Why Being Affordable is Killing Your Med Spa (and What to Do Instead) - Med Spa CEO

Med Spa CEO Podcast Summary Episode: "Why Being Affordable is Killing Your Med Spa (and What to Do Instead)"
Host: Heather Terveen
Release Date: January 29, 2025

Introduction to the Episode

In this episode of the Med Spa CEO Podcast, hosted by Heather Terveen, the focus is on the detrimental effects of positioning your med spa as the "affordable" option in the market. Heather emphasizes the importance of transitioning to a premium positioning to enhance profitability, client trust, and business sustainability without sacrificing personal well-being.

The Pitfalls of Being the Affordable Option

Heather begins by addressing a common trap many med spa owners fall into: striving to be the most affordable and accessible option for everyone. She asserts that this approach can "kill your business" by limiting sales, hindering growth, and preventing the establishment of your practice as a true authority in the field.

"Being affordable is absolutely killing your business."
— Heather Terveen [03:15]

She highlights that while the intention to care and include everyone is noble, it often backfires, leading to misguided inclusivity where the business attempts to serve too broad a clientele, diluting expertise and compromising service quality.

Impact on Operations and Profitability

Heather delves into the operational challenges of maintaining affordability. She explains that running a business with thin profit margins requires operational excellence—a level of efficiency many med spa owners, who often come from clinical backgrounds, may lack.

"In order to be affordable, you have to be operationally excellent."
— Heather Terveen [15:40]

She compares med spas to businesses like dry bars, which offer limited services and can maintain competitive pricing through streamlined operations. Med spas, with their diverse service menus, find it harder to achieve the same level of operational efficiency without sacrificing profitability.

Importance of Premium Positioning

Transitioning to a premium pricing strategy not only enhances profitability but also increases perceived value among clients. Heather cites studies that support the benefits of premium pricing, including higher customer loyalty and better client retention.

"Customers associate higher prices with higher value."
— Heather Terveen [22:05]

She shares findings from a Harvard Business Review study demonstrating the price quality effect, where consumers perceive higher-priced services as more valuable. This perception leads to greater trust and willingness to invest in premium services, benefiting both the client and the business.

Supporting Research and Statistics

Heather reinforces her arguments with compelling statistics:

A McKinsey & Co. study found that businesses focusing on premium pricing enjoy higher customer loyalty and retention.
The Journal of Consumer Research revealed that 79% of consumers are willing to pay more for services they believe offer better quality and expertise.

These studies underscore the financial and reputational advantages of adopting a premium pricing model over competing solely on affordability.

Shifting Mindset and Team Alignment

A critical component of transitioning to a premium model is aligning the entire team’s mindset. Heather explains that the owner's belief in being affordable permeates the business, influencing team members and hiring practices.

"When you are the owner of your practice... you set the tone for what everybody else... is going to believe."
— Heather Terveen [10:50]

She emphasizes the need to shift beliefs from affordability to premium value to ensure that all aspects of the business, from pricing to client interactions, reflect this new positioning. This alignment fosters a team culture that supports high-value service delivery and effective sales strategies.

Practical Steps and Resources

Heather offers practical advice for med spa owners looking to make this transition:

Evaluate and Adjust Pricing: Reassess service menus to reflect premium pricing that aligns with the expertise and quality offered.
Enhance Operational Efficiency: Streamline services to focus on high-impact offerings that can be managed efficiently without compromising quality.
Invest in Team Training: Equip team members with the skills and confidence to make bold recommendations and uphold the premium brand image.

Additionally, Heather introduces the Premium Patient Magnet Toolkit, a resource designed to help med spas attract and retain premium clients. This toolkit is available for $47 and provides strategies to magnetically draw in high-value patients.

"We are a premium solution. We are the experts and the authorities at what we do."
— Heather Terveen [35:20]

Conclusion and Call to Action

In wrapping up, Heather urges med spa owners to commit to abandoning the affordable pricing strategy in favor of a premium approach. She underscores that this shift not only enhances profitability but also elevates the business's reputation and client satisfaction.

