Should I Increase my Fees ?
Robert Medhurst | BNat ND DNutr DRM DBM DHom
It would be extremely rare to find a natural medicine practitioner who entered our profession simply to make money . Most of us spend thousands of hours and many thousands of dollars to obtain a qualification for the sole purpose of healing others . If we ever give any thought at all to the financial side of our clinical practice it ’ s usually only because we ’ ve been reminded of things such as overdue bills . And yet , the sad reality is that in most cases if we don ’ t give our finances the attention that they require we can ’ t keep our clinic doors open for too long .
The reason for raising the issue of fee increases at this time is that the current rate of inflation in Australia means that your economic viability , and therefore the viability of your clinic , is being put under more financial pressure than has occurred for several decades . It ’ s important that you ’ re aware of this and it ’ s important that you consider taking steps to deal with it . To that end , what follows is a discussion on inflation , breakeven , price sensitivity in our marketplace and why you should consider increasing your fees .
Inflation
In the 12 months to June 2022 , Australia ’ s inflation rate was 6.1 % ( www . abs . gov . au ) and , according to the Reserve Bank of Australia ( www . rba . gov . au / publications / smp / 2022 / aug / economicoutlook . html ), by the end of this calendar year that rate is likely to be even higher . The inflation rate is based on the Consumer Price Index - a measure of price changes to things such as food , clothing , transport , education , insurance and housing . In practical terms , what that 6.1 % means is that what $ 10,000 would have bought you in June last year in operating expenses such as power , rent , transport and telecommunications will now cost you $ 10,610 . It also means that what it costs for you to live - food and clothing , etc - has increased at the same rate . In addition , if you employ staff , they ’ re also affected by rising personal expenses and may be looking to you for a pay increase to help them cope .
Break-Even
Commercially , the primary consequence of inflation is an increase in your operating expenses . This can be put into perspective by assessing the effect on your break-even point - the point at which you have sufficient income to cover your expenses . As healthcare providers our break-even point is best expressed in terms of the number of clients that we need to see to cover our expenses .
Consider the following :
Example 1 . You ’ re a practitioner who prescribes medicines and you wish to determine how many clients ( new clients and follow-up clients ) you need to see per week to break even . Presume that you prescribe medicine for each client at an average profit of $ 20 per client . You can disregard the cost of medicines because the mark-up you put on them makes them self-funding .
You have the following expenses :
Rent Marketing expenses
Miscellaneous ( phone , stationery etc )
Insurances Professional memberships
$ 150 per week $ 30 per week $ 30 per week
$ 400 per annum $ 300 per annum
204 | vol28 | no4 | JATMS