December 1, 2015

Smart Fee Setting

It is necessary when determining a pricing structure for your clinic that you take multiple factors into account. It is easy to choose one mark-up method and to apply that across the board, but there’s more to it than that.

The categories to be considered are:

  • Service Fees, including Shopped and Essential
  • Inventory Fees, including Shopped, Standard, High-Cost, and Infrequent

The very first thing to consider when pricing services is to realize that the purpose of your pricing system is to maximize value, not cost. Your clients will shop around for some services based on price. If your goal is to offer the lowest price, then your job is easy. Cut everything by 50% and you are done. Literally.

Study after study has shown that consumers seek value over savings because they understand that “you get what you pay for.” When presented with four coffee makers priced $20, $30, $40 and $50, most shoppers will purchase the $40 unit, because they demand quality but aren’t going to “waste money” on the top of the line model. They do not recognize much difference in quality between the two top models and thus the perception of value is automatic. “I saved $10!” It is precisely the same with veterinary care; they want the best medicine possible but not at a good price. Hovering around the 80th percentile for your market will maximize your profit while helping create a perception of value for your clients.

Published in Blog