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Home Care – Calculating the right pricing to stay in business

13 Mar 2020

 

You’re basically charging your consumers for the following:

  • Care Management

  • Package Management

  • Goods & Services

  • Exit Fee

 

You have to ensure that you cover your costs and include a profit margin if you want to stay in this business.

 

So, what do you need to include in your calculations to ensure this happens?

.

Care Management includes:

  • Care Manager’s hourly rate (suggest you use the highest rate that you pay).

  • On-costs such as superannuation contribution, payroll tax, workcover premium etc. 

  • Kilometres based on an average cost per hour

  • Profit Margin

You then need to build in additional time for follow up and factor that into the hourly rate.

You also have to determine, based on history, how much time a Care Manager will devote to each Package Level and use that as a multiplier.

 

Package Management includes:

This is based on the cost of managing the package and may include:

  • Rostering staff

  • Finance staff for preparing the monthly consumer statements and managing unspent funds

  • Compliance and Quality Assurance activities. 

  • Cost of paper, printing, postage etc.

  • Profit Margin

Services provided by your care staff includes:

  • Staff hourly rate – suggest you use the highest rate you pay in each category eg Personal Care/Domestic Assistance/Nursing etc.

  • On-costs such as superannuation contribution, payroll tax, workcover premium etc. 

  • Allowances

  • Kilometres based on an average cost per hour

  • Profit Margin

 

External Suppliers including brokerage services includes:

  • Cost of the service/product provided (can use a set $ amount for budgeting purposes)

  • Profit Margin

 

Exit Amount – this should be based on how much it costs you to finalise your consumer’s package including staff time for the following up of invoices, calculating the refund, sending out the letter and making the actual payment.  This can add up to quite a bit of time.

 

You need to make sure you can justify your charges to the consumer for transparency purposes ensuring they understand what they are being charged for.  This will reduce the number of complaints down the track and lead to better relationships with your consumers, No-one likes these type of surprises.

 

If you are interested in discussing your pricing or any other home care issues, please contact Debra Ward by email debra@carecollaborator.com.au or phone 0438 020 728.

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