Getting aged care pricing right is one of the most consequential decisions your organisation will make. Set prices too low and you erode the financial foundation needed to deliver quality care. Set them incorrectly in relation to regulatory frameworks and you risk compliance breaches that can cost far more than any pricing gain. At HCPA, we have guided more than 25 aged care providers through pricing strategy, registration, and financial compliance since our founding. Our team, led by Team Lead Shayan with 7 years in quality and compliance and 3 years with HCPA specifically, brings practical, hands-on expertise to every engagement.

Our advisors average more than 2 years of dedicated aged care experience, meaning you get counsel grounded in real-world application rather than theory. We follow a 20-step engagement process that covers everything from initial pricing audits through to lodgement support, with typical engagements running 6 to 8 months and investment ranging from $6,600 to $17,500 depending on provider size and complexity. This guide covers the full pricing landscape: Refundable Accommodation Deposits, Daily Accommodation Payments, supplementary fees, and the revenue optimisation strategies that separate high-performing providers from the rest.

Understanding the Aged Care Pricing Framework

Aged care pricing in Australia operates within a structured regulatory framework administered by the Aged Care Quality and Safety Commission and governed by the Aged Care Act 1997 (and its 2024 successor legislation). Every residential aged care provider must understand the three core pricing mechanisms: the Refundable Accommodation Deposit (RAD), the Daily Accommodation Payment (DAP), and the combination payment option that blends both. These are not simply commercial decisions. They are regulated instruments with maximum room price thresholds, publication requirements, and resident disclosure obligations.

The Maximum Accommodation Payment (MAP) sets the ceiling for what providers can charge without seeking Department of Health approval. For the 2025-2026 financial year, the MAP threshold has been updated to reflect current market conditions. Providers wishing to charge above this threshold must apply for and receive approval, which involves submitting detailed cost justification data and market comparison evidence. This process typically takes 8 to 12 weeks and requires supporting documentation that most providers underestimate.

Beyond accommodation pricing, providers charge means-tested care fees and basic daily fees based on legislated schedules. Understanding how these interact with your RAD and DAP income is critical to building a sustainable revenue model. Providers who treat pricing as a one-time decision rather than an ongoing strategy consistently leave significant revenue on the table.

RADs vs DAPs: Which Is Right for Your Business Model

The choice between RADs and DAPs is not just a resident preference issue. It directly shapes your cash flow profile, balance sheet strength, and investment capacity. RADs function as interest-free loans from residents to providers. In exchange for a lump sum payment, the provider holds the capital and can deploy it for facility improvements, debt reduction, or operational funding. When the resident leaves or passes away, the RAD is refunded minus any agreed deductions.

DAPs, by contrast, provide recurring daily income rather than a capital lump sum. The DAP rate is calculated using the Maximum Permissible Interest Rate (MPIR) applied to the equivalent RAD amount. For 2026, providers need to understand exactly how MPIR movements affect DAP rates and how to communicate these changes clearly to residents and families.

Cash Flow Implications of RAD-Heavy vs DAP-Heavy Portfolios

Providers with high RAD uptake benefit from large capital balances but face significant refund obligations when beds turn over. This requires careful liquidity management and a clear refund reserve policy. Providers with high DAP uptake enjoy predictable monthly income but miss out on the capital base benefits. The optimal mix depends on your facility’s occupancy stability, capital expenditure pipeline, and debt structure.

Our analysis of high-performing aged care providers shows that those achieving 15 to 25% revenue optimisation typically maintain a deliberate RAD-to-DAP ratio strategy rather than leaving it entirely to resident preference. They also conduct annual pricing reviews aligned to market data rather than simply rolling over prior year rates.

Combination Payments: The Overlooked Opportunity

Many providers underutilise the combination payment option, where residents pay a partial RAD and top up with a reduced DAP. This flexibility can make your accommodation product more accessible to residents with moderate assets, increasing occupancy without reducing your effective room price. Structuring combination payment offers strategically requires understanding your break-even points and the administrative systems needed to track multiple payment streams accurately.

Setting and Publishing Your Room Prices

Every aged care provider must publish room prices on the My Aged Care website before charging any resident. This is a non-negotiable compliance requirement, and pricing changes require updated publication before implementation. Failure to publish correctly is one of the most common compliance findings we see during provider audits.

Room pricing must be published by room type, not by individual room, unless specific rooms have materially different features that justify separate pricing. The description accompanying each room price must accurately reflect what residents receive, including room size, amenities, and inclusions. Misleading room descriptions that do not match actual provision are a compliance risk and a reputational risk with residents and families.

