Should You Reduce Therapy Prices in Difficult Times?

As therapists, most of us have to be business owners as well as offering our services, and our practices are subject to the same economic pressures as any other business. Periods of high inflation or financial uncertainty, whether personal, local or global, can raise difficult questions about pricing.

When clients are struggling, and your bookings begin to dip, it’s natural to wonder whether reducing your prices might help. Let’s start by looking at how businesses of all types react in times of crisis and then apply this to therapists.

How Businesses Respond to a Crisis

In the past, businesses have traditionally increased prices when things get tough, arguing that it helps to bring demand in line with supply, and prevents hoarding because people only buy what they need when it’s expensive. It’s also said to incentivise companies to step up production of vital goods and services so they can maximise their profits while prices are high.

Applying this theory to therapy, think back to the coronavirus lockdown, where face-to-face therapy was impossible and not everyone offered an online option. Those who did could charge more, because people who wanted therapy had to use their services despite the price rise.

But what happens then? The most likely thing is that other therapists, seeing that they could not only get clients but charge more, start to offer online therapy. So although, in the short term the established online therapists get a bit of a bonanza, in the long term, more competition is likely to bring the prices down again. Of course, life is more complicated than this makes it seem, and other factors play into it as well. But the general principles apply whether it’s during a lockdown, super-high inflation, or disruption due to wars, natural disasters, and so on.

Raising your price in a crisis is good for your short-term profit margins, but unpopular with consumers, who (probably rightly) feel exploited. It also leads to some vulnerable people being unable to afford vital good or services, and has led governments to introduce laws protecting them against excessive price rises and exploitation in emergencies, referred to as price gouging.

A Kinder Approach to Financial Challenges

In recent years, some businesses have taken the opposite approach, reducing prices or offering additional support during difficult periods. After Hurricanes Irma and Harvey in 2017, for example, companies reduced prices of essential services such as flights out of Florida (JetBlue), and many phone companies waived text, phone and data coverage fees in the affected area (AT&T, Sprint, T-Mobile, Verizon). During the 2020 Coronavirus lockdowns, Amazon released free children’s audiobooks, TV shows, and educational apps. Authors, including Neil Gaiman, waved royalty fees so teachers could read their books online, and many financial institutions offered payment holidays or relaxed other rules.

Social media is said to be one reason for this change, because of the positive and negative feedback posted by consumers. So, the cynical amongst us may think that what appears to be an altruistic decision may in fact (at least in the long term) be a PR-based one, increasing customer liking and loyalty to the brands who show themselves to be kind and supportive. But, however devious the underlying reasons, the consumers still benefit.

Your Therapy Business in Times of Hardship

The problem is that these examples are, in the main, huge businesses which will weather drastic changes in the economy much more easily than the average therapist. So, what should we do?

Before we look at the pros and cons, be aware that I’m not going to be able to come to many conclusions here. In the end, the answer is going to be down to your individual preferences and circumstances. But I do hope to give you some new thoughts and ideas to help you make the decision.

I am also coming from a point of view that makes a few assumptions. Here they are…

• You are a therapist who wants to continue to work with clients during whatever crisis you are currently facing. (If not, reducing your prices won’t help, because you’re not working with clients anyway.)
• This crisis affects all clients, not just one person asking for a discount on compassionate grounds.
• You are a small business, most likely a sole trader or a company that just employs you. (The economics for larger businesses, or those with multiple employees, are different.)
• You believe there are a large number of potential clients you could help, but because of the crisis, they are wary of committing to your usual prices. (If you have plenty of clients willing to pay your usual rates, you would probably not be considering reductions).

Should you Reduce your Therapy Prices in a Crisis?

Drawbacks of reducing your prices

• Valuing yourself – you may feel you are not being paid what you’re worth, or that some who could pay your full prices are ‘taking advantage’ of your wish to help.
• Client relationship – coming over as ‘desperate’ may change the dynamics between you and your client, so consider carefully how you will present the idea of reduced prices.
• Price and value are different – but low prices might still impact on clients’ perceptions of the worth of your service. 
• It’s a short-term strategy – sooner or later you will have to put your prices up again, which risks alientating some clients.
• Getting support – if you are still working and being paid, however little, it may impact on your ability to claim support, loans, grants, or benefits that boost your income. Make sure you look into this before making any decisions.

Benefits of reducing therapy prices

• Debt avoidance – some money is coming in to help cover fixed costs such as insurance, rent, websites etc. even if it’s not enough to pay you as well. This might be especially important if you are a sole trader who has personal liability for any debts incurred by your business. 
• Engagement – it helps you feel that you are doing something to keep your business afloat and/or to help those in need.
• Brand loyalty – if a lot of your business is from word-of-mouth referrals, discounted clients now could convert into more full-price customers when things return to normal.
• Genuine altruism – you may feel you have a moral or ethical obligation to help people in a crisis, even if they can’t afford your usual rates.

Other Options – Keeping your Therapy Business Going in a Crisis

• Look at cost-cutting – can you reduce any of your overheads?
• Offer a lower rate only to specific groups, such as low income families, or those who can demonstrate that they have been affected financially by the crisis.
• Add value by including extra resources in your therapy packages instead of reducing the price – offer recordings, workbooks, etc to support the work you are doing with the client. 
• Use your downtime wisely so you are ready to go when the crisis ends. (This article may give you a couple of ideas about how to do this.) 
• Review your business model –
  • consider expanding into new client groups,
  • develop some additional income streams,
  • look at upselling,
  • sign up for some affiliate schemes whose services might sell better than yours are doing at present.

Finding the Balance Between Care and Cost

Every therapist wants to help people, it’s why we are in the job. We have to find a, sometimes delicate, balance between doing that and running a viable business every day because we know that, in the long run, if we don’t make a profit, we won’t be able to help anyone.

We know there are people out there who could benefit from our services who can’t afford us, which is why so many therapists do voluntary work as well as paid. In a crisis, these issues are thrown into relief. It’s not just the wish to tide our businesses over the crisis period, but also the wish to help where we can.

I hope that this has at least helped to clarify your ideas about pricing in a crisis and wish you all the best as your business moves through periods of change.

Disclaimer
The information and ideas shared on this blog are based on the author’s professional experience, research, and training. They are intended for educational purposes and to support reflection and professional development. Therapists should always apply their own professional judgment and consider the needs of individual clients when using any techniques or suggestions discussed here.
While every effort is made to ensure the information is accurate and helpful, no responsibility can be accepted for any loss, damage, or difficulties arising from the use or misuse of material contained in these articles.