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Episode 12

Working Out Your Hourly Rate

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About this episode

Welcome to this episode of Treat Your Business podcast, where we are going to start working out your hourly rate.

In today’s episode, I’ll be covering:

  • Why you need to start working out your hourly rate.
  • We work with insurance companies who think we are worth 35 pounds per hour.
  • When I first launched my business eight and a half years ago, I made the decision that I was going to run a business.
  • An example from a physiotherapist who is overcharging her patients.
  • Why you need to know your hourly worth.
  • The importance of understanding your hourly wage.
  • The opposite ends of the spectrum are easy to know, the middle value is harder.

Resources:

https://www.facebook.com/groups/thrivebusinesscoaching
https://www.facebook.com/thrivebizcoaching

JANE

The Treat Your Business podcast is sponsored by Jane. Jane is an all in one practice management software with helpful features like online booking, admin scheduling, integrated payment processing, and charting. But there’s more to Jane than you might think. The team at Jane cares a lot about the problems you face as a practitioner. One of those problems is the prevalence of no shows and late cancellations in practices.

So they’ve made it easy for you with a few simple tools built right into Jane. That includes the ability to implement an online booking payment policy, send out unlimited text and email reminders, and enable waitlist management features to fill those last minute gaps that were preventable.

Come and see Jane in action at Jane app. And if you know you’re ready to sign up, then you can mention the code Thrive1MO for a one month grace period on your new Jane account.

Book, chart, schedule, invoice, process payments, and run your whole practice online.

https://jane.app/

Highlights

  • 00:01:57 – Why you need to start working out your hourly rate.
  • 00:04:07 – We work with insurance companies who think we are worth 35 pounds.
  • 00:06:11 – When I first launched my business eight and a half years ago, I made the decision that I was going to run a business.
  • 00:08:35 – An example from a physiotherapist who is overcharging her patients.
  • 00:13:28 – Why you need to know your hourly worth.
  • 00:16:09 – The importance of understanding your hourly wage.
  • 00:19:06 – The opposite ends of the spectrum are easy to know, the middle value is harder.
  • 00:21:20 – If you are a clinician that can make your business 100 quid, anything that is less than 100 pounds in terms of worth in the business.
  • 00:23:53 – When we say yes to something, we’re saying no to something else.

