How to Create More Profits

May 23rd, 2006 • Related • Filed Under

Hope this finds you feeling prosperous and doing well!

I am curious. Do you get nervous when people ask “How much do you charge?” Worried that you might not be worth it? Worried that it might be too much?
I am still on my money theme this week. Liza Carr, a fabulous therapist, sent me this quote:

In 1997, people spent $1.7 billion (yes, billion) on psychic hotlines (this does not include seeing psychics face to face). -Ofer Zur, Ph.D

Do you think psychics worry about telling people their fee? Do you think they wonder if they are worth it?

If so, you are not alone. My voice used to crack when I stated my fee! And I have found this to be the #1 fear of many therapists.

Just for fun, I invite you to think about how you spend your hard-earned dollars.

Do you pay a hair stylist, personal trainer, house cleaner, or massage therapist a similar fee to yours?

Do you resent them when you pay them?

Sometimes this exercise can help us put our fee into perspective so it comes out of our mouth easier when people ask “What do you charge?”

I’d really be interested to hear how you feel when talking about your fee. Is it comfortable to tell people who call what your fee is? Is it a little scary?If you’d like to share how you feel about money and setting your fee, it would be great to hear you thoughts. I’d love to get a discussion going on this issue. You can post a comment here.

Last week I had two therapists call me with a lot of excitement. Both acquired two new clients in one week! How cool is that.

Now, you know, I strongly believe in the extroverted marketing activities such as speaking and developing referral partners.

But these two therapists were getting clients from an introverted activity - an online therapist locator service!

If you are considering an online therapist locator service, I recommend Counsel-search.com.

When you sign up, just enter affiliate (coupon) code:

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and you will get a monthly listing on their online therapist locator service for only $9.99/month and a web site at no-charge to you!

Rich Gilmour, the owner of Counsel-Search.com says “If you don’t yet have a website, friends of Casey Truffo get one FREE!” Just remember to enter your affiliate (coupon) code of: casey

Check out Counsel-Search.com!

Note for Exclusive Members: You can get an additional bounus from Counsel-search! You get the first month’s listing for only $1 by going to the Resources section in the Exclusive Members Site and using the coupon code listed there!

With love and respect,

I am so excited to present you with this article from the fabulous practice-building coach Lynn Grodzki.

Lynn was my very first coach years ago and I am delighted that she offered to let me share with you the following article! To subscribe to her “Private Practice Success Newsletter.” please visit www.privatepracticesuccess.com.

An Expensive Business to Operate

by Lynn Grodzki, LCSW, MCC

In my last month’s newsletter, I discussed the 2006 industry-wide survey from Psychotherapy Finances (www.psychotherapyfinances.com), showing that incomes of clinicians are declining and not keeping pace with inflation.

This month, I highlight another finding of the same survey: Despite declining incomes, practice expenses are still high. This validates what I teach, that a therapy business is an expensive business to own and operate.

“If we keep doing what we’re doing, we’re going to keep getting what we’re getting.” Stephen R. Covey

Whether you are a sole proprietor or part of a group practice, whether you have a home office or work out of a separate office, your expenses will be a substantial percentage of your gross income, and that makes this an expensive business to run.

It may not seem that way when you have a small practice, because there is relatively little start-up expense, especially with a home office. But when you look at your expenses as a percentage of gross income, you see the true picture.

The 2006 survey reports that expenses of those in solo practices run an average of 30 - 40 % of their total income. Expenses for those in group practices average between 30 - 45%. This is considered a high percentage, in business terms.

To be profitable in private practice you need to keep your income high and your expenses low. Overall, this means you must minimize your reliance on managed care, and sliding scale clients; attract and retain self-pay clients; and manage your expenses carefully so that you can keep as much of your income as possible.

“Beware of little expenses; a small leak will sink a great ship.” Ben Franklin

Let’s look at two basic strategies that help to keep clinical expenses low:

1) Get organized.

You need to continually track your income, payments, outstanding debt, and expenses. Have a system that allows you to see this data at all times. If you are not using a computer to do this, you are in business the hard way. The survey shows that therapists are technophobic, and only 55% of those in solo practice use a computer for billing. This is one area where getting comfortable with technology can make a difference to a therapist’s bottom line.

One therapist I coached found that just getting her files in order, made it possible to eliminate $10,000 in debt she carried — unpaid bills from existing clients. Before getting organized, she knew she had some outstanding receivables, but didn’t know how much or who really owed her for what. After compiling her records, she was able to present clients with a statement and work out a payment plan.

2) Adopt a consumer model of payment — such as taking credit cards.

