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Med Spa Success Strategies
Wednesday Thoughts: Are You Undercharging? How to Price Your Med Spa Services for Maximum Profit
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Foreign. Today I wanted to talk about pricing. Are you undercharging how to price your med spa services and how to do so for maximum profit? And here's what I'm going to promise you. We're not going to do what a lot of people do. I think that there's a, an epidemic here of consultants and advisors that say things that you as med spa owners want to hear and they don't explain the trade offs of the decisions that you make and the potential downsides. So it's easy for somebody to come in here and say, hey, you should be charging more. You need to maximize profit. You need to live at the premium price tier. You need to position yourself as a luxury provider. What does that actually mean though? How do you do it? What are the trade offs, what are the downsides and what are the risks? We're going to talk about some of that here today. So again, we can dream of charging more, but the market reminds us of what is real. We can pin our prices in a luxury price point. If we don't have the reputation, we don't have the goods to back it, then you're going to be sitting there with premium price points and empty books and empty appointment slots. And that's not what we want either. So it's trying to figure out how to calibrate to create maximum impact. How do we increase our price points while still keeping our appointment slots full? So why should we even strive to charge more? A lot of med spas are really successful. Honestly, a lot of our most successful clients are living in the realm of, of competitive pricing. That's how they win. They've got really good rep. It's this simple matrix of price and reputation. If you can maintain really competitive price points, low price points and a good reputation, that's pretty easy. Recipes for success. It's much harder to try to maintain premium price points. But why is it something that we should strive for as med spas? So that we can avoid that race to the bottom. So the first thing is it gives you more margin for reinvesting nicer spaces, conferences, education, anything, all the things that you can do as a business to reinvest to make your business better. It helps you increase your staff pay, which means you're to both recruit and retain better staff. Right. If you've got better margins because you're able to charge a premium for services, it means you're going to have better providers, better patient experience, sort of as a chicken or the egg type of thing. But luxury pricing gives you the option to pay staff better. Right. And better staff gives you the backing to justify luxury pricing, better profit and owner distributions. You're running a business, you're not doing this as a charity. Like there's a business component to this. You want to make sure that you're able to take home a healthy paycheck to compensate you for your time and the risk that you've taken as a business owner. And better margins via higher price points give you more wiggle room there. And then also we want to make sure that you've got cushion and wiggle room so that if an economic downturn happens or an emergency happens, you've got cushion and reserves to make sure that you can withstand that. All right, so let's talk about two different buckets here. When I talk about pricing, I've got a little bit of a nuanced explanation of how we think about pricing decisions. And this comes in two different forms. So bucket one are people who don't see you as a clearly superior option. Right? They have an experience doing business with your med spa. You've got good Google reviews, but two or three other competitors also have good Google reviews. Your Instagram looks nice and your website looks nice, but two or three other competitors in the area also also have really nice Instagram profiles, really energetic fun providers and nice websites too. So there's nothing clearly setting you apart as the luxury option for these people that are in bucket one. Those are people that you don't have an established relationship with. Bucket two are people who love you and trust you based on an interaction with your business. So we always say, the quote that I always use from a book called the Advertising Effect is action changes attitude faster than attitude changes action. The the best way to create perception is through experience. So the people who love you and trust you most are really going to be the people that have done business with you. It's hard for people to love you and trust you if they've never experienced doing business with your med spot. So for those bucket one people, the people that don't really know the difference, they're not convinced that we're going to provide them with a clearly superior service or result versus, you know, the top two or three other competitors in the area. Our recommendation always is that you reduce friction to create more of the bucket to people. So I want a low barrier to entry. This is where we talk about pricing and discounting. I want attractive and aggressive new patient special offers. These are one and done new patient promos, one time use things that are meant to create the Opportunity to develop a relationship and to tip the scales in your favor so that when people are weighing their options, they're looking at you versus your top two or three competitors that also have really good reputations, really good reviews, nice social media handles, good website. How did we make it easier for those people to choose you? We reduce friction via attractive new patient special offers so that we can create more of the bucket two people which are the people that know, like and trust us based on the fact they've done business with us and with these people. We want to test the waters. What can we charge as our standard price points without turning a bunch of people away? Right. Will people truly pay a premium to continue doing business with you? That's the question that we're asking. And you want to test the waters to find the answer. There's we can talk in theory all day, but the goal should be to raise prices gradually to achieve the upper limit of the market assuming demand allows. So the assuming demand allows is the part that people don't want to hear. If you're not really providing