Transcription

You’re listening to treat your business with Katie Bell, the podcast for health and wellness business owners that want and need to give their business the treatment plan it deserves and needs so that you can create more time back in your lives to give you the income you deserve and work hard for and to create more freedom and flexibility in your lives to enjoy the things you love to do. Whether you are a physiotherapist and osteopath, a sports therapist or maybe a Pilates studio owner, I’m determined to share with you bite sized episodes full of tried and tested tips from my own real experience of growing a successful physiotherapy and wellness clinic and from working with many businesses to do the same. So if you’re tuning in and feel like you’re on a hamster wheel of patients admin, life constantly juggling working and being with the family, and feel like you’re doing a rubbish job at both not making the income you thought you would by running a business and generally feeling overwhelmed with everything that you have to do, then keep listening. The treat your business podcast is sponsored by Jane. Jane is an all in one practice management software with helpful features like online booking, admin scheduling, integrated payment processing, and charting. But there’s more to Jane than you might think. The team at Jane cares a lot about the problems you face as a practitioner. One of those problems is the prevalence of no shows and late cancellations in practices. So they’ve made it easy for you with a few simple tools built right into Jane. That includes the ability to implement an online booking payment policy, send out unlimited text and email reminders, and enable waitlist management features to fill those last minute gaps that were preventable. Come and see Jane in action at Jane app. And if you know you’re ready to sign up, then you can mention the code Thrive one M O for a one month grace period on your new Jane accounts. Hello, and welcome to this episode where we are going to start working out your hourly rate. And I created this episode based on a great call that I actually had, this morning, I was going to talk about something completely different. And I thought now I’m going to talk about this because it’s really relevant right now in our industry with the economic challenges that we’re going through. We are surrounded by reasons and evidence that suggests our hourly rate should be low. And I’ll give you an example of this. The NHS provides a service on a lot of our services for free people think that they they can go and get what we provide for free in a service. So we’ve got that in the back of our mind. A lot of us were trained in the NHS. So we have worked and we have experienced delivering a service to clients and not having to charge for it. Which is really easy, isn’t it when we were we never had to have that price conversation. It’s an absolute joy, when we have to have that price conversation. We all want to vomit. And we also grow to think in our industry that we need to be constantly doing CPD to prove our worth to prove that we are good enough, and to be able to therefore charge more for our services. And there’s this conundrum all the time that I when I speak to clinic owners and business owners they’re they’re almost obsessed around doing CPD courses. But what they don’t do enough of is invest in really in CPD and their business how to run their business. Because they don’t actually associate value in that. We think we need to be better physios, we need to be better osteopath, we need to be better massage therapists need to go to Pilates instructors. So we are really focused on doing more CPD because we think that proves that we’re good enough. But often what happens is people go and do their CPD, but they don’t actually put their prices up. They don’t actually charge themselves out any more money. Another thing that happens in our industries, we work with insurance companies. And we work with insurance companies who think that we are worth 35 pounds. And for a lot of us, we cannot physically run our business using those charges. Okay, but especially what’s happened over the last few years, the cost of delivering our service has radically gone up the cost of staff wages of rent of overheads of heating, lighting, insurance, you name it, it has gone up. Now, a lot of us our prices haven’t followed suit quick enough, and therefore our margins that we’re making are really, really reduced. But we work with insurance companies who think we’re worth 35 pounds. So this is another bit of evidence that our ego has to try to suggest that we’re not actually worth any more. Insurance companies now that are saying that they don’t allow us to charge if we need to write letters, or we need to send patient notes. So we need to spend our time, which is worth money, creating, documenting, sending, writing, whatever it is, we’re not allowed to charge for those anymore. We’ve also worked with insurance companies who asked us to see a patient charge at 35 pounds when your normal clinic fee might be 55 pounds for the exact same experience. And then they also want a seven page online report. And there is many reasons why we have left a lot of the insurance companies to name few. Because I just got to the point where I felt that they are not recognising our importance and the level of education and the level of our well the work people put in to become trained in in being physio and being osteopath in whatever it is, when you’re working