The new year is often a time when health and wellness practitioners consider making changes to their fee structures. The costs of running your business—like adjustments to your workspace or new professional services—may have gone up over the last year. So what you charge may need to increase accordingly. But at the same time, it’s common for private practitioners to wrestle with ethical questions about how to increase rates for clients.
How much of an increase is reasonable? How should you inform your clients about any changes to your fee structure? These are important questions to consider, and although they may make you uncomfortable, they’re necessary. As entrepreneurs, you have to make fiscal decisions that make sense for your business as well as your clients. Raising your rates is a natural part of private practice—and one your clients may be more understanding of than you might think.
Ethical Considerations on How to Increase Rates for Clients
It’s always a balancing act to figure out how to increase rates for clients. Your fee should be enough for you to work without resentment, and should move you closer to your long-term financial goals. But if you raise your fee too much, you risk alienating your current clients, or pushing prospective clients away to other providers who charge less.
However, you’re likely a different practitioner than you were when you initially set your fee. Over time, you gain more experience, develop as a care provider, and perhaps become an expert in working with particular problems or populations. Each of these add to the value you bring your clients, and is relevant when you’re considering whether to increase your rate, and by how much.
Defining Your Increase Amount
Once you make the decision to raise your rate, you have to decide how much to increase it by. Some providers have a standard annual fee increase built into their client contracts—usually of a few dollars or percentage points. But there’s no rule that says you have to do it this way.
Across healthcare fields, there’s typically not a hard and fast rule about the actual amount you can raise your rates. Most ethics codes simply require that you provide adequate notice of any increases, and that the fees you ultimately charge must not be exploitive to your clients.
So, it can often be helpful to survey the marketplace. What are other practitioners who work on similar concerns with similar populations charging? How much does experience appear to factor into those rates? Are there other factors, like specific office location, that seem to impact the fees that others advertise? Once you have this information, you can see how you measure up against the competition, and whether that’s changed over the past year.
You can have a successful business charging the highest fee in town. After all, someone has to, right? But if you’re going to be charging more than others, or if you’re planning a significant increase in fees for existing clients, make sure you can justify your new fee to clients and prospective clients who may be skeptical. What do you offer that other less-expensive providers don’t?
How Much Notice You Should Give Clients
Here, too, there’s usually not a set minimum in laws or ethics codes. They typically leave it up to the practitioner to determine how much notice is “reasonable.” However, as always, you should check the law in your area and the ethics codes for your field to make sure you’re not subject to a more specific rule.
For small increases in fees, if your clients are not otherwise financially disadvantaged, a week’s notice may be enough. If the increase is going to be larger—or if you work with clients who are already having a hard time paying you—it makes sense to give more warning. Some clinicians will send notices of fee increases four to six weeks before the increase will take effect.
Some time ago, I was seeing a therapist who carefully started a conversation with me about a planned increase in his fee. I was a newer professional at that time, and finances were a concern for me. But when he finally got around to telling me how small the planned increase was, I laughed in relief. Because of the way he approached the conversation, I thought he was preparing to tell me my fee would double!
Since we as providers often spend significant time wrestling with internal questions about how to increase rates for clients, we may approach these conversations expecting our clients to have similar concerns—but they often don’t. Many clients expect fee increases over time, and small increases in particular might simply be accepted and shrugged off.
How Should You Inform Clients?
Regardless of whether clients expect fee increases or not, it’s still important to be transparent and upfront about any changes you’re making. It can help to have a face-to-face conversation about a potential fee increase to determine whether such an increase will create hardship for a client.
It’s also in your best interest to be able to document how and when a client was informed of an upcoming increase, just in case questions do come up later about whether the notice was given far enough in advance. Consider providing clients with a letter outlining the fee increases, when they are scheduled to take effect, and what the client can do if they’re experiencing financial difficulties.
Can You Raise Your Rates for Some Clients and Not Others?
Most providers are free to charge different clients different rates for the same service. Such fee-setting isn’t inherently unethical. If it was, then any agencies who offer sliding fee scales would be in trouble. However, there are some potential problems to look out for here.
For instance, you want to be sure that differences in what clients are charged are not discriminatory in nature. I know of a clinician who didn’t want to work with men, so she charged men a markedly higher fee than women to discourage them from booking appointments with her. This may be both legally and ethically problematic, as client demographics shouldn’t be the basis of your fee decisions.
Or let’s say you work weekends, and you have trouble filling your Sunday morning appointment slots. You might want to raise your fees only on your other working days, and keep your Sunday fees lower. Because you want to fill those slots, it seems like it’s in your best business interest to adjust your fees in this way.
But to the community around you, this might seem to be discriminating against any families who attend religious services on Sundays, and therefore don’t have an opportunity to come to therapy at a lower cost. Even if you didn’t intend for your strategy to be discriminatory, you do need to be aware of how those strategies might have disparate impacts across different demographic groups.
One form of fee-raising that I’ve often used in my own practice is to raise fees for new clients, while keeping my existing clients at the same fee level they started with. This requires careful tracking to ensure everyone is being charged the correct amount, but also serves to increase your income going forward without creating any additional hardship for your existing clients.
Pitfalls to Avoid
If you’re working with insurance companies, your contracts may prohibit you from charging a lower standard fee to cash-pay clients than what you charge insurance clients. This contract language may stand in the way of offering reduced fees to clients in financial hardship, if the contract demands that the insurer’s customers be granted the lowest fee you’re charging to any cash-pay clients. Make sure to review your insurance and any other contracts carefully for potential limitations on disparate fees.
When thinking about how to increase rates for clients, a lot of practitioners try to soften the announcement by including other ways their clients can save on their future fees. Some providers offer package pricing or prepayment discounts, for example.
But you need to be careful when considering something like that. While such packages may be acceptable for coaches and other unlicensed providers, if you are a licensed healthcare provider in your state, these pricing structures might actually make you an insurer in the eyes of the law. Before you implement such packages in your practice, make sure you understand what legal implications there might be in doing so.
It’s important to know when to raise your rates. Your work has value, and that value grows over time. As long as you’re avoiding the pitfalls and giving clients adequate advance notice, a fee increase may be the best thing you do for your business all year.
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