“I inherited my pricing of services from the practice owner when I purchased the business.”
“I make across-the-board price increases every couple of years just by taking a look at industry benchmarks, either nationwide or in the area.”
“Sometimes I price-shop services so we make sure we’re competitive.”
Do any of these comments, or all of them, sound familiar? Pricing your services—from lameness exams to Coggins tests to major surgeries—is challenging no matter how you look at it. It’s hard to determine pricing that is fair, yet profitable. It also can be difficult to talk about costs with clients. What’s more, as equine veterinarians, we are facing more challenges running a practice today than we did a decade ago. Those include:
- With big-box companies and catalogs selling veterinary supplies and medicines, there’s a limit to what we can charge for pharmacy products.
- We’re seeing increased competition in the equine industry that sometimes creates decreased demand and fewer patients.
- Costs are rising significantly for equipment, supplies and labor.
- Budget-conscious clients are asking more questions about prices and the value of services.
If you’re like most equine veterinarians, challenges on the business side of the practice are stressful. But you can counter that by understanding the cost structure of your business as well as you understand your clients and patients.
You might be thinking, “I know my prices are fair in the area.” Or, “My clients have never challenged the cost for a service.” But do you know exactly which services are profitable and which are not? If you don’t understand this, it’s difficult to determine the difference between making a profit or simply covering your costs.
By understanding your cost structure, you can go beyond profits:
Grow your business. Whether you’re adding equipment or staff, your strategic pricing will provide the capital to do this.
Increase the value of your business. Cash flow and profitability are key to the value of any business.
Improve your practice. You’ll have more resources to provide necessary equipment and staff to provide customers with a better standard of care.
Communicate better. You’ll feel more comfortable and confident having conversations about pricing with clients.
Improving the business side of your practice is vital to the veterinary care you provide. It affects not only your financial success, but also your peace of mind. Relieve some of your management pressure by understanding your profitability so you can invest more in your practice and continue to deliver the highest-quality care. (You can learn more about understanding your profitability and pricing your services by watching this webinar that is free to registered EquiManagement.com members.)
Winona Burgess, DVM, CPA, MBA, is a coach and consultant for Profit Solver from Zoetis. Dr. Burgess works with equine veterinarians to understand their business needs. Profit Solver is a new financial service that uses a unique, patented and scientific method to make fair and practice-specific recommendations, using the individual practice’s cost data rather than national or regional benchmarks. This service was made available in direct response to challenges veterinary customers expressed with managing today’s complex businesses. For more information about growing your business, contact Dr. Burgess at firstname.lastname@example.org or your local Zoetis representative, or visit GrowPeopleFirst.com.