with these insurance companies. It’s just not recognised. And I felt like I was contributing to them being allowed to charge that amount of money until we made the decision that we were going to pull away from them. We could do that because less than 5% of our turnover was created by insurance patients. We are very, very when I first launched my business, eight and a half years ago, I made the decision that I was going to run a business, my business model was going to be private painting patients, I was not going to build a business that relied on insurance companies and medical legal companies to run with it that use absolutely great if that’s your business model. I just decided that that’s not what we were going to do. So we’ve got a low percentage of turnover, linked to insurance companies. And that meant that I had an easy decision to say no, we’re stopping that we we are not working for that rate. And I’m certainly not going to create a seven page report and see the patient for 35 pounds. We also have a feeling that if we raise prices, people will think we’re in it for the money. And we’re in healthcare. So we don’t want to come across as greedy people we don’t want to come across as people that are just doing this for the money. And hopefully that all sounds familiar. So when we set our hourly rate when we first launched our business, and we decide what we’re going to charge ourselves out at, we’ve kind of got all this past experience and all of these thought processes in our head. That means we then set our rate at whatever it is okay. And hopefully, over time as your confidence grows, people naturally put their prices up price rises should be a yearly thing in your business. It should just be part of your business cycle. And what often happens is we don’t price rise for ages and ages and ages. And then we realise that we are so far away from where we need to be, we then have to take a big price rise, and that feels uncomfortable that feels awkward that feels like we are in it for the money. I had a lovely call this morning, as I mentioned earlier with someone who was really stuck with her pricing and actually her value her self worth what she felt she is worth as a physiotherapist and she’s also a Pilates instructor. So I’m gonna give you an example she she sees a patient and she sees a MSK physio patient for 35 pounds for half an hour. And as it isn’t really half an hour. She said well, actually no, because I’ve got 15 minutes between clients because of COVID. And I still got it. Okay. So, so do you see the patient for 30? And then right you know, sit in the room and make phone call and then get your next person in? She said no, what actually happens is I just run over. So we end up running for like 45 minutes. And then my notes don’t happen I have to take them home at night I have to put the kids to bed and I’m just chasing my tail all the time. So why do you think that is? And she’s like, I don’t know, I just feel like I need to deliver like I need to over deliver to charge. So So okay, so actually the issue here isn’t about your pricing. It’s about how you feel about it, how confident you are and what you feel you need to do to give the clients that feeling of really high value because you feel like 35 pounds is a lot for your for 30 minutes. So you give them 45 And you over and over and over deliver. She said Yeah, that’s exactly what happens and then I get home at night and then I write the exercise plan. And then I write the note so and it probably takes me in total about an hour into minutes. So is that right? So you’re actually charging the client 35 pounds for an hour and 10 minutes of your time? Yeah. So so why is it when you see a women’s health patient, you charge them 45 pounds? Now, fair enough, it still runs over to 45 minutes. I say, you obviously value your time at 45 pounds, says, why is that? She said well, that they they can be a bit more complex. And I guess I’ve done other courses in women’s health. So I said, Well, an ACL is quite complex that you know, a rotator cuff tendinopathy can be very complex, there’s lots of things that could be going on there. As to so I find it interesting that you value yourself at 45 pounds in one thing, and then 35 pounds in another. And I said, What, what’s your initial assessment price. And that was, I think it was 55 or 60. And I said, what you value yourself at 45 pounds for 45 minutes. So surely, that means that your initial assessment price should, should marry up to that. If you think about your value at 35 pounds for 30 minutes, that means you value yourself 7570 pounds for an hour, no cap charge, I can’t charge 70 pounds for an hour. So it was a really interesting conversation, it made me think you know what I’m going to talk about this on my podcast today. Because every client that that we work with within the first sort of four to six weeks, we have to look at their, their pricing, because for many of them, it’s like, there’s just no way out. Like we have to make more money in this business, or it’s going to stop, or I’m going to burn out. And I’m literally making no margin, there’s no point me doing that anymore. So 100% of the clinic owners we have to work with in studio owners within the first month, we’ve got to raise the prices. And we don’t do it because they’ve just had this epiphany, we do it because we actually work on their own self worth. So with this client, we looked at her time, we looked at the value that she was delivering. And I said, So do you deliver