Should you be increasing your practices prices? ABSOLUTELY! Listen, inflation has been out of control over the past year, therefore you need to ensure you are keeping pace with it as a nurse practitioner business owner. It is critically important for your practice’s financial health.
The rule of thumb with most businesses is to increase your prices by 2-3% a year. This is the standard inflation rate. Unfortunately, inflation has been 7-10% (probably higher depending at what statistics you look at) over the past 2 years. This means that you should be increasing your prices by at least 7-8% to match inflation. This keeps the VALUE of your services inline with the VALUE of the dollar. Remember, you never want to shortchange yourself. You are VALUABLE as a nurse practitioner entrepreneur, so you must ensure you are charging appropriately for the services you provide to your patients while staying competitive in your market (more about that in a bit).
Additionally, the prices of medications, products, and supplies have gone up. I don’t know about you, but it boils my blood seeing the increase in prices for various supplies/medications that are critical to the operations of my practice. But you know what? It is what it is and there is little I can do about it.
It is just like how my favorite brand of bagels went from $3.50 a package to $6.50 over a month. Sure, I could go with lower quality bagels, but I like these. It is the same with my practice. I am used to various compounding pharmacies products and other supplies I obtain from Henry Schein and other vendors I go through. My patients are used to these as well. Unfortunately, even shopping around results in no significant decrease in prices from what I am finding. Sure, I can save a nickel here and there, but in the grand scheme of my business, it doesn’t make THAT much of a difference to my bottom line going with cheaper products. The only saving grace is going though vendors through things like our GPO to get prices down. While it helps, I still need to increase my prices to an extent…
Quick warning: the last thing you want to do is increase your prices so much that patients start leaving. Increasing your prices needs to be done tactfully and slowly. Do NOT increase your prices by 10% over night. This is a big no no. You want to ease into it over a period of 3-6 months as patients will not notice this to any significant extent. This is what I have been doing at my men’s health practices.
Over the past 6 months, we have been increasing our prices by just $5 here and there. Nothing crazy. Our base rate for testosterone replacement therapy, the visits, B12 injections, and injection supplies was $125 about a year ago. We increased it to $130 about 5-6 months ago and then recently increased it to $135. So, this process was done over a 6-8 month period. Did patients complain? Sure, a few did, but most did not. Some patients didn’t even say anything while other patients asked why have prices gone up.
“Due to supply shortages and the increase in prices from our vendors and suppliers, we have to increase prices to stay in business. But we are increasing prices at the bare minimum to ensure everyone can remain on treatment affordably.”
Guess what? Works like a charm 90% of the time. The other 10% of the time the patients complained like it was the end of the world. Seriously dude? An extra $5 a month is going to break the bank for you? What is more important: giving up a Starbucks coffee one morning or staying on treatment and reaping all the benefits that come with it? But I digress…
The good news? We have not had a SINGLE patient leave. Thus, if you increase your prices slowly and tactfully, you shouldn’t have any problems whatsoever.
Increasing your prices regularly is important for your financial health. Remember, a business is an investment, therefore you need to ensure that profits increase nice and steady (at a minimum) year to year. Increasing your prices by 2-3% a year will do just that for you. But you should strive to grow your practices revenue 1.5x year to year (more about that in THIS article) but increasing your prices slowly will guarantee an increase in your margins.
With inflation like it is now though, it is imperative that you increase your practices prices simply so you can maintain an adequate profit margin to make it all worthwhile. Unfortunately, that number is in the 7-10% range right now. Be cautious with this… increasing your prices by 10% overnight might not sit well with some patients, so ensure you do this gradually over a period of 3-6 months! If you do so, then you shouldn’t have any negative effects on your patient volume.
If you are worried about increasing your prices, then simply add something else to treatment that is CHEAP for you but can be seen as valuable for your patients. You can explain to patients that you need to increase your prices secondary to inflationary pressure from your vendors and suppliers, but to make up for it, we are wanting to add on (insert cheap injectable) to your monthly subscription. This can be anything from biweekly injections of B12, Biotin, Amino Acids, Vitamin D (do labs first!), and so forth… Patients derive value from it, see results, feel better, and most importantly derive more value from the increased cost of your services. A WIN WIN!
If you do not increase your prices, your profit margins will decrease…
If you do not increase your prices, your practices financial health will diminish…
If you do not increase your prices, then the risk and cost of doing business increases which makes it less worthwhile from the nurse practitioner entrepreneurs perspective.
So, it is very important that you begin steadily increasing your prices over the next few months to match inflation. This is good business, and you will enjoy seeing the results hit your bank account. Just a $5 increase in prices for your products and services can result in thousands of extra dollars in revenue a month to your practice! What better way to instantly increase your margins? But remember, be careful with this and do it gradually!