Setting veterinary practice fees
Football season is in full swing, and all this talk about the importance of having a solid defense and a strong offense makes us wonder if veterinarians could apply a similar strategy when it comes to pricing and delivering their services to clients.
Ask yourself this: As the quarterback of your practice, are you confused about how to set and charge your fees appropriately? Is your defensive line—your receptionists, technicians and support staff—worn out from spending too much time justifying your pricing and not enough time offering the level of care that makes the price secondary in the eyes of your clients—particularly if there's a new service, your fees are increasing or team members are unsure if your price is fair?
If you answered "yes" to any of those questions, it's time to make some changes to your practice playbook. So huddle up and follow this plan for success.Be ready to play with a solid game plan
Rule No. 1: All the practicing in the world won't matter if you're not ready to play ball when the game starts. Make sure your practice is rewarded with a win by charging appropriately for your services. Get started with the following strategies:
> Competitive pricing. You'll want to be price-competitive, so monitor what Internet pharmacies are doing by having a member of your staff go online to see what they're charging. And periodically survey other practices in your community to compare fees for price-sensitive services. Make the calls anonymously to ensure compliance with federal and state antitrust laws, though.
Depending on the quality of patient care and client service you offer, your fees should fall between the middle and high end of your competition. You don't want to be the cheapest option. You want to differentiate your practice by enhancing and communicating the level of service you offer so your clients can put your fees into perspective. Ideally, you'd be at the middle to high end of the range so long as your medical care and client service support that.
> Cost-based pricing. This strategy is most commonly used for pricing inventory. Establish a selling price by determining a cost and applying a markup. In companion animal practices, an average markup of 90 to 150 percent is added to the cost of pharmaceuticals, along with a dispensing fee of $6 to $11, according to Benchmarks 2013: A Study of Well-Managed Practices from Veterinary Economics and Wutchiett Tumblin and Associates. The total price is then compared to a minimum prescription fee and the client is billed the higher of the two. Drugs with low turnover rates (less than 8 to 10 times per year) typically have a higher markup to cover the additional carrying cost.
> Variable pricing. This changes your standard pricing to influence when, where or how clients purchase services and products. Examples include special pricing on dental services to increase visits in the month of February, wellness plans with monthly payment options and loyalty programs that offer rewards for client referrals.
> Value-based pricing. This strategy aligns the price of other medical services with your exam fee, which reflects the economics of your community. It takes into consideration your clients' demographic, employment, education and community setting (urban, rural or suburban). Through our study and other resources, we have found that if the client will pay X for an exam, we can predict they'll pay X, Y, Z for the other services.
Download a chart that'll help you compare your fees with those of Well-Managed Practices at http://dvm360.com/feechart.