Pricing Your Practice¶

Quick Summary: Calculate your required revenue (operating costs + desired income + buffer), divide by target panel size and 12 months for base pricing. Validate against local market rates. Typical DPC pricing ranges from $50-150/month depending on location and practice style.

Table of Contents¶

• The Pricing Formula
• Step-by-Step Pricing Process
• Pricing Psychology
• Special Pricing Situations
• When to Raise Prices
• Common Pricing Mistakes
• Pricing Worksheet
• Checklist

Overview¶

Setting the right price for your Direct Primary Care membership is one of the most consequential decisions you will make. Price too high and you struggle to attract patients. Price too low and you cannot sustain the practice or deliver the value patients expect.

This guide provides a systematic approach to pricing that balances financial sustainability with market accessibility.

Prerequisites¶

• Completed Startup Costs Overview
• Understanding of Membership Models
• Knowledge of your target patient demographic
• Awareness of local healthcare market

The Pricing Formula¶

Sustainable DPC pricing comes from understanding three key numbers:

1. Your Required Revenue¶

What do you need to earn to cover costs and pay yourself?

Annual Revenue Needed = Operating Costs + Desired Income + Taxes + Reserve

2. Your Target Panel Size¶

How many patients do you want to care for?

Typical DPC panels: 400-800 patients per physician - Lower panels (400-500): More time per patient, higher price needed - Higher panels (600-800): More volume, lower price sustainable

3. Your Price Per Member¶

Average Monthly Price = Annual Revenue Needed ÷ Target Panel ÷ 12

Step-by-Step Pricing Process¶

Step 1: Calculate Your Operating Costs¶

Use your numbers from the Startup Costs Overview or the Monthly Expenses Template.

Example Monthly Operating Costs (Shared Space Model):

[!NOTE] These costs vary significantly by location and specialty. Malpractice insurance ranges from $4,000-$12,000/year for primary care depending on state. Continuing education should include conference registration, travel, and lodging ($2,000-2,500/year). Professional memberships add up quickly—DPC organizations ($500-750 each), state medical association, medical staff dues, and specialty societies can total $2,500-3,500/year.

Step 2: Determine Your Desired Income¶

What do you need/want to earn personally?

Considerations: - Current income or living expenses - Student loan payments - Retirement contributions - Health insurance costs (you must provide your own) - Life/disability insurance - Desired lifestyle

Example: - Desired take-home income: $180,000/year - Self-employment taxes (~15%): $27,000 - Health insurance: $15,000/year - Retirement savings: $20,000/year - Total personal income need: $242,000/year

Step 3: Add a Buffer¶

Build in margin for unexpected costs, slow months, and growth investment.

Recommended buffer: 10-20% of total

Example: - Operating costs: $51,600 - Personal income need: $242,000 - Subtotal: $293,600 - Buffer (15%): $44,040 - Total Revenue Needed: $337,640/year

Step 4: Determine Panel Size¶

Choose based on how you want to practice:

Example: Target panel of 500 patients

Step 5: Calculate Base Price¶

Annual Revenue Needed ÷ Panel Size ÷ 12 = Monthly Price

Example: - $337,640 ÷ 500 patients ÷ 12 months = $56.27/month

But wait—this assumes 100% adult patients at the same price. In reality: - Children are often priced lower - Family discounts reduce per-person revenue - Some patients choose annual plans (with discount)

Adjust for realistic patient mix:

Annual revenue: $42,500 × 12 = $510,000

This exceeds our $337,640 requirement, providing margin for: - Family discounts - Slow growth periods - Patients who leave - Annual plan discounts

Step 6: Validate Against Market¶

Now compare your calculated price against market data:

Research Methods: 1. DPC Frontier Mapper: Browse DPC practices nationally and in your area 2. Direct competition: Visit websites of nearby DPC practices 3. Regional cost of living: Adjust for local economics 4. Traditional care costs: What do uninsured patients pay out-of-pocket?

National DPC Price Ranges (2024): - Lower cost of living areas: $50-$75/month - Average markets: $75-$100/month - High cost of living areas: $100-$150/month - Premium/concierge style: $150-$200/month

Source: AAFP DPC Data Brief

[!TIP] Research your market independently. Review publicly available pricing on practice websites to understand what patients in your area expect to pay. Useful directories include DPC Alliance and DPC Frontier Mapper. Your pricing should be based on your own costs, value, and business needs—not coordinated with other practices.

