From 1 July 2019, the government changed the legislation wanting Home Care Providers to improve transparency around their pricing, making it easier for consumers to compare. In order to do this, the government decided that you are no longer allowed to charge an administration fee however that can be built into the unit cost. The administration fee includes expenditure such as marketing, office rent, insurance etc.
Doesn’t sound too difficult does it? So what do you include in this to ensure you recover your costs and make a profit?
The following definitely has to be included:
· Employee’s hourly rate – suggest you use the highest rate in that category eg personal carer rate/domestic assistance rate/nursing rate etc
· On-costs such as superannuation contribution, payroll tax, workcover premium etc. This is usually around 20% especially if you pay payroll tax
· Administration cost. This will include expenses such as your marketing, office rent, insurances etc. This may vary quite substantially between businesses so maybe anything between 5 – 10%
· Profit Margin – usually around 10%
If you’re using external suppliers, you need to evaluate the highest rate, then maybe add a 10% mark up ensuring you’re covering your costs in relation to organising the services, compliance, processing and payment of the account.
The 5 Common Services that you need to publish pricing for are:
You can also charge a Package Management Fee which is based on recovering the costs of managing the package and may include preparing the monthly consumer statements, managing package funds and compliance and quality assurance activities. You could calculate this based on the staff that manage this and the other costs such as paper, printing, postage etc.
Maximum Exit Amount – no changes.
You can also charge a Per kilometre fee if you charge the consumer for staff travel to/from their place. If you contract this out, you can include a minimum and maximum price covering what you are being charged.
Any Other Administration Costs will be included in your unit price.
You need to make sure you can justify your charges to the consumer and they understand what they are being charged for especially if you want to reduce the number of complaints down the track.
If you are interested in chatting about your consumer on-boarding and how you can build better relationships reducing consumer turnover, contact Debra Ward via the Care Collaborator web page: www.carecollaborator.com.au, email firstname.lastname@example.org or mobile 0438 020 728.