exceptional service, exceptional experience, a differentiated product or service, better results, something that clearly helps your med spa stand apart from the competition. This is going to be very difficult. So you have to have the goods. But my contention is if you don't truly have the goods, this is impossible. And when I say having the goods being an A minus practice where you feel like things are pretty good, people like our providers, the space is nice, we welcome people, we're friendly, we're as good as any other med spa. That's probably not good enough. If you want to test the waters at the upper end of the market, you need to truly be sought after and provide a top of the line experience in all facets. This episode is brought to you by Med Spa Magic Marketing, my agency. We help med spas and aesthetics practices is grow with more effective marketing strategies. And I know that's a vague phrase, right? That's a vague claim. So I have an offer for you. I offer this to any new prospects if you're interested in exploring any of them, another marketing option, a new agency, or just getting into Facebook, Instagram, Google Ads for the first time. I'd love to show you why we're different, what we're doing for clients and we can do that via a one and a half hour planning session where I'll outline a specific marketing plan and I'll give you one all of the blueprints that we would implement if we were to do business together. Now you can Take that, use that on your own, hire someone else to help you execute it or work with us. We really don't hold anything back on that strategy call. And I think you'll have a lot of confidence in how you manage your marketing investment moving forward, understanding some of the nuances that can help you implement more effective marketing strategies for your business. So if you want to do that, you can go to medspamagicmarketing.com Also, keep in mind that raising prices will cause some people to leave, but it's often more than offset by the increased revenue and profitability from those who stay. So as a marketing company, like we're on a wait list. As a marketing company, we've got clients that are on a wait list of a month, six weeks, sometimes to onboard with us. So as we're evaluating that, we've had multiple instances in the last couple years where we've gone through and done price increases. And when we make these decisions, we know that there are going to be some clients who just feel like I they can't disconnect the fact that it still feels like an expense on the marketing side. For whatever reason, they're not comfortable making the jump and they will even go elsewhere. But the majority of clients stay. And basically what you're left with then is a smaller workload, more capacity and better profitability on the ones who stay. And you can actually maintain or even increase revenue even with client attrition. But that's a very shaky balance. If you try to jump your. If, if you find out that people are actually only doing business with you because your Botox is the cheapest price in town, and you go and try to jump price points without the goods to back it, you, you're going to have massive attrition. So you really have to have a good feel and a good vibe as why are people doing business with you? Do you have the flexibility and the goodwill from your patients to justify a price increase? Because you have to know some people, even if it's one or two, there are going to be some people that will leave because of an increase in price. But usually if you calibrate that properly, it's going to be more than offset by the increased revenue and profitability from those who stay. Okay, so last couple of things here. Remember, if the value that you deliver is seen as greater than the price people will buy, this is basic economics. People are willing to give you their money because they think whatever they're getting in return is worth more to them than the money they're giving you. And if they feel like there's an opportunity cost, which means, hey, for that same amount of money, I could get this service done at a satisfactory level somewhere else. You're not going to retain those clients. So you have to ensure that your value proposition matches. And people feel the friction of like, hey, I, I do not want to leave this business, I do not want to leave this provider. I really trust these people, I really like these people. And so what if I have to pay 10 or 15% more for my Botox? This is where I feel comfortable. I'm confident I'm going to a result and I don't want to trust the outcome and the look of my face and my treatment plan to another practice or another provider. If you don't have that in alignment, people will resist. So when it's believable, also, this is another thing. When it's believable and it's not for all practices, but if people actually believe you have the goods, price can be a signal of quality. So it goes back to being a circular loop, right? We want to show that we're a quality quality provider so we can increase prices. But increasing prices actually also indicates to people that more often than not they're paying for a better quality of product or service. Right. If you're shopping for cars, you're going to assume the more expensive cars are more expensive for a reason. That basic consumer psychology element is at play even in the med spa space. But it can be risky because if people are paying a premium and then they find out you don't have the goods, or it's not believable even in your marketing messaging, it falls apart. So if you've got graphics on social media and ads and your website, they look really wonky and outdated and crummy and the colors don't match and it generally looks unprofessional, then you can try all day to match that with a premium price point. If your people come in and the providers are sloppy, they're unkempt, they're not really personable, they're not doing a phenomenal job, there are service quality issues. As soon as you lose any sort of credibility, this falls away. But when it's believable, price can also be a signal of quality. So this is another reason I think you should be trying to chase premium price points if you can justify it. If you want help with additional consulting, strategy or marketing advice, you can visit our website, MedSpa magicmarketing.com for additional resources or to schedule a call with me. Thanks and we'll see you on the next one.