Heather invites listeners to explore the Med Spa Advantage program, aimed at helping boutique med spas grow revenue and profits while reclaiming personal time and reducing stress.

"Decide once and for all that we are not the affordable price leader. We are a premium solution."
— Heather Terveen [40:50]

For more resources and to join the Med Spa Advantage program, listeners are directed to visit heatherturveen.com/apply.

Key Takeaways:

Avoid the trap of competing solely on affordability.
Embrace premium pricing to enhance perceived value and profitability.
Align your team’s mindset with your premium positioning.
Invest in operational excellence to support your pricing strategy.
Utilize available resources like the Premium Patient Magnet Toolkit to attract and retain high-value clients.

For more insights and strategies on growing your med spa or aesthetic practice, subscribe to the Med Spa CEO Podcast and join the community of thriving med spa owners.

Transcript

A (0:00)

Premium patients and clients won't trust you with their results if you don't trust yourself to charge what you are worth. Welcome to the Med Spa CEO podcast where I teach you how to grow and scale your med spa or esthetic practice so that you can have the income and impact you know you were meant for without overwhelm, stress or feeling like you have to sacrifice your personal life and happiness to do so. It's totally possible for you and your business. Plus simpler than you think. Keep listening to find out how. Hello my friend. Welcome back to another episode of the podcast. I am super pumped you are joining me today. Today I am recording. There's video, there's audio, there is my podcast team. Danny and Brianne are here helping me record this episode for you. It is gorgeous here in Scottsdale today where we are recording, the weather is a little chilly. I mean chilly in Phoenix, Scottsdale standards, not chilly for my friends who are in the Midwest, Canada and the north and beyond. But nevertheless, I'm super pumped you're joining me today. I actually put together this episode because I really want to speak to very many of you, especially my female women led. Now there are some really great dudes that I've worked with too who suffer from the very same thing. But it's this idea behind wanting to be the affordable option, wanting to be an accessible option for many as opposed to the high value premium option for the few. Now when I say be the premium high value option for the few, most of you aren't thinking, I don't want to be that. But many of you are killing your businesses by trying to be an affordable solution, by trying to be accessible to everyone. Like trying to be accessible maybe to your friends in the local area or what have you today. Because I see it so rampantly with the clients that I work with and it comes from such a good place, right? Comes from such a place of really wanting to care and make sure that you are not leaving anyone behind with your pricing and, and the structure of how you guys make your recommendations and what have you. But here's the harsh truth. Being affordable is, is absolutely killing your business. And I want you to be in business for a long time. I want you to make lots and lots of money from your business so that you can take care of yourself, so that you can pay yourself well, so that you can provide for your family, so that you can pay your team well. So today we're gonna dive into why trying to be the affordable solution is actually hurting your sales, limiting your outcomes and keeping you from becoming the true authority and experts for what it is that you do and specialize in your market and really shifting you to becoming the place that premium patients and clients are willing to drive far and wide to come to. So really, truly, bottom line, small businesses, small independent businesses, in most cases, especially with small independent med, spa and aesthetic practice businesses, can't afford to focus on being the most accessible solution in your area. So we're going to dive into this today. Why being affordable is unsustainable for you, how this is actually showing up unintentionally and inadvertently as well too. Because many of you, this permeates everything, and especially I see this inside of MSA specifically because we coach CEOs and owners, but we also coach your team members too. And if the leader has a belief system that is based on like, we need to be affordable, we need to, like, not leave anybody behind. We want to be inclusive, right? This is what I would call misguided inclusivity, right? There's good kind of being inclusive where we're not being discriminatory and then there's the not correct kind of inclusivity, the misguided inclusivity that I would say, where you're trying to, like, serve everybody and then you end up being a master, an expert of nothing as well, too. And so what happens with leaders is when you are the owner of your practice or your clinic and you have this belief, intentionally or unintentionally, that being affordable is one of your core values, this not only permeates how you've set up your menu and your offers and your marketing and your selling, but it ends up your entire team and staff has that belief as well, too. And I think there's a