deliver less value for an ACL rehab, rupture, or than you do if you’ve got a pelvic floor problem she’s in there. Now it makes sense. Well, therefore you, you need to bring your prices in alignment. So what we did on the call today is we looked at where her prices are now where they need to be. And I said, Listen, I’m going to suggest where your prices need to go based on your hourly worth right now and how you’re doing things. And we need to make sure that you’re actually only delivering 30 minutes, because your boundaries have gone. And therefore this is another reason that you feel like you’re over delivering and charging too little for what you give to your patients. So but what we we need to do is we need to look at where your prices need to go, I’m going to give you a suggestion, it’s going to make you feel very uncomfortable. And then we need to find somewhere that we can get close to she’s not a Catholic, you’re going to call this call and time to like just double my prices and and do this and do that said Well, yeah, I mean, I would love you to double your prices, because you’re way too You’re way too cheap. And you’re undervaluing yourself. You’re a very experienced Vizio with years of training. And I said, What can we get somewhere up there? I said it has to feel uncomfortable. It has to feel a stretch or it’s not worth doing. There is literally no point putting a pound on your prices. You’ve got you’ve got to rip the plaster off at some point, particularly if you’re under grossly under charging. And I said to her, Okay, well, let’s look at this is going to be a 30% price rise. So I said but let’s reframe it in a different way. 30% of your patients can opt not to see you and you still make the same amount of money. And she said, Yeah, I said, so what else does that mean? She said, well, then I’ve got 30% of places for new people to come in. And I said, who didn’t know your price in the first place? So we had this whole that sort of realisation that she is under charging for her experience for her education, I want you to think about, you’re not just charging for your time, okay. You’re not just saying I’m seeing you between 12 and 1230. And therefore it is 40 pounds. What you’re actually saying is, I have spent three years on an undergraduate degree. Before that I was hanging out to get certain A levels. I’ve then gone and done loads of work experience. After that I then had to do a post grad degree or I’ve got post grad qualifications or I’ve done an acupuncture course or I’ve done a you know, I’ve gone on to do a PGP or what all of these amazing qualifications that you all have got. Everybody else speech was so well qualified, and so amazing and what they do, but they are they are under charging because they still think that they’re just charging for that bit of time. And you’re not you’re charging for all of those years of experience all of those years of training and graft and money that you’ve spent to get your level of knowledge to where it is now. Knowing your hourly worth is really important as in this lady’s example, because she said to me did write I really need. She’s, she’s a busy mom of three. She said, we’ve got no time, and I’m not making the money that I need to make. And I said, okay, but we need to look at what is making you more money. And what is making you less money. And instantly we can make decisions about what you get rid of, if you need more time and you need to make more money, then those are the decisions that we need to we need to make sure right, okay, we went through some of her clients because she’s a sole a sole trader, so just her client, so she was talking me through, and she said, um, you know, these clients have been with me forever, and they just pay this kind of BI for Pilates classes up front. And what they were paying was, was a very, very low price. And she said, I just feel bad. I’m actually what we established is she doesn’t even want to be doing one to one Pilates anymore. Because we also assumed that she could make more money in a class setting than she could from a one to one perspective. So knowing your hourly worth, and where you make more money in certain areas of your business allows you to make better decisions as to what you need to focus on in your business. Understand your hourly worth when you’re a clinician is really easy, isn’t it? Because you say well, I charge 35 pounds for half an hour charge 70 pounds for an hour, or you might charge 100 pounds for an hour, whatever it is, that’s how much at that time you can make for your business. So we’ve kind of got two ways to look at this when you’re a business owner, who is a clinician, or a business owner, who was also teaching the Pilates classes, you will teach a class that 10 pounds per per head or per mat, for example, you’ve got 50 people in the class, you know, you can make 150 quid, okay, you’ve got limited amounts of time. And you have got some one, two ones that are taking up a lot of the time, you’re only charging them 50 pounds. So we’re losing 100 pounds of opportunity. Their question is which ones you like, do you like one more than the other because you can’t just you can’t always just chase the money, because you’ll create a business model that doesn’t align with what’s important to you. But as a clinician, or as a as an instructor, it’s really easy to work out. If I worked 12 hours, I will make this much money for the practice or the clinic. But you’ve all got an element of running your business, which is the non clinical