Medical Spa Pricing Strategies To Increase Profitability
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Pricing your medical services is a key factor in your clinic's success.
Your pricing strategy helps to determine how patients respond to you, and their feelings about your clinic. It's as likely that you're charging too little as it is that you're charging too much.
There are plenty of different pricing strategies; bundling, discounting, subscriptions... let's take a look at a few and the research that can help give you a guide for what might work in your situation.
Before we start, let's settle on a point of view and the outcome we're looking for. In general, we're discussing how to maximize gross revenues. There are some strategies that you may employ with other goals in mind; for example you may want to work only 20 hours a week and so your focus may be on maximizing hourly revenue rather than focus on a total. That's an entirely justifiable goal and we'll discuss it and other areas around this in future posts.
For now let's just begin with maximizing gross revenue.
Pricing High or Pricing Low?
In some cases physicians combine "lowest cost / cheap" with "value".
This is completely wrong.
"Value" is the primary buying criteria for every person and every purchase. The difference is that while cheap or the lowest cost is an external measurement that's easily quantifiable, "value" is completely internal and emotional. Value is personal.
Buyers who purchase high-priced services or pay more do so because they perceive the value from these purchases to be higher than cheaper alternatives. I many cases this is completely without merit but there it is.
So... economy pricing could be a hit and miss for your medical spa. With many reports of botched patients and reviews about horrible side effects and complications, medical spa may want to avoid the "cheapest" label for a number of reasons. The problem with being the lowest price is that there can be only one, and you can get stuck in a race to the bottom with competitors who are also pursuing a "lowest-cost" pricing strategy. And a patient who comes to you for price will leave you for a lower price just as quickly.
So, it may be that premium pricing is a much better option if you're able to execute.
Break it Down or Bundle it Up?
For this specific strategy, you would need to consider different ways to implement this. Breaking it down refers to x number of treatments for this price per treatment. Example, you can price a treatment for ___$ a session as opposed to using a “starting from” price implementation.
A bundle pricing strategy could also work for patients who need multiple treatments (e.g. laser hair removal, non-surgical fat contouring) or multiple procedures that could reduce wrinkles but if you break it down, patients could also see how much the treatment is per session as opposed to bundling it up.
Bundling is a common strategy for treatments that require multiple treatments to see an effect and satisfy a patient.
The answer may be to do both.
Some medical spas utilize a “membership plan” method, wherein a patient is given an option to avail of similar procedures, for this certain price. This is essentially that 'concierge medical model' but it is an uncommon practice in cosmetic medicine, yet it’s something that has serious advantages.
Should it be a 5, 9, or 0?
Pricing with the ‘9s at the end is called Charm or Psychological Pricing. It’s when you dock a cent off from its perceived value. Grocery stores employ this strategy thus many customers, and many are enticed when they see an original price and see the lower priced amount.
However, it doesn’t work all the time. You simply can’t have all treatments priced $_99.
The answer: price treatments differently.
However, consider the “psychological” aspect of the patient when they browse your price list. Round numbers like 0s work well for people who rely on emotions because seeing the number would make them “feel good”.
One of the most effective pricing implementation strategies online is a discount or "credit" on a first treatment inside a specific time window. Sumo (see below)has done their research on the matter, and found that most customers signed up after learning they could receive store credit, and that the company’s email list grew by 87%.
Slashing off or Discounting?
The strategy works well definitely for costly treatments. Instead of offering a $4 discount for a $12/unit of Botox, better to have it as such: $150 off a $450 for a treatment of Botox. Thing is, for both examples, the price is just docked 3 times off its original cost. Patients tend to go for the $150 off as a larger perceived value.
For values lower than $100, go for an actual percentage.
You can have a side by side comparison of the old price to the current price by putting a slash on the old price, provided the old price is higher than the current one.
You can implement any of these at a time, but remember not to go overboard with it. Learn which strategy could definitely work for your medical spa, and which would be more cost-effective as well. For your medical spa to get more patients and leads, you may need to switch up your pricing or implement different ones at the same time and which ones receive the most profits.
Further Reading On Pricing
Ciotti, G. (2015, September 09). 10 Pricing Strategies That Can Drastically Improve Sales. Retrieved from https://www.entrepreneur.com/article/250289
Maguire, A. (2017, March 16). 6 Different Pricing Strategies: Which Is Right for Your Business? Retrieved from https://quickbooks.intuit.com/r/pricing-strategy/6-different-pricing-strategies-which-is-right-for-your-business/
Moreno, N. (2018, May 10). 9 Pricing Strategies to Explode Your Revenue (Backed by Psychology). Retrieved from https://sumo.com/stories/marketing-pricing-strategies
Reeves, C. (2016, August 03). 8 Pricing Strategies To Use On Your Product, Service Or Workshop (FS124). Retrieved from https://fizzle.co/sparkline/7-pricing-strategies
Von Wilpert, C. (2018, July 04). Ecommerce Store Credit Strategy (Hint: 87% Email List Growth). Retrieved from https://sumo.com/stories/ecommerce-store-credit
