Fees

Fees are often something that veterinarians don’t like to deal with as they don’t quite know what to do in terms of setting up the fees themselves.  The typical recommendation for fees ends up being an increase of 3-4% across the board or in just major areas.  However, if you do some research, you’ll see that you really aren’t setting yourself up to be successful.  There are a lot of reasons why, but mainly, you can look at a few different sites that can clearly map out why setting your fees across the board using an average simply won’t allow you to cover cost increases to operate your business and will either leave you just covering expenses, or in the hole.

The first of these sites is the US rate of inflation.  If you are setting fees lower than inflation is increasing, you will end up in the red.

Keep in mind, that clients will pay for what is valued most; outstanding service.  People will pay for value; theirs – not yours.  Your job is to effectively show the clients what value they will be receiving for the cost of care and treatment of their pets.  This can be difficult as many veterinary staff tend to think in terms of the technical and medical, while clients are often focused on cost vs value on a base level.  However, in a 2012 study conducted by American Express, research indicates that consumers value excellent service – with some willing to pay for it, and others simply expecting it.  This video clip is a short explanation from the late Steve Jobs on the importance of focusing on the customer experience as a whole.  That is the driving force and DNA of Apple and has led to rather astounding results.  To draw the parallel in veterinary medicine, the product is a must, but you cannot use the product or technology as the selling point when communicating value to clients.

Something else to consider when setting fees or looking at who can potentially afford your services, is Pareto’s Principle, which suggests that for any business, 80% of your revenue is driven in by only 20% of your client base.  Most veterinary clinics fail to set a clear, concise business plan and as a result, look at attracting all clients and treating all the same.  If you can spend time identifying why you really want to be, how you want to achieve that, focus all of your efforts from staff training to personnel hiring, on those goals, you will see improvements on your expense side.  Fees can be set higher, because you are providing value that those clients will recognize and will not have a problem with paying.  This again, follows the Apple retail store model.  If you are servicing those 20% effectively and consistently, you will not have a problem setting your fees in a manner which covers your operating costs and allows for profitability.

Lastly, you can use one of the best tools available on the market today ProfitSolver for veterinary practices.  The product is time consuming to set up, but ultimately will show you your own expenses in great detail, and where you are either doing well, or showing a loss.  Often, veterinarians are surprised at where they see losses.  It’s a great technology tool that allow you to leverage the investment to make insightful and accurate decisions in terms of setting your fees.  You cannot and should not look to compete against a one doctor practice who operates out of their house if you have your own fully equipped site, with multiple doctors and support staff.  Your overhead is going to be much more, and you need to be able to cover those expenses.

Using technology removes the guesswork.  You can see clearly what costs actually are and when they increase for you.  As long as you focus on communicating value to those clients who are driving in your revenue and are willing to pay for the services you offer, then you should focus on increasing fees to off-set the operating expenses.  The program also has the added benefit of allowing you to set goals (ie, 3-10% increase in revenue over 5 years for example), that will allow you to see what you need to do to meet those goals across the board, provisioning you with more concise information to use when planning for retirement or selling of your business.

At VMTSG, we can help you with setting your fees and highly recommend this technology, although we are not directly affiliated with this company or product.