time the business development time, not the admin time, guys, that is not business development, sending emails and invoices is administration, it doesn’t necessarily move your business forward. So you’ve got this time that you need to spend working on your business. And that is really hard to put the finger on, isn’t it. Because sometimes you’re working on your business and you don’t directly see oh, I’ve just done that. And therefore I’ve made 1000 pounds. It’s that cumulative effect of actually, if I don’t teach that wants one, that’s going to make me 50 pounds, but I am going to move I’m going to move this shoulder pathway forwards, because that means that we’re going to be able to launch this new service in the business and the service has the potential to make another 100k a year on the top line, then you can clearly see that just by saying yes to the client all the time in that class all the time, you are losing the opportunity of growing your business. And that’s where we get stuck in our business, we get so stuck in the doing that we struggled to pull ourselves out because with that fear of losing that 50 pounds or that 100 pounds, but we don’t always look at what we’re going to gain. So most of us have some internal gauge of how much our time’s worth. So let me give you an example. If somebody said to you, will you do this for seven P? You’d be like no way. Absolutely no way. But then he said, I’ll give you it for some seven grammes, you’d be Yes, absolutely. The answer is yes. Just tell me what I need to do. So the opposite ends of the spectrum are really easy to know, aren’t they, but that middle value is like it’s harder, it becomes less clear. Let me give you an example. So we were booking flights, we’re going away on a long haul trip. And even I do this, okay, I’m really good at spending time on things that are going to move the business forward and delegating the lower value task now not lower importance, just lower in terms of monetary value in the business, okay, most of the time, right. But I’m also human, and we also still get ourselves in our own heads sometimes. So we’re booking flights, and we were like right on Skyscanner. So we could go from Manchester, to Dubai, Dubai to Bangkok. For whatever it was, whatever The price it was okay. And then we got into this whole weapon, we could go Manchester to Heathrow, Heathrow to Doha, Doha to Bangkok is going to take four more hours, but we’re gonna say 200 quid each other that, okay, that’s, and I was like, whoa, whoa, whoa, whoa, hang on a minute, my time, I know is worth more than 50 pounds an hour, so I’m not going to save 200 quid to spend four more hours in the air, no, that’s not going to happen, okay, that’s that’s where this middle value comes in, we catch ourselves don’t wait, trying to save 90 quid, but actually we’ve got to go on another flight somewhere else and connect somewhere else rather than just this nonstop flight where we need to be to spend a little bit more money or we think now I’m going to wash my car and wash my car, like takes not even that long to wash my car. Because I’m not going to spend 25 quid to get somebody to come about my car whilst I am able to do something else in the business. Okay, so we we find ourselves saying I’ve got no time, I’m really busy. But we’re spending a lot of times on low, lower hourly worth tasks than what we can create in our own business. So as a really simple example, if you are a clinician that can make your business 100 quid, anything that is less than 100 pounds in terms of worth in the business. So anything admin related, anything sending invoices, insurance claims, you know, all those kinds of things that go on a lot of your marketing activities. If you could pay somebody less than 100 pounds to do that job, then the answer is you should be delegating that job. But what we end up doing, and I used to be this person is I would spend most of my time on what I call 10 pound task, which was ordering toilet roll, ordering mint Imperials for the clinic, you know, ordering theraband and, and stuff like that. And I spent hours on this stuff, answering emails, all this kind of stuff. And I got myself completely overwhelmed and burnt out and exhausted now is that right? Something’s got to change. So what I did is I drew four boxes on a piece of paper, and the top left hand box said 10 pounds, the top right hand box and 25 quid, the bottom left said 50, and the bottom right said 100. Okay, that’s where you can start. And as your business grows, those boxes will probably start off 100 quid, and grow to 1000 quid and more. So 1025 50 100, and I, for one week, every time I did a task, I wrote that task in one of those four boxes, based on what I thought I would need to pay somebody to do that task for me. And it was a very interesting observation or week, because what I realised is that the majority of my time was being spent on 10 pound an hour tasks. I was seeing clients, okay, so yeah, that it whatever your hourly rate is, that might be 50 quid, it might be 100 quid wherever you are there. But other than that, most of my time, was in 10 pound an hour. So I thought, right, where do I start? So I thought, I’m going to delegate that amount to somebody, I could pay 10 pounds, 12 pounds, whatever, an hour to do all of that for me. And that is how much time it’s going to save me hours and hours and hours and hours, which meant I could use that time to spend on higher worth tasks. So if you work with a client at 50 pounds, or you work