Above-Threshold Room Pricing Applications

If your market position and facility quality justify above-MAP pricing, the application process requires a structured submission to the Department of Health. Applications must include:

• Detailed cost build-up for the room type
• Market comparison data for comparable facilities in your region
• Evidence of room quality and amenity features
• Financial sustainability projections
• Resident consultation evidence

Approvals are not automatic. Applications that lack specific, verifiable market data or that rely on general assertions about quality are regularly rejected or returned for further information. HCPA has prepared and lodged above-threshold applications for providers across multiple states. Our success rate reflects a methodology built on specificity and evidence rather than aspiration.

Pricing Agreements and Resident Contracts

Every resident must receive a written Accommodation Agreement before or on the day of entry. This agreement must specify the agreed room price, the payment method chosen (RAD, DAP, or combination), and the terms for any changes. Errors or omissions in Accommodation Agreements are a frequent source of complaint to the Commission. We recommend providers have their Accommodation Agreement templates reviewed annually to ensure alignment with current legislative requirements. For comprehensive guidance on aged care compliance documentation, HCPA provides detailed template reviews as part of our engagement process.

Supplementary Fees and Additional Service Revenue

Beyond accommodation pricing, aged care providers can generate significant additional revenue through supplementary fees for services not included in the standard care package. These include hairdressing, podiatry, specialised dietary options, alcohol service, social outings, and premium amenities such as private dining. However, the legislative framework sets clear boundaries on what can and cannot be charged as a supplementary service.

Providers cannot charge separately for services that form part of the standard of care they are required to provide under their aged care approval. This distinction requires careful analysis. Many providers have inadvertently created compliance exposure by charging for items that regulators consider part of their basic care obligations. A pricing audit that maps every supplementary fee against the regulatory framework is essential for any provider serious about revenue optimisation without compliance risk.

Building a Supplementary Services Revenue Model

Providers who build structured supplementary services revenue programs consistently outperform those relying on accommodation and care fee income alone. The key is packaging: creating clearly described, consistently delivered service bundles that residents and families can understand and value. Bundled lifestyle programs, for example, tend to achieve higher uptake than individual itemised charges because they feel cohesive and intentional rather than incidental.

Pricing these programs correctly requires understanding your resident demographics, their preferences and willingness to pay, and the actual cost of delivery. A program that generates $150,000 in annual supplementary revenue but costs $180,000 to deliver is not a revenue strategy, it is a cost centre. HCPA’s financial modelling work includes supplementary services feasibility analysis as a standard component. Learn more about our approach to aged care registration and operational setup that integrates pricing strategy from day one.

Revenue Optimisation: A Regulatory Growth Approach

Revenue optimisation in aged care is not about maximising charges. It is about aligning your pricing to your actual cost base, market position, and care quality in a way that is sustainable, compliant, and competitive. Providers who achieve genuine revenue improvement do so through a combination of pricing accuracy, product clarity, resident communication, and operational efficiency.

Market Benchmarking and Competitor Analysis

Understanding how your room prices compare to competitor facilities in your catchment area is foundational to any pricing strategy. My Aged Care publishes all room prices publicly, making competitive intelligence relatively accessible. However, price comparison alone is insufficient. You need to understand what each competitor includes at their stated price, because two facilities with identical RADs can offer dramatically different value propositions based on amenity, staffing ratios, and program quality.

HCPA conducts structured competitor benchmarking as part of pricing engagements, analysing not just listed prices but service inclusions, facility condition, occupancy levels, and reputation signals. This gives providers a genuinely differentiated market picture rather than a superficial price comparison that can mislead strategic decisions.

Annual Pricing Review Process

A structured annual pricing review should cover:

• Cost base analysis: what has changed in your operating costs since last review
• Market scan: what competitors are charging and how your position has shifted
• Occupancy analysis: whether pricing is affecting occupancy levels
• Resident feedback: what residents and families think about value for money
• Regulatory updates: any changes to MAP thresholds, MPIR, or supplementary fee rules
• Revenue projection: modelling the impact of proposed changes before implementation

Providers who complete annual reviews in this structured format consistently identify pricing adjustments that improve revenue without negative occupancy impact. Those who skip annual reviews tend to discover pricing misalignment only when occupancy problems are already entrenched. For support with ongoing aged care consulting and financial strategy, HCPA offers retainer-based advisory services tailored to your review cycle.

Technology and Systems for Pricing Management

Accurate pricing management requires systems that can handle multiple room types, combination payment tracking, DAP rate adjustments when MPIR changes, and refund reserve calculations. Many providers operate on manual spreadsheet systems that introduce error risk and consume significant staff time. Transitioning to purpose-built aged care management software that handles pricing automation not only reduces error risk but frees your finance team to focus on strategy rather than administration.

Common Aged Care Pricing Mistakes (And How to Avoid Them)

In our work with providers across Australia, we see the same pricing mistakes repeated. Understanding these patterns can save you significant time, money, and compliance risk.

