How to Set a Price For Massage
By Dave Moore
How much should you be charging for a massage treatment? Do you follow what other therapists charge or do you examine your labour hours, outgoings, inflation and other operational costs?
With some simple steps, I’ll show you how to set a realistic price.
Triggered by a plumbing emergency, which cost over $400 PER HOUR, I began to question why most massage therapists (myself included) are charging so little. After all, we’re running a business, not a charity.
When I checked how much I was charging for a treatment and whether my charges truly reflected the costs incurred in running my clinic – and were giving me a living wage – I realised my charges hadn’t even kept up with inflation, especially the cost of energy.
At the moment, the value of everything drops by around 2-3% per year due to inflation. In the past, this figure has been significantly higher, so you need to be vigilant and do regular checks and updates. In my case, the value to me had dropped around 12% in the 5 years since I last adjusted my fees. A quick check of the Reserve Bank’s online inflation calculator gave me a starting point, and a bit of a fright.
Disclaimers and Cautions
I’m not an accountant so this is just a guide to get you started. I’ve tried to make it quite flexible so please adapt it to suit your circumstances.
Many of us work in different ways and nothing is set in concrete. Numbers don’t need to be perfect but the better the guess, the more accurate the result. The key point is that a massage business is more than just massaging clients.
1. Create a “Work Breakdown Analysis” to Determine Your Annual Clinic Hours
This identifies everything we do as a massage therapist and works out its value to our business.
Take a look at the graphic below and work out, on average, how much time per day you spend on each of these activities. Can you think of other activities that should be included? If so, add them in.
Grab a calculator and add this up. That’s a lot of time you spend each day on running your business.
This highlights how much time you put into your business compared with the time you spend actually doing massage.
In my example below, only 1/3 of your time is hands on.
Time for some maths.
Working on the basis of a 48 week working year, where there is an allowance for 4 weeks off/year for vacation, public holidays, family and other events, and sickness, it’s time for more maths.
2. Determine Annual Auxiliary Working Hours
Your auxiliary working hours are the time spent on:
And yet more maths to see how many hours you work in total. I’ll bet you’re surprised by the result.
3. Determine Your Desired Hourly Rate
How much is your time worth? An untrained waiter gets around $17 per hour and the minimum award for an entry level massage therapist is about $23. We are worth more than that. Determine your desired hourly rate, then do the maths:
10% of the gross annual labour cost should be paid to your superannuation fund (otherwise you’ll have a miserable old age). Check with your accountant to see if your super contributions are tax deductible.
Speaking of tax, don’t forget the gross annual labour cost is a pre-tax amount, so expect to lose about 30% to the ATO. That’s calculated later in this exercise.
You’ll need to do a similar calculation for each person (if any) you employ.
6. Other Costs
How much money does your massage business outlay? Can you add any other items to this list?
7. Annual Running Costs
Calculate the other sources of income, e.g. from interest and/or tax returns. Then determine your annual running costs.
Remember these costs need to be met before you make any money for yourself. You may be able to claim some of this back in tax, which will then be income in the next financial year. (Please check this with your tax accountant though because I’m not an accountant.)
8. The Cost of Doing Business
Now for the cruncher. How much money you need to turn over per year to run your practice and pay yourself a reasonable wage is your cost of doing business. Again with the maths.
9. Your hourly cost for a massage treatment is …
Obviously this comes from your clients. Using your clinic diary, you’ll get an idea how many clients you’ve treated in the last year. Use that to help you do the maths and find out what you should be charging your clients for a one hour massage.
Is this how much you’re charging your clients? If not, how do you plan to survive?
I Made a Spreadsheet So You Don’t Have To
I have made up an Excel spreadsheet, based on the information I’ve shared here, where you can add your own numbers in the GREEN cells. All the embedded calculations will save you from doing so much maths. Remember to be honest with yourself and don’t work for nothing.
If you would like a copy of my Excel spreadsheet, please email email@example.com and we’ll send it to you free of charge.
Has this article been useful? Please share with your colleagues and together we can help all massage therapists earn what they deserve.
About the Author
Dave Moore is a Sydney based massage therapist and a current AMT Director, performing the additional role of Treasurer. After working as a theatrical electrician and touring with bands (this could account for his loud voice), Dave progressed into operations and project management roles at both national broadcasters and a Sydney university before taking up massage in 1999. Dave enjoys sharing his experience to help other therapists look at the business side of their practice.