couple of different reasons for this. One, you're the leader. You set the tone for what everybody else who works for you is going to believe. You set the tone for that. But another thing that happens is that when you're in the hiring process, if you have this belief, you inadvertently attract and communicate and attract other people who have that belief as well too. And it's like, for like. And then it's like not just the problem that we need to shift your belief set. You may have shifted your belief set, you know, in the recent year or two, even just as you found me and started listening to this podcast or maybe learned more about what it's going to take to actually build a thread driving profitable business. But you have team members that have been with you longer than when you shifted that belief or you just didn't even really think about this. When you were hiring Lori Wimmer, who is our revenue generating team coach inside of msa, we're actually collaborating on an entire program that we are going to be dropping inside of MSA and selling separately as well, two called revenue generating teams. And we've been working behind the scenes on this project for a while now. And Lori and I were just talking about how often med spa and clinic owners end up inadvertently and unintentionally not having really strong hiring processes when it comes to hiring folks that are going to have the ability to be able to sell. Well, okay, now we're gonna leave. Why? Your beliefs around selling, many of your beliefs around selling, and certainly many of your team and staff members beliefs around the word selling, you know, selling is not sleazy. Okay, we're gonna talk about that in another episode. But you inadvertently end up hiring people. Certainly if you have the belief that we are the affordable leader, that we want to be accessible to everybod, you're going to hire team and staff members who also have, who mirror that belief back to you. Like attracts like. Um, but even for our clients who maybe don't have that belief, they unintentionally don't have very good processes. They don't have very clear job descriptions, job offers, and then a very clear process in their hiring and their interviewing to actually filter out the team and the staff members who are always going to struggle to sell more comprehensive things, selling more premium things as well too. And so even if you've shifted your beliefs since you hired certain team members, or maybe you've shifted, you know, how you are pricing yourselves the structure of things. This belief about wanting to be affordable is a killer to your revenue, to your sales, and then ultimately to your clinic's ability to get really consistent, reliable, outstanding outcomes for your folks. And it makes sense, right? Because when we have what, like what I'm coining as misguided inclusivity, what I mean by that is you're like, you don't want to leave anybody behind. You know, if somebody's interested in your services or treatments, but they're on a tight budget, which, by the way, many of you don't even find out if the person is on a tight budget or not. Many of you and your team members project your own price sensitivity on the person in front of you. So what I found after coaching so many people now is that oftentimes you don't even know, like, you're assuming that everybody's on a budget and it could be just because you're on a budget, right? The most premium patients and clients in your market are looking to invest and care deeply about finding really incredible providers and experts at what it is that they want to find a solution for. And so pricing is one of the ways that we position you as an expert and authority. One of the key things that trying to be affordable, there's, there's two things from an operational perspective. One is it's really challenging to be profitable because in order to be a business that is trying to be affordable, you have to be operationally excellent. Okay? You have to be operationally efficient, you have to be a really strong operator. And many of you are not really strong operators. Many, most of the clients we work with, not all, but many are technicians. Like they started out as an esthetician, as an RN, NP, PA, clinician, surgeon, a practitioner of some sort, delivering whatever service that you specialize in. And so because of this, in general, med spa owners and aesthetic clinic owners have a lot of growing to do when it comes to being able to run a business operationally efficiently. So one, you're just not that skilled at being operationally efficient. And two, you're just not aware of the fact that in order to be affordable, you have to really be operationally so excellent and skilled because the profit margins that you have are going to be so much tighter when you're trying to be affordable. So all the other business models, for the most part now, there's outliers, like huge. Like we're going to set aside the Walmarts and the Amazons and the super huge Fortune 100 companies, right, that are trying to serve the masses. But the ones, the small businesses or even the franchises that you look at that have had a lot of success with being a more like affordable option, they do not have a lot of variety in what they are delivering on, which helps