Mistake 1: Setting Prices Without a Cost Build-Up

Many providers set room prices based on what competitors charge rather than what their own cost structure requires. This produces pricing that may be market-competitive but financially unsustainable. Every room price should be grounded in a cost build-up that covers accommodation depreciation, fit-out maintenance, utilities, cleaning, and a contribution to overhead. Without this foundation, providers cannot determine whether their pricing is generating a genuine surplus or simply covering variable costs while fixed costs erode their position.

Mistake 2: Failing to Update Published Prices Before Implementation

Charging a resident a room price that differs from the published price on My Aged Care is a compliance breach. This happens most commonly when providers update their internal pricing schedules but delay the My Aged Care publication update. The publication must precede the charge, not follow it. A simple internal sign-off process that links pricing change approval to My Aged Care publication prevents this error entirely.

Mistake 3: Charging for Standard Care as a Supplementary Fee

As noted earlier, this is one of the most common compliance findings. Providers who charge separately for items that regulators consider part of standard care face repayment obligations and potential civil penalties. A periodic supplementary fee audit mapped against the current legislative framework is the most effective preventive measure. HCPA includes this audit as part of our broader aged care audit preparation services.

Mistake 4: No RAD Refund Reserve Policy

RADs must be refunded within 14 days of a resident’s departure (with some exceptions). Providers who have deployed RAD capital into illiquid assets without maintaining a refund reserve create genuine liquidity risk. As bed turnover accelerates, this can escalate from a treasury management inconvenience to an acute cash crisis. Every provider with material RAD balances should maintain a documented refund reserve policy reviewed at least quarterly.

Frequently Asked Questions: Aged Care Pricing

What is the Maximum Accommodation Payment for 2026?

The Maximum Accommodation Payment (MAP) threshold is updated periodically by the Department of Health. Providers should check the current threshold directly with the Department or through their aged care advisory service before setting or reviewing room prices. Providers wishing to charge above the MAP must apply for approval with supporting evidence before publishing or charging the higher rate.

Can I charge different RAD amounts for different rooms?

Yes. You can set different RAD amounts for different room types based on room size, location within the facility, amenity level, and view. Each room type must be published separately on My Aged Care with an accurate description of what that price includes. Rooms with materially identical features should generally be priced consistently to avoid perception of arbitrary pricing.

How is the Daily Accommodation Payment calculated?

The DAP is calculated by dividing the equivalent RAD amount by 365, then multiplying by the Maximum Permissible Interest Rate (MPIR). The MPIR is set by the Department of Health and updated periodically. When the MPIR changes, DAP rates for existing residents on variable-rate arrangements may also change. Providers must notify affected residents of DAP rate changes in advance.

What supplementary fees can I charge?

Providers can charge for services that are genuinely additional to the standard care and services they are required to provide. Common legitimate supplementary fees include hairdressing, specialised social programs, premium food and beverage services, and optional lifestyle programs. Services that form part of your approved care obligations cannot be charged separately. When in doubt, map the fee against the legislative framework or seek advice before implementing.

How often should I review my aged care pricing?

At minimum, annually. Your pricing review should be triggered by any of the following: a change in the MAP threshold or MPIR, a material change in your operating costs, a significant shift in local market competition, or a change in your facility’s occupancy levels. Providers in active growth phases or significant capital investment cycles may benefit from more frequent interim reviews.

What happens if I charge a resident more than I published?

Charging above your published room price is a breach of the Aged Care Act. The resident is entitled to a refund of any excess amount charged, and the breach must be reported. Repeated or systemic overcharging can result in formal compliance action by the Aged Care Quality and Safety Commission. Prevention is straightforward: implement an internal control that requires My Aged Care publication confirmation before any new price takes effect.

How HCPA Supports Your Aged Care Pricing Strategy

HCPA provides end-to-end aged care pricing support, from initial pricing audits through to ongoing annual review advisory. Our engagement model is structured around outcomes: we work with you to identify specific revenue optimisation opportunities, implement the changes required, and verify that every step is fully compliant before implementation.

Our 20-step engagement process ensures nothing is missed. We start with a comprehensive pricing and compliance audit, then move through market benchmarking, cost build-up analysis, supplementary fee review, documentation alignment, and My Aged Care publication verification. Engagements typically run 6 to 8 months with investment from $6,600 to $17,500, depending on provider size and the scope of work required.

Providers who work through our pricing engagement consistently report not just better revenue outcomes but significantly reduced compliance anxiety. Knowing your pricing is structured correctly, published correctly, and reviewed systematically is not just a financial benefit. It is operational confidence. Explore our full range of aged care consulting services or contact us directly to discuss your pricing situation.

Ready to optimise your aged care pricing? Contact HCPA today and start building your Regulatory Growth pricing strategy with our experienced team.