The survey shows that accepting credit cards is a growing trend for clinicians. Over half of all group practices accept plastic, but only 23% of solo practices take them. Although you lose a little of your fee due to a percentage you pay to the card company (usually 1.75-3%), you gain flexibility, eliminate outstanding receivables, and have a way to encourage immediate payment.

One therapist gets credit card information from each new client as part of the intake packet. His contract explains that the card will be used for missed session payments. This way, the therapist and client can be assured that the billing can continue in a regular way, even when the flow of sessions gets disrupted.

“don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over .” Warren Buffett

Want other ideas to increase profit and reduce expenses? Check the statements that are true for you in the area of “Profit Drains” or “Profit Gains”.

Profit Drains

I have no business plan or a weak business plan.
I don’t have enough liquidity or cash on hand so I am always borrowing money.
I offer the wrong services to the right people.
I offer the right services to the wrong people.
I am in a location not conducive to getting or retaining clients.
I don’t have a good accounting system for accurate tracking of finances.
I have too much credit card debt.
My income can’t support my lifestyle.
I have poor communication with my clients regarding fees.
I spend too much time doing menial work and too little time earning money.
I have poor self care resulting in feeling burnt-out.

Profit Gains

Every dollar I spend on my business contributes to furthering my profitability.
I have less paperwork come across my desk since I automated my systems.
I only work with serious clients.
I reduced my debt and high interest payments
I pay attention to details of finances.
I collect fees as soon as possible to eliminate accounts receivables.
I put profitability ahead of comfort or appearance.
I have a good accounting system in place to be able to see my finances and budget to date at a glance.
I am a skilled manager of my practice.
I made a list of my expenses and cut them by 50%.
I leverage my time and efforts to get the most money for the least time.
I surround myself with bright people dedicated to my success.
I have multiple profit centers.
I think expansively and build a practice to last well into the future.
I spend 90% of my time delivering service and generating referrals, 10% of my time doing all else.

Fieldwork: Look at ways you can plug your most serious “Profit Drains”. Then find several items on “Profit Gains” you can adopt to increase your profitability.

Recently a therapist said to me “I have been practicing saying my fee. In fact my husband calls me throughout the day pretending to be a prospective client and says “What do you charge?” I now have no fear and I can state my fee easily. I know I am worth it!“Wow! This was fun to hear.As I said, it would be great to hear you thoughts on fees and money. You can post a comment here.

There Are 13 Responses So Far. »

Comment by Sheri Zampelli on 24 May 2006:

First off, love the new look and feel of the newsletter. Very cool. Secondly, in regards to stating my fee, I have become quite comfortable lately and even occassionaly wonder if I should play with raising my fees?

It wasn’t always this way. I used to work at an agency where some clients were only required to pay $5! Their fee wasn’t tied into my income but I was paid per client. There were some folks who even seemed to view $5 as a hardship! Wow. When I first opened my practice, I had some hesitation (afterall, I went from asking for $5 to asking for $100) but I have since raised my fees and it’s never a problem.

In the beginning, it was Casey’s coaching that helped me learn how to ask for the fee. Now, with some successes under my belt and the fact that some of my clients have made phenomenal changes, I know I’m worth it. I think I was very much in my own way when I felt it was “too much.” Because truthfully, I have seen a Shaman (sp?) several times for emotional release body work. He charges $250 a session and I have no problem paying it. It’s not that I’m Ms. Moneybags, it’s just that I know that the $250 I spend with him has caused immediate, effective and lasting change. It is $250 well spent. I know some of my clients feel the same way about me…because they tell me. But my programming of “not good enough”, “don’t brag”, “who do you think you are” can sometimes prevent me from hearing them.

Okay, that’s probably more than you wanted to read but I want to support anyone who’s ready to take the leap to a more fulfilling practice and I want to support Casey.

All the best,
Sheri Zampelli
Comment by Judy McGehee, LMFT on 24 May 2006:

Initially, money was a taboo issue for my work. Never had classes in grad school about running a practice or stating fees. Through a wonderful mentor, I was able to talk about my fee on par w/ the dentist, doctor, workout trainer, etc. because I was reminded what it took to really run a business - that’s what I do: run a business, help people in need and crisis, take calls 24/7 - and through all of that I also went to school, sacraficed a social life for years while attainting my competency, pay rent, utilities, lots of fees to be in business, malpractice, “slip and fall”, etc. I’m still a little below market value, and that is ok for now, after about 15 years in business, because it allows me to see a variety of people who wouldn’t otherwise get mental health treatment.
Comment by Brad Stenberg on 24 May 2006:

