Pricing conundrums: How underpricing one service can have a knock-on effect
With the economic landscape complicated, it’s never been more important that veterinary practices are pricing their services competitively.
But due to the nature of those complications, it’s essential to work out where that happy medium lies, between scaring off clients and underselling your expertise.
We’ve already looked at the science behind pricing consultations and shown how the average practice may not just be leaving money on the table, but actively making a loss on one of their key services.
Today we’re going to investigate surgeries, and how practices could be making a common mistake by using a routine procedure as a baseline.
A COMMON APPROACH, BUT NOT NECESSARILY THE RIGHT ONE...
We’re starting this hypothetical situation by assuming an average bitch spay cost of £300.
Now, the worry here is how vets determine the price of an operation.
We may consider a bitch spay to be a fairly routine procedure, but in reality it is a major surgery – the fact that we can do lots of them and it doesn’t take us very long because we’ve become skilled at it doesn’t change this.
So when a patient comes in with, say, a small tumour that needs removing and you’re quoting them £800, you’re suddenly thinking, where’s the disconnect?
Why is the price point so different between what are essentially two similar procedures?
What we need to do is to make a realistic appraisal of the true cost of spaying a bitch.
OUR FAVOURITE: LET'S DIG INTO THE MATHS
Let’s cost a spay out properly, along the same line as a major abdominal surgery – for example removing an ovarian tumour, without including histology or lab fees etc.
We’d be charging for the following, with rough prices as a guideline:
Anaesthetic (induction and monitoring): £300
Surgical pack: £30
Surgical waste disposal: £10
Hospitalisation, day patient: £30
Post-op examinations: £80
What that leaves us with is the true cost of a bitch spay – roughly £1000.
But we’ve established above that the average price of a bitch spay roughly stands at about £300.
That means we’re offering a 70% discount on a bitch spay.
SO WHAT'S THE SOLUTION?
If we’re using a bitch spay to determine our value of a surgery, it needs to be based on the spay’s true value.
So, when we’re discussing pricing with young vets, we tell them that a rough rule of thumb is to take the cost of their bitch spay, times it by four to get the real cost, and then use that to benchmark their prices.
Of course, this is just a hypothetical situation once more. But it’s based on the experiences we see in practices every day.
With decades of experience in the industry, our team has established systems that allow us to consult with practices on the costs associated with running a practice, the profit margins of the services we offer and the best way to introduce new pricing structures into your business.
If you’re interested in finding out more, we’d love to hear from you. Get in touch today to set up a one to one chat with our experts.
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