as a dental cleaning and tooth whitening, you might consider bundling them together into tiers to incentivize patients to buy additional services. Start by considering what a “bare bones” service would be, and build your tiers from there. The key is to give budget-conscious patients a low-cost choice that will get them into your practice. Once they are in your office, you can do your best to convince them to buy additional services.
The key to pricing your tiers is to remember what your bottom-line costs are and be sure to cover them. Sometimes, practitioners make the mistake of setting the price of basic services too low, thus leaving themselves open to sustaining a loss if too many patients avail themselves of that option. The massage example above provides a good benchmark. Price your lowest tier a little higher than you think it should be. You’re still offering patients a good deal, but at the same time, you are providing them with a subtle incentive to purchase additional services. Your prices at every level should cover your costs and make you a profit. It’s up to you to decide how high you can push those prices and still keep your patients happy.
Tiered pricing is something that makes a lot of sense for healthcare providers. People want to feel that they are getting quality services, and yet they also want to feel that they are getting a lot for their money. When you structure your prices into tiers, you give yourself an opportunity to talk about what is included at each level and increase the perceived value of what you are offering.
