{"id":4058,"date":"2025-06-24T15:40:13","date_gmt":"2025-06-24T05:40:13","guid":{"rendered":"https:\/\/blog.amt.org.au\/?p=4058"},"modified":"2025-06-24T15:40:35","modified_gmt":"2025-06-24T05:40:35","slug":"if-you-charged-100-per-hr-in-2020-and-havent-raised-your-rates-since-youre-actually-only-earning-83-now","status":"publish","type":"post","link":"https:\/\/blog.amt.org.au\/index.php\/2025\/06\/24\/if-you-charged-100-per-hr-in-2020-and-havent-raised-your-rates-since-youre-actually-only-earning-83-now\/","title":{"rendered":"If You Charged $100 per hr in 2020 and Haven\u2019t Raised Your Rates Since, You\u2019re Actually Only Earning $83 Now"},"content":{"rendered":"\n

by Anna Mitchell<\/h4>\n\n\n\n

Yep, you read that right. <\/p>\n\n\n\n

If you\u2019re a self-employed therapist who charged $100 an hour in 2020 and you haven\u2019t raised your prices since, you\u2019re now effectively earning only $83<\/strong> an hour for the same amount of effort.<\/p>\n\n\n\n

If you treat for 25 hours a week, 48 weeks a year, then your income has effectively dropped from $120,000 to just under $100,000.<\/p>\n\n\n\n

That\u2019s a $20,000 pay cut that you didn\u2019t agree to.<\/p>\n\n\n\n

Dude. Your boss sucks<\/em>.<\/p>\n\n\n\n

How did your pay get cut by 17% when you weren\u2019t even looking?<\/strong><\/h4>\n\n\n\n

Inflation. The average annual inflation rate between March 2020 and March 2025 was 3.7%. <\/strong>On that hundred bucks you were charging back in 2020, that\u2019s nearly four bucks an hour for each year. That means in 2025 you should be charging $120 an hour just to cover inflation<\/em><\/strong>.<\/em><\/p>\n\n\n\n

If you don\u2019t really know what inflation means, it’s the silent bloating of prices each year. Like that waistline that silently expands if you\u2019re not paying attention to your clothes getting tighter, prices go up and you get progressively less for your dollar as the years go by.<\/p>\n\n\n

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What does that mean for your business?<\/strong><\/h4>\n\n\n\n

If you don\u2019t raise your prices, it means your costs go up but your revenue stays the same. Which means your business profit (i.e. the money your business pays you as its owner after operating costs are covered) goes down \u2026 and down \u2026 and down.<\/p>\n\n\n\n

So, if you haven\u2019t raised your rates in a few years, your profit margin <\/strong>\u2013 how much of each dollar you earned and actually kept \u2013 has quietly been chewed to bits<\/strong>, even if you\u2019ve been working just as hard or harder.<\/p>\n\n\n\n

But wait \u2026 it gets worse<\/strong><\/h4>\n\n\n\n

The official inflation rate is the average inflation rate for the economy, based on a \u2018basket\u2019 of certain items economists think are representative of the cost of living. It\u2019s measured by the CPI, otherwise known as the Consumer Price Index. The inflation rate for your business<\/em><\/strong> may well be higher<\/em> <\/strong>than the official rate. Things like rent, electricity, and insurance etc often outpace CPI.<\/p>\n\n\n\n

Also, your business\u2019 costs might have risen beyond the level of inflation, not just because of cost-of-living pressures but also due to the buying decisions you\u2019ve made for your business. If you\u2019ve spent more on training, tech or equipment, that\u2019s shrinking your profit margin too.<\/p>\n\n\n\n

Do your accounting<\/strong><\/h4>\n\n\n\n

This is why it\u2019s important to do your accounting, so you know what your business\u2019 profit margin is and can adjust your prices accordingly.<\/p>\n\n\n\n

If \u2018doing your accounting\u2019 doesn\u2019t extend beyond sending hastily-compiled-at-tax-time figures to your accountant for them to lodge your tax return, and returning to the part of your business you\u2019d rather<\/em> be doing, you\u2019re going to miss this whittling away of your profit margins. You’ll end up wondering why you have so little money when you work so damn hard all year long.<\/p>\n\n\n\n

If you\u2019re basing your rates on what clients \u201ccan afford\u201d or what \u201cfeels fair\u201d without doing the maths on your actual costs and inflation, you\u2019re running your business on vibes.<\/p>\n\n\n\n

Vibes, like \u2018exposure\u2019, don\u2019t pay the bills. Try paying the tax man, or your super fund, in vibes and see how fast your reality cheque bounces.<\/p>\n\n\n

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So, what can you do?<\/strong><\/h4>\n\n\n\n

1.     <\/strong>Check your pricing<\/strong><\/h4>\n\n\n\n

Make sure it\u2019s at least keeping up with inflation. Run your 2020 rate through the RBA inflation calculator here<\/a>. If it\u2019s more than one quarter into the financial year, use the quarterly calculator to get the most up-to-date rate.<\/p>\n\n\n\n

2.   Look at your costs<\/strong><\/h4>\n\n\n\n

Are you charging enough to cover them now<\/em><\/strong>, not five years ago?<\/p>\n\n\n\n

Former AMT Director and fellow massage therapist Dave Moore put together a great blog post and calculator a few years ago to help you figure out what your hourly rate should be based on your labour and other business costs. You can find it here<\/a>.<\/p>\n\n\n\n

If you have no idea how much time you spend on the items Dave\u2019s listed under \u2018Daily Clinical Hours\u2019, I recommend you get yourself the free Toggl Track app<\/a>, and start tracking. I use it to track every minute of my day, and have been astonished by what I\u2019ve learned from its reports about how I spend my time. It\u2019s not only helped me to work out profit margins, but it has also helped me become more aware of time-wasting activities (I\u2019m lookin\u2019 at you<\/em>, YouTube!) and use my time better.<\/p>\n\n\n\n

If you have no idea what your income, business costs and profit margins are, I can help. I\u2019ll show you how to do your accounting the smart way in my online courses and programs<\/a> designed specifically for sole traders who suck at the accounting stuff so that you can find out! Because a real<\/em> business owner knows their numbers.<\/em> And I don\u2019t mean how many towels you can fold in sixty seconds or how fast you can reset your treatment table after each client.<\/p>\n\n\n\n

3. Make a plan<\/strong><\/h4>\n\n\n\n

If raising your rate freaks you out, raise it gradually\u00a0or add value in other ways but start doing the maths<\/strong> and making intentional choices.<\/strong><\/p>\n\n\n\n

A few ways to raise your rates without out or losing clients<\/strong><\/p>\n\n\n\n