them become more operationally efficient. Okay, so for example, like dry bar blowouts, now I wouldn't even say they're being affordable, but you could say they're not. Like, it's not a million dollars for a blowout. In fact, my daughter, tonight I made an appointment for her. It's her 14th birthday. She turns 14 in a week or so here. And this is the only day that we had available to actually celebrate with our friends. And she asked me to book a blowout for her. Happy birthday, Sydney. And so I booked a blowout at the dry bar down the street from us. And it was, it's interesting actually. One, I looked at two different dry Bars. One was in the hotel that's right near us and one was in a shopping center. They had different prices for their blowouts. One was 75 for the blowout and then the other was 55. Now they're able to offer those pricing on blowouts because that is all they do is blowouts, right? So it's easier to become more operationally excellent at something. You know, you look at some of the, even some of the Laser franchises, if you will, they are offering less things. And it's certainly when they first start out, they're offering less things, and that is because they're able to become more operationally excellent and efficient. Now, for most of you, you are solving multifaceted problems where you have more services and technology and products. Maybe you're not just delivering a blowout, right? You're not just delivering facials. If you're a results driven type of place, you're not just delivering talks. For most of you, most of you have a comprehensive menu that has a variety of things so that you can really have a combination mentality approach to helping your clients and patients solve the problems they want to solve and get the desired outcomes that they want to solve that they want to achieve. And so in order to be affordable, you would have to really narrow down the scope of what your offering is in order to actually increase the volume and make sure that those thin profit margins that you have that helps you take your thinner profit margins and make them a little bit more robust is if you really, really narrow down your focus. And the majority of you have not done that, okay? And the majority of you don't want to do that. So we don't want to be affordable, okay? Now this does not mean that all of you need to be super luxe luxury either. This doesn't mean we're going to price, gouge or be like incredibly the most expensive price that we can think of. That's not what I'm talking about. But we do want to build what we're doing around premium clients and premium patients, okay? We want to ensure that we're focused on them. We're focused on the folks that are in actually a variety of different socioeconomic circumstances, but they care deeply about getting the results that your practice or clinic are able to provide and solving the problems that your services and specialty is going to help them solve. Okay? So when we are affordable and when we try to be affordable, it's really challenging to actually deliver incredible results. And how this shows up is like, yes, it shows up in the actual baseline Pricing that you have for your menu, your services and all those things. So yes, oftentimes we need to increase the baseline pricing. But this also shows up with how you all will under recommend. It may be that you've worked past your price sensitivity or your price sensitivity beliefs that all of your customers have. But your team members, you notice, have challenges with this. They want to be affordable, so they end up under recommending. Right? Which leads to inferior results, which leads to disappointing outcomes. And so it shows up in pricing. But then the other underlying problem is that shows up with just an under recommendation for all of you. Okay, there's also a lot of evidence and I'm going to give you some stats here about why premium is better for your positioning overall. There was actually a study done by McKinsey & Co. Showing that businesses focused on premium pricing see higher customer loyalty and probability compared to businesses competing on price. Okay, so it doesn't even just affect that, you know, initial appointment value as well, but it increases your client or patient retention as well too. Your pricing conveys the value that you believe that your services and your expertise actually provide. There was also a Harvard Business Review study that showed customers associate higher prices with higher value. It's a phenomenon called the price quality effect or price quality heuristic. And so what they discovered was customers, when they were presented with higher priced solutions, and they compared the same products or solutions to just lower prices, like just differences in the price. So lower prices over here, higher prices over here. The customers believed that there was more value in the higher priced solution. So when you inadvertently are trying to be affordable, you're trying to be accessible, you actually lower the perceived value of what it is that you do. Okay. And so I always give myself an example as well too. Like I'm a 46 year old woman who invests premium, I should say, in esthetic treatments myself. And I'm never looking for the most affordable provider, even