Don't believe everything you hear about fees

Don't believe everything you hear about fees

It's tough to throw the brakes on and challenge long-held beliefs about what you charge.
Oct 01, 2007

ONE OF MY FAVORITE CHILDHOOD PASTIMES WAS SITTING around a campfire with family and friends. Often we'd take turns telling ghost stories and urban legends—the man with a hook for a hand, the killer in the back seat, the evil babysitter, and so on—to see who could scare the others the most. The flickering firelight and dark woods made a perfect backdrop for the stories, and our efforts resulted in more than a few sleepless nights.

But you don't need a campfire for tall tales. When it comes to fees, urban legends are alive and well. Practice owners hear them and may suffer a few sleepless nights of their own when designing their fee structure. Following are 10 common myths about fees. In my work consulting with individual practices and conducting seminars, I hear each one time and time again. Here's what I want you to hear, believe, and hold close to your soul: Not a single one of them is true. When practice owners and managers finally jettison these misconceptions from their belief systems, they discover newfound success both financially and in the level of care their practices provide. Again, I've seen it firsthand time and time again.

So pull up a chair and get ready for a session of mythbusting. Maybe you'll even sleep better tonight. Have you heard this one ... ?

Myth: Every client wants a cut-rate bargain.

Reality: Clients want value, and price and value are implicitly linked. As consumers, we expect to pay more for Emeril's cooking than for Burger King and more for a Lexus than a Kia. At the same time, value is a matter of opinion, not fact. Setting your prices requires understanding what your clients value—and you don't have to guess. They value high-quality care, compassion, honesty, courtesy, respect, sincerity, and timeliness. If you deliver in these areas, price is rarely an issue.

Myth: If I raise fees, my clients will bolt.

Reality: Most consumers are willing to spend money; they're just selective about where they spend it. Clients expect value for their dollars. They want the best for their pets and know that high-quality veterinary care comes at a price. (See "Meet the truth seekers" for proof that you can raise fees and retain clients.) Instead of worrying about the fallout if you increase fees, focus on providing the level of patient care and client service that justifies your fees and keeps clients coming back.

Myth: It's best to raise fees across the board.

Reality: Clients attach different values to different services and products. They're price-sensitive about vaccinations and elective surgery, and they're willing to pay more for services that depend on doctors' time and knowledge, such as examinations, lab work, and diagnostic imaging. Consider these tactics for your prices:

  • Use a competitive fee strategy for price-sensitive services. Think about how your practice compares to others in the area as far as number of doctors, practice hours, level of medicine, facility type and condition, community reputation, specialized services, and so on. Then consider the fees other practices charge for price-sensitive services.
  • Use a cost-based strategy for inventory items. Add an average markup of 150 percent to the standard cost of medicine, including sales tax and shipping, along with a dispensing fee of $9 to $12. Then compare this total fee for the item to your minimum fee and bill the client the higher of the two. Here's an example: