Charge what you're worth
BEFORE WE TALK PRICING, ANSWER these questions with a yes or no.
•To attract and keep clients, should your prices be the lowest in the area?
Well, there's no such thing, so why read another article on pricing? The answer: If you can change the way you look at your charges, you can get over a major stumbling block in running the business side of your practice.
A client asks you to do something for a horse, so you get in your truck, drive out to the farm, perform the service, maybe dispense some medication, get back in your truck, and drive away. Somewhere in there you issue a bill, and if all goes well you get paid.
With this mindset, financial transactions take on a whole new meaning. If you don't provide something of value to customers (calling clients "customers" puts a new spin on it, don't you think?), then you have no reason to be in business in the first place.
Now, how do you translate that newfound attitude into something that helps pay your bills each month? Well, you've likely read articles that say you'll earn more if you raise fees. Customers generally don't complain, so across-the-board fee increases will net you more income even if you do lose a few customers along the way.
While there's truth in that, raising prices and collecting on invoices is one of the hardest parts of your job. And you need to know that getting customers to pay won't get any easier until your view changes. What I mean is, you have to honestly believe deep down that you're providing a service that's valued by customers and that the delivery of that service meets or exceeds their expectations. Only then will the billing process stop seeming like an unpleasant necessity.
Why don't they pay?
Charging appropriately for your services can be tough. You and your colleagues tend to avoid conflict and try to please your customers. That means you feel guilty when customers complain about fees, which happens more and more as Wal-Mart trains us all to expect the "lowest price always."
So let's look at why customers don't pay their bills: They're not able or they're not willing. Both of these issues can and should be addressed—ideally before services are performed. (I do understand that this isn't always possible in life-or-death situations.)
First, some clients can't afford all of your services. Unless you're a nonprofit practice with a full fundraising department behind you, it's not possible to treat every horse for everything it needs. With reliable clients who can't afford the necessary services, you need to develop a treatment plan that works with their budget or help them make some tough financial and health decisions about their horse.
Some clients, of course, don't value what you do, and they risk undermining your morale along with that of your practice team and other customers. These clients are not going to pay no matter what. If you're spending time and energy on them and they don't value your work in the first place, you won't be able to take good care of the people who do value your services. Learn to say no.
Sometimes your customers are unwilling to pay because you didn't meet their expectations. If this happens, you're not going to receive payment—no matter how good your technical skills are. This runs counter to most veterinarians' view: The client called, I did the work, and I deserve to be paid. When this cycle doesn't work out, you're both disappointed.
To avoid this, be sure to talk to new clients about their expectations. Do they want only the minimum required vaccinations and Coggins certificates? Do they expect you to be proactive in their animal's care or see the animal only if something's wrong? Do they want to be intimately involved in the decisions that affect their horses, or do they just want you to tell them what they should do? Figure out beforehand what new clients expect and then deliver.
The price is right
How do you price your services to meet those expectations? First, understand what it costs to run your practice. You must cover certain fixed and variable costs each and every month and you'll want to make a profit. Talk to your accountant or consultant to figure out what you need to earn. With their help, you'll determine the minimum you should charge for your services.
Product pricing, however, can be trickier with horse owners. They're often familiar with catalog and Internet pricing. So using standard industry markups simply doesn't work. Trying to explain why you charge twice as much as the catalog is a losing proposition. When it comes to product sales, either match catalog prices or direct customers to reputable retailers.
If you lose profit from product sales, you need to price your services differently. However, this can be good for both you and the customer. They know they're getting a good deal on products, and you're rewarded for what's between your ears, not for what's behind the counter.
One way to increase the revenue you earn for services is to determine what makes your practice different from all the others in the area. Then attract customers who want that "something special" you offer. If you're meeting customers' expectations, covering costs isn't the issue in setting your fees.
I'm sure you've all heard stories about veterinarians who charge high prices but have clients lining up to pay. If you're not meeting your goals, review your customers' expectations and your delivery of service. But don't get caught in a downward pricing spiral.
Elise M. Lacher, CPA, heads Lacher McDonald Consulting Inc. in Seminole, Fla. Send questions or comments to email@example.com