on a business idea that can generate 20,000 pounds next year. That’s the trade off. I’ve said this before, in one of my previous episodes, there’s always a trade off. When we say yes to something, we’re saying no to something else. And I want you to start thinking about what you are saying no to what you’re trading off. And we often trade off the things that we think hard. We think business development is hard. We think business strategy is hard. We think financial forecasting is hard. So what we get consumed by is the low worth tasks, the 10 pound an hour tasks that completely take over your life. I have somebody that comes in balance my car, makes them sound like a really no actually does it. I’m judging I’m putting my judgement out there. So I have this person that comes about my car and I I actually used to backup my car myself every week. I love a clean car. Okay, it’s really important that my car is nice and clean. And I realised that by the time I’d like got the hose out and got all the paraphernalia out and I got the new round got the extension Lee down and done it all properly. And it made probably a very average job because I’m not a great car pilot and let’s be honest, it was probably taking me an hour and 15 minutes. And I was then this person that was constantly saying I’m too busy. I’ve got too many things to do. So the first thing I did was I got a cleaner, I got some nice about the car got so much to do all the windows at home, got somebody to do the garden. And I literally just freed up that time for myself because it’s really important, my environment is really important in how I function as a person. So if my environment is off, I am off. So I like to have a clean house, a clean car and organised garden, etc, etc, okay, it won’t be important to everybody. But you will be doing things in your week that are completely consuming you that you could delegate to somebody else, which would free you up the headspace, if nothing else, to start working on those bigger tasks. If you’re somebody that is really busy clinically, and you feel like you don’t want to see more patients, I don’t want you to free yourself up to see more patients, I want you to free yourself up to be able to go and work on those higher, higher worth tasks. I’m gonna give you another example of what happened to me last week I went to the vet, the dog had a vomiting bug. It was utterly delightful. And I was in there seven and a half minutes it cost me 101 pound 80. I had absolutely no qualms in paying it. Because if anybody any of you are dog lovers, you will absolutely understand that you will pay anything. But for seven and a half minutes, did I think that was low value? No, I was like the dog needs an injection to soften vomiting, he needs this thing on his food, they could have sold me anything I was going to buy it. I had absolutely no question about paying that. However, when we get ourselves into a situation where we are providing that service, we’ve got qualms about spending 35 pounds on a, you know, a half an hour physio session. So understanding the value of your time is really helpful. But you need to know what you want out of your life to get the most accurate idea of the value of your time. So I hope that you have taken loads from this episode. And I want you to think about the your the positioning of your price. How did you create that hourly rate for you? How did you set your prices at that level? are you positioning your price as the expert? are you positioning your price that makes you feel uncomfortable? are you positioning your price in a way that allows you to create better, better conditions for delivery better ways that you can solve your client’s problems? Or are you charging so low that you’re struggling to provide the results and the resources that you want to for your clients? Are you spending most of your time in a week on those 10 pound an hour tasks. And if you do nothing else after this, you can you can head into our Facebook group, there is a resource on there where you can download that chart that I talked about. There’s boxes 10 pound an hour, 25 pound an hour, 50 pound an hour and 100 pound an hour. And for one week, all you need to do is every time you do a task, write down where you’re spending your time. And you can start to just delegate those 10 pound an hour tasks. Thank you for joining me on this episode and I look forward to seeing you on the next one. Thank you for listening to treat your business with Katie Bell, the podcast that tells you what you really need to hear. And now when it comes to running a successful business in the health and wellness industry that gives you the time, money and freedom you are wanting for access to our free workshops on how to get more clients in your business. How to make more income in the next 30 days. And to get more time back in your business and life. Head to our free Facebook group today. Treat your business or head over to thrive dash business coaching.com. All of the links are available in the show notes. Hey there, this is Katie from the Jane team. If you’re new to the name, I’d love to introduce you. Jane is an all in one practice management software with helpful features like online booking, scheduling, charting and billing. You’ll also be backed by knowledgeable support team ready to help you every step of the way. Come get to know us at Jane dot app. We’d love to meet you and see if Jane is the right fit for your practice.

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