Pricing for Chiropractors: Should you add a COVID-19 surcharge?
As accountants for Chiropractors, we understand your health care practice has likely changed significantly now that you are allowed to reopen. There are a number of factors to consider such as the potential for longer operating hours, seeing fewer chiropractic patients in person to maintain social distancing, sanitization methods between patients, and PPE for staff. All will affect your bottom line in various ways whether in the short term or the long term. However, one factor that is unique to the current COVID-19 pandemic is the question of whether to charge a COVID-19 surcharge or not. If your CPA is focused on providing accounting for Chiropractors, you already know the answer to that question. If not, then read on!
Because neither the Canadian Chiropractic Association nor provincial regulatory bodies regulate pricing for chiropractors, the decision lies solely on you and your business. There are two perspectives to consider before charging a COVID-19 surcharge within the chiropractic industry. Here are current College of Chiropractors of Ontario current COVI-19 Updates.
Accounting for Chiropractors – Perspective is important
Most business owners will see this perspective first – and sometimes as the only perspective that matters. From a financial standpoint, the explanation is cut and dry. Your costs go up, so should your pricing – in the same way that you should raise your prices annually to account for regular cost of living increases. As a CPA accounting service for Chiropractors, we suggest that a gray area is that COVID-19 is temporary. So a price increase might not be the right move, but a temporary surcharge would be.
As a business owner, you should ask yourself the following questions before adding a COVID-19 surcharge:
- How competitive is the chiropractic industry in your geographic area? If competition is high, your customers will have more opportunity to shop around if they are unhappy with your pricing.
- Are you more concerned about long-term customer loyalty or short-term financial health? You can still build customer loyalty while implementing a surcharge, but it might affect the amount, and it would definitely affect how you communicate about pricing with your patients.
- What is your communication strategy? Generally people aren’t opposed to a surcharge as long as the business is transparent. And some customers are more open to a surcharge from a small business owner rather than a large chain
- How financially secure are you heading into reopening? Depending on how you are set up financially and how much awareness you have over how your finances are affected by different aspects of your business, a surcharge may or may not have any effect on you long-term.
- How easy it is for you to shift with the ever-changing environment? Ultimately, the government has control over what can or cannot be done at your health care practice during the COVID-19 pandemic. They are invested in ensuring numbers continue to decrease. Sometimes that means guidelines can shift with what feels like a moments’ notice.
While turning inward might seem like a good place to start, your patients are the reason why you are still in business. Reopening is still new in most cases, but there are some accounts of other types of health care practices who have added a surcharge. It has been met with mixed reviews, which is to be expected. Each of your patients is unique in the way they make decisions, but there are certain things that always play a factor in the ultimate decision.
As Chiropractor accounting professionals we feel these are the types of questions you should be asking about your patients.
- How price-sensitive are your patients? During the COVID-19 pandemic, many people have had their income cut off, they have lost their benefits, and they are making harder decisions where to spend their money. Most have a heightened price sensitivity.
- Do your patients appreciate added value through expertise? One way to counter price sensitivity is to provide added value through at home exercises, online content like blogs and videos, and short video check-ins with patients. All of this expert content is something they can only get from you, their trusted chiropractor.
- Do your patients value transparency? If you are charging a surcharge, be transparent about it. Price sensitivity and a lack of knowledge about your surcharge may cause patients to research other chiropractors in the area to find lower pricing. But if you proactively explain what the surcharge covers, you can bring them onside and create loyalty. It also goes a long way if your patients feel you are looking out for their safety rather than your bottom line.
- Do your patients appreciate creative pricing solutions? It is easy to add on a COVID-19 surcharge, but your patients may appreciate the thought that goes in to creating flexible payment terms and special offers. If you are looking to create long-term loyalty and ongoing cash flow these types of strategies can be helpful.
There is no right or wrong answer when it comes to whether you should charge a COVID-19 surcharge for your chiropractic practice as everything starts to reopen. However, you should consider all aspects of the decision and discuss this with a CPA experienced in Accounting for Chiropractors before making your final choice.
If you have questions about how a surcharge might affect your ongoing bookkeeping or you aren’t sure how to implement this new pricing strategy within your business know that we are Accounting & Tax Specialists for Chiropractors in the GTA, You can reach us by calling (905)-831-6383 or use our confidential Contact Form.