By Lori Eberly
On a rainy Tuesday morning, Lisa, the owner of a small but growing home care agency, sat at her desk staring at her calculator. She had just lost a prospective client who told her, “Well, the other agency down the street is charging $2 less an hour. Can you match it?”
Lisa sighed. She’d already been squeezing her margins thin. Her caregivers were grumbling about pay, her administrative team was overworked, and yet she felt she had no choice but to compete on price. The question she kept asking herself was: How do I set my rates without losing business?
If you’ve ever found yourself in Lisa’s shoes, you’re not alone. Many agency owners look around town, see what competitors are charging, and either match it or undercut it. On the surface, that feels “competitive.”
But in reality? It’s one of the fastest ways to sink your business.
Because here’s the truth: your pricing should have nothing to do with the person down the street.
Why Copycat Pricing Fails
1. You Don’t Know Their Numbers
That agency you’re trying to match might be barely breaking even — or worse, losing money on every single hour of care. Do you really want to build your business model on their mistakes?
Think of it like two runners in a marathon. If the person next to you is pacing wrong, following them won’t help you win — it’ll just wear you out.
2. Different Business, Different Costs
Every agency has its own unique cost structure. Your caregiver wages, workers’ comp rate, scheduling software, marketing budget, and insurance premiums are all specific to your operation. What works for another agency doesn’t automatically work for you.
3. Price Wars Are a Race to the Bottom
Imagine walking into a coffee shop that sells lattes for 50 cents less than Starbucks. You might go once, but will you really switch loyalties forever? Probably not — because coffee is about the experience, not just the cost.
Home care is the same. If your only selling point is, “We’re cheaper,” you’re teaching families to see care as a commodity instead of a relationship. And eventually, you’ll reach a point where you can’t cut anymore without sacrificing quality — or burning out your team.
The Smarter Way: Cost-Based Pricing
Instead of asking, “What’s everyone else charging?” ask: “What do I need to charge to deliver great care, pay my caregivers fairly, and still run a profitable, sustainable business?”
Here’s a simplified way to think about it:
Step 1: Calculate Your True Cost of Care per Hour.
Let’s say your caregiver earns $16/hour. Add payroll taxes, workers’ comp, and other benefits (about 15% on average). That’s $18.40/hour.
Now add $6/hour in overhead (administrative costs, rent, insurance, technology, etc.).
Your all-in cost is $24.40/hour.
Step 2: Add Profit.
To grow and sustain your agency, you’ll want 10–15% profit.
That puts your hourly rate between $27.11 and $28.70.
Step 3: Factor in Value.
Do you offer 24/7 live support? Do you invest in caregiver training? Do you use family-friendly technology? These all justify higher pricing — and families will pay more for peace of mind.
One agency owner I spoke with raised rates after realizing she was undercharging by $4/hour. She worried clients would walk, but instead, families said, “We’re glad you’re paying your caregivers better. We want people who are happy and committed taking care of Mom.” Not only did her retention improve, but her referrals increased, too.
Compete on Quality, Not Price
When you understand your numbers, you shift the conversation from: “How cheap are you?” to “Here’s why families choose us and why we’re worth it.”
Families aren’t just buying hours of care. They’re buying trust, reliability, dignity and peace of mind. That’s worth far more than shaving $1–2 off an hourly rate.
Final Thought
Pricing is strategy — not guesswork.
It’s the difference between running a business that scrapes by and one that thrives, pays caregivers fairly, and grows year after year.
So, stop peeking at what the guy down the street is doing. He’s not running your business. Set your rates based on the numbers that matter — and watch your agency grow stronger for it.
Lori Eberly is a college professor and program director of health sciences at Appalachian State University. She is also the founder of Senior Care Strategy, a consulting and coaching firm dedicated to helping home care agency owners and senior living leaders grow their businesses with purpose, efficiency and heart. With nearly two decades of experience as a multi-unit home care franchise owner, she blends academic insight with real-world expertise to shape the future of health care leadership and senior care.
