Do you believe that your prices are the highest in the area and what to do about it if it is true?
How do you know your prices are the highest in the area? Who’s telling you this? Does that mean all your prices are the highest or just some of your prices? How many invoices are you physically holding that shows the other practice has lower prices than yours? I am not talking about hearing if from your staff, I am talking about actually PHYSICALLY HOLDING an invoice that shows services done at another clinic were lower than yours?
Here’s my question: “Would you take your own pet to the clinic that had the lower prices?” If the answer is yes, that says to me, they practice quality medicine and you trust them with your pet. If this is the case, I recommend you look at your prices and/or service level offered. Unfortunately, it is easier to look at your fees then your service level. If you are going to lower your fees, how are you going to let your clients know? If you lower your prices, please realize you are not guaranteed to increase volume (Clients through the door). If you lower your fees you must make it up in volume. Failure to increase in volume results in you making less. A marketing strategy needs to be thought of to bring in new clients.
If you would not take your pet to the clinic with the lower prices, then you probably do not understand you’re pricing and you and your team think your prices are high. You can have high prices and do well and you can have high prices and do poorly. Someone in the area is going to be the highest on a set service that is a fact. I doubt if they are the highest on everything and if they are, then they must be providing better service than your clinic. That doesn’t mean they are making money.
A 1 Dr. small animal clinic with no boarding, offering boutique medicine with no turn over can be extremely profitable while 3 Dr. practices gross a lot and leave little for the owner after paying all expenses. Running your own business without knowing if you are maximizing your profit makes no sense to me.
Commonly, I hear from owners that believe their clients will not pay more for services they hear this from their receptionist and deduce that she is hearing it from your clients. Three years ago, one of my consulting clients sold their practice to a corporation. Guess what the new owner did first? You guessed it, they raised the prices. They raised some prices 15% or more. Some clients left but the majority stayed. The math doesn’t lie: a potential decline in client base has to be made up in ACT (Average Client Transaction) without betting the doctors will do a higher level of medicine.
No one is going to buy a business to lose money. What you leave on the table is staggering and you know that you are leaving money on the table. If you are depending on the sale of your practice for your retirement, and the vast majority are, you need to have a solid strategy for sale and exit of your practice at the most profitable price.
If you have questions about this article or general questions, call me 469-867-3647. I do not charge to answer questions.
If you are going to the TVMA stop by our booth #405
Randy P. DVM Carsch
Give me the opportunity and I will EARN your business