If your calculated price is: - Below market: You may have room to increase, or offer premium features - At market: Good validation of your pricing - Above market: Reconsider costs, panel size, or value proposition

Step 7: Test and Refine¶

Before finalizing:

Informal validation: - Describe your services and price to friends, family, potential patients - Gauge reactions—are they excited, hesitant, or dismissive? - Ask "Would you pay $X/month for this?" (be specific)

Competitive positioning: - If no local DPC: You have pricing flexibility - If local DPC exists: Decide to compete on price, value, or differentiation

Special Pricing Situations¶

Employer Contracts¶

Employers often expect volume discounts:

Typical employer pricing: - 10-20% below individual rates - Per Employee Per Month (PEPM) structure - May include dependents at additional cost

Example: - Individual rate: $89/month - Employer rate: $75/month PEPM - Dependents: +$50/month each

Annual Payment Discount¶

Reward commitment with annual prepayment:

Typical discount: 10-15% (effectively 1-2 months free)

Example: - Monthly: $89/month ($1,068/year) - Annual: $949/year (11% discount)

Considerations: - Improves cash flow - Reduces payment processing fees - Requires clear refund policy - Must track different billing cycles

When to Raise Prices¶

Plan for price increases from the start:

Legitimate reasons to raise prices: - Annual inflation adjustment (2-4%) - Significant cost increases - Added services or value - Market repositioning - Reaching target panel (demand exceeds supply)

Best practices: - Give 30-60 days notice - Communicate reason clearly - Consider grandfathering existing patients temporarily - Raise prices for new patients first

Typical approach: - Year 1: Launch pricing - Year 2: Evaluate; small increase if justified - Ongoing: Annual review with modest adjustments

Common Pricing Mistakes¶

Mistake 1: Underpricing¶

Problem: Cannot sustain practice or deliver promised value.

Solution: Calculate true costs before setting price. Include your time value.

Mistake 2: Copying Competition Without Understanding¶

Problem: Their costs and goals may differ from yours.

Solution: Use market data as one input, not the sole determinant.

Mistake 3: Not Accounting for Ramp-Up¶

Problem: Early months have few patients but full costs.

Solution: Have adequate reserves; don't lower prices out of desperation.

Mistake 4: Complicated Pricing¶

Problem: Patients confused; harder to explain and administer.

Solution: Keep it simple. 2-4 price points maximum for most practices.

Mistake 5: Avoiding the Conversation¶

Problem: Uncomfortable discussing money; undersells value.

Solution: Practice explaining value confidently. Price reflects worth.

Pricing Worksheet¶

Use this worksheet to calculate your pricing:

1. Annual Operating Costs | Category | Amount | |----------|--------| | Rent | $ | | Utilities | $ | | EMR/Software | $ | | Supplies | $ | | Insurance (malpractice + general) | $ | | Professional services | $ | | Marketing | $ | | Other | $ | | Total Operating Costs | $ |

2. Personal Income Needs | Category | Amount | |----------|--------| | Desired take-home | $ | | Self-employment tax (15%) | $ | | Health insurance | $ | | Retirement savings | $ | | Total Income Need | $ |

3. Total Revenue Calculation | Category | Amount | |----------|--------| | Operating costs | $ | | Income need | $ | | Buffer (15%) | $ | | Total Revenue Needed | $ |

4. Pricing Calculation | Input | Value | |-------|-------| | Target panel size | | | Revenue needed | $ | | Revenue ÷ panel ÷ 12 | $ | | Base monthly price | $ |

Checklist: Setting Your Prices¶

• Calculate all operating costs
• Determine personal income requirements
• Add appropriate buffer (10-20%)
• Choose target panel size
• Calculate base monthly price
• Design pricing tiers (age, family, etc.)
• Research local market pricing
• Validate calculated price against market
• Test pricing with potential patients
• Finalize pricing structure
• Document in membership agreement
• Create pricing presentation materials

Resources¶

• Membership Models Comparison
• Pricing Calculator Template
• Startup Costs Overview
• DPC Frontier Mapper

Next Steps¶

After setting your prices: - Membership Agreement Essentials - Document your pricing legally - Payment Processing Options - How to collect payments