The audacious boldness of managed care companies to set the fee at $60 has given me the boldness to ask for my fee (more than twice that). In the process it has helped me believe in myself as a true professional who is worthy of his hire.
Comment by Donna Blethen on 24 May 2006:

I am still working on asking for what I am worth. I am having amazing feedback from my clients how they love my work and how special I am. I have just gotten my fee to $120 after 28 years in the field. I always have thought if someone needed to see me their need was greater than mine and I should help them. My needs just got bigger with my first son off to college. It was not so much about my worth as about who needed what more.
Donna Blethen
Comment by Evelyn Schmechtig-Cochran on 24 May 2006:

The past few weeks I have had several, about six or so, drop outs because peolpe did not want to pay a bigger co-pay since I am not on many panels and will not join. I either give receicpts for the client to bill or bill directly. I guess I have been shocked by people quitting therapy after having built rapport and made some progress and having them say they want to go with a panel person. It really feels devaluing. I try to be extremely clear about my fee, right upfront and on the phone. They want to see me because of recommendation from another person or MD but when it really comes down to it they do not want to pay. I am not worried about my practice and I do not reduce my fee. I have gotten off of all but one insurance panel and refuse to join another ever again. I guess I am shocked that peolple do not want to pay for services. I get facials, etc. and pay a pretty penny for them and don’t think to complain or fuss over having to pay. One women’s husband made her stop. He is a medical doctor in a high paying speciality but felt his wife’s therapy was too expensive even though she felt her anxiety was going down greatly as a result. I told the Universe I do not want those kind of people walking thru my doors anymore.

Evelyn
Comment by Angie Hoffpauir on 24 May 2006:

It occurs to me that the things mentioned, i.e., haircuts, massage, cleaning, etc. are all tangible products, in that you can see and experience immediatley the work (good or bad) that has been done. Therapy os not like that. It is not a tangible service, in which one sees the immediate effects ot results. I think that this is part of the reason that paying for such “intangible service” is such a difficult topic.
Comment by Paula Hall on 25 May 2006:

When I am challenged about my fee I often ask this question: Your livingroom has 6 inches of water in it from a burst pipe and you call the plumber to come in. As you are standing in the middle of the water logged carpet do you ask the plumber if his fee is fair or if he/she would negotiate the rate? Probably not. You called the plumber because of the training and experience required to solve a problem that is directly impacting your daily living. Counseling is no different. Your emotional health and well-being is AT LEAST as important as your wet carpet! This leads to follow up sessions and often to a discussion about how to make the time spent in therapy most effective for the client.
Comment by Donna Martin on 25 May 2006:

I too came from a background of working as a therpist in a non-profit, grant-funded counseling center where clients could receive counseling from master’s level, often licensed therpists at no cost. When I started my private practice and began to ask for $100 per 45-50 minutes, it felt awkward. But, as my own bills went unpaid because I was accepting far less than $100 per session, I began to feel resentment. It finally dawned on me that my expertise and experience in the field deserves to be compensated, and at a profitable level for me. When I realized that “this is how I feed my family and provide shelter”, it was not longer difficult to state my fee confidently. If clients need to pay less, I refer them to the grant-funded agency I used to work for.
Comment by Cris Stahl on 25 May 2006:

I used to be uncomfortable around money. Because I love what I do and think that it’s my duty to help people in need, I thought I shouldn’t have to charge anything. But that’s changed. I feel confident that I am providing a service that people need and I see it as make a living for myself. I can help people and still pay my bills and take a vacation.
Comment by Casey on 30 May 2006:

I am so excited by all the comments! We really have come a long way and thanks to all of who are being role modulues for us all!

Warmly,
Casey
Comment by Casey on 30 May 2006:

I love you guys!
Casey
Comment by Elizabeth on 30 May 2006:

I am new to the field of counseling. I am a LGPC and need to complete my hours to get my permanent license. I set my fee low ($60.0) because I do not have my permanent license. After I get my license I plan on doubling my fee to $120 per session for new clients. I need to earn money to pay back my student loan and I also need to have money to pay business expenses. I really love what I do and I am looking forward to using Casey’s program to expand my practice.
Comment by Barbara on 31 May 2006:

Loved all the comments. I got a good idea about dropping some panals. It’s just too complicated to be on so many and the compensation is not worth it. I am O.K. about my fee of 100$. I am a registered nurse and a licensed professional counselor and I do believe I am worth 100$ per session.
I think we are all in a very needed service and that we are helping people lead a better quality of life. How could you put a price on that?
Thanks for all these comments and your wonderful emails Casey. I wish I could get some time to visit you and learn more.