subconsciously. Subconsciously, all of us know that price means that there is a link between the price and the demand that that person has. And when I'm thinking about my face, I'm thinking about my body. Whether it's aesthetics or wellness or weight loss or whatever it is that you provide. Like, I think, put yourself in that person's shoes. Now, there are folks who are looking for the most affordable price solution. And those folks are likely not going to be as loyal either. And they oftentimes are higher maintenance customers. But you have a whole group of people that are intentionally looking for the most premium solutions in their market because they don't want the affordable solution. And I am one of those people, and you are probably one of those shoppers in certain circumstances as well, too. There are certain things in life that I am looking to get like a better deal on. I don't buy like super, super designer clothes, meaning like ultra, like thousands of dollars for shoes or, you know, a dress that's like $15,000, right? That's like ultra. I like nice things. I have some designer handbags and I like certain items, and I have some, some choice investments that I make and choose what have you. But sometimes I'm looking for a deal, but when it comes to my esthetic treatments, I am not looking for the most affordable solution. So when you're thinking about your pricing, when you're thinking about, like, the mentality that you might have, you know, when you're looking across your team members too, and you're seeing that some of them are really struggling to make those big, bold recommendations, and it's because, you know, they're worried and overthinking about the price sensitivity of the patient or client that's in front of them. I want you to remember that we want to shift you away from the being an affordable approach to your entire practice, okay? We want to shift you to focusing on premium patients and clients. In fact, I have a really great training. I'll link it up in the show notes as well, too. It's called the premium patient magnet toolkit. And we dive deep into how do we become a med spot or a practice that magnetically attracts premium patients and clients to us. The types of premium patients and clients that are all in on our recommendations, that are, like me, the types that are going to be loyal to you for many years to come. Because the key is when we focus on those types of clients and patients, we can dramatically improve our revenue and our profits as well, too. Here's another stat I'll throw out there. The Journal of Consumer Research study found that 79% of consumers are willing to pay more for services they believe offer better quality and expertise. The other thing that the research has shown us is this. If you price yourself too low, you actually send a subconscious message that your services aren't worth much. Premium patients and clients won't trust you with their results if you don't trust yourself to charge what you are worth. Okay? So this impacts the outcomes you're able to achieve and honestly impacts why many small businesses and med spas and clinics don't end up surviving as well, too. So as we look at you crushing it in 2025 or whenever you happen to be listening to this episode, I want to really encourage you to decide once and for all that we are not the affordable price leader. We are not the affordable, accessible to everybody solution. We are a premium solution. We are the experts and the authorities at what we do and we deliver incredibly high results and outcomes for our folks. And we have incredibly high value as well too. The more I can shift you all as leaders, as CEOs to actually believe this, to show up this way energetically, this will shift not only your ability to sell more and to direct the ship, but this will start to permeate the team and the staff members that you have and even attract the kind of team and staff members who believe that as well too. So again, if you're interested in the Premium Patient magnet toolkit, this is probably a great training that you will love. And it's only $47. I'll link it up in the show notes as well too. You can snag that Dive deeper into this approach that I'm talking about today to ensure that you are able to attract the premium patients and clients in your market that are willing to drive far, spend big and get really outstanding outcomes that you can then in turn use results and outcomes to attract more premium patients and clients who are willing to dry far and spend big too. That is what I have for you this week. I will see you next week. Hey, if you're enjoying this podcast and you're a boutique results driven Med Spa owner who's looking to drive more sales profitably each month without hustling yourself into the ground to do so, then you should consider applying to join us inside of the Med Spa Advantage. It's the the only program designed to help you grow your revenue and profits while gaining back more time so that you don't feel scattered and drained while running and growing your business each month to learn more about whether or not you're a fit for joining us, you can head over to heatherturveen.com apply to apply to get on a call with us to learn more. That's heatherturveen.com apply to learn.