Ask each employer whether the contract should renew with its plan year. Build price changes into the contract from the start: when you'll give notice, how much an increase can be, and what you'll show to explain it. Employers handle increases better when they see them coming.
How long
A one-year term matching the employer's plan year is one option. It lines up with their budget and open enrollment. A first contract with a new employer can be shorter, as a pilot. Here's how to run one.
Multi-year contracts give you steady revenue but lock your price. If you sign one, include a yearly price adjustment.
How renewal works
- Auto-renewal: the contract continues unless someone gives notice by a set date.
- Active renewal: both sides sign a new term each year.
Either way, put the renewal date and the notice date on your calendar. 90 days before renewal is a good time to start the conversation. This post covers preparing for it.
Raising prices
Write the rules into the contract:
- How much notice you'll give, like 90 days before renewal.
- Any cap on the yearly increase.
- What the increase is based on, like your costs or a published index.
An example
In a made-up example, a contract covers 55 members at $66. Your costs rose and you want $70. That's $4 a member, or $220 a month and $2,640 a year. Tell the employer the yearly amount, not only the per-member number. It's what they'll put in their budget.
Show the reason
Bring the numbers that support it: how many members enrolled, how many visits, response times and what's changed in your costs. A short quarterly report all year makes this easy. Here's a template.
In your books
Update the rate in your contract list the day the new price takes effect, and check the first invoice at the new rate. A price increase that never reaches the invoice is easy to miss.
What I'd do this week
- List every employer contract with its renewal and notice dates.
- Put a reminder 90 days before each renewal.
- Check whether each contract lets you change the price, and how.
Common questions
How much can I raise prices?
Whatever the contract and the relationship allow. Explain any increase with numbers.
Should I raise employer prices when I raise individual prices?
Not always at the same time. Employer prices change at their renewal date. Plan both together.
What if the employer says no to the increase?
Know your floor before the meeting. You can offer fewer services or a smaller group at the old price.
Want renewal numbers ready before you need them?
We reconcile every account every month and send your P&L and Balance Sheet by the 15th, so decisions like this start from real numbers. If that's what you need, apply to work with us.