18 Aug Inflation and Your Fees
With inflation hitting the headlines everyday and the current cost of living crisis, we’ve been discussing with our Club Connect members what impact this is having on their dental practices and what they should do about it.
We are all guilty of it! Not wanting to increase our prices with the rising costs due to the fear of losing patients, and understandably so. Who’s to say that other businesses don’t feel the same either? It seems the most important thing we can do right now is to recognise that doing something is better than doing nothing. One huge increase every now and then is likely to be more damaging than smaller increments over time.
There has to be a balance between trading profitably and pricing yourself out of the market. Your gut feeling and the sensitivities of the local market need to be balanced against a proper analysis on your direct costs and hourly rates. I advise that you avoid setting your fees too high and then have to back pedal with discounts or be forced to try and justify what you charge.
Value for Money
There is page upon page out there on the science of understanding ‘value for money’. Now, this isn’t always about real cash, and there isn’t an exact formula to calculate value for money – it’s too personal for that. Your patients’ perception of what value for money is unique to them as an individual. They will base this on their own set of circumstances which can change at any moment. As you know, value for money and affordability are not the same.
What are The Competition Doing?
This is crucial to know, but you don’t have to follow them. When you understand what your patients really value, you will know what they will exchange for the value your service will provide them.
We all know where the current climate is heading and so do your patients – price increases. This is a good time to protect the financial stability of your business and take a close look at the relationship between your income and expenditure.
Be careful about what you offer FOC – there is no point being a busy fool! Consider the message it gives customers about your service and the quality of your brand. What opinion would you form on a professional service where the provider puts zero financial value on the service or time provided?
Discounts can Devalue Trust
‘SALE! This Bank Holiday weekend!’ …Even sofa sales have had their day as the public are widely sceptical about them now. Too often the headlines don’t seem credible and cause customers to lose trust in that brand. An ‘open day’ really is the dental equivalent of a sofa sale. In short, if you change the price, you need to change what is being offered, otherwise it may alienate existing patients and attract people who only want the cheapest dentistry available. Open days can work, but it’s crucial they are carefully costed.
The 5 P’s
Depending on what you read, there may be 4 P’s, or 6 P’s… but one thing remains – your Pricing does not sit on its own from the other ‘P’s” of business; People, Product, Promotion, Planning, and Profitable Relationships. They are all joined at the hip. If you move one of them consciously, you will move all of them. Don’t be unaware of the impact price has on other areas of your practice.
As the saying goes, ‘if you think you are expensive, you probably are’. But, it takes more than some positive thinking about your worth for a patient to understand why you charge what you charge. Avoid flowery language that attempts to side-step talking about your price. ‘Objection handling’ sales techniques are of the past – what would your reaction be if each time you asked for the price of something, you were told that ‘your investment is X amount of money‘? The public aren’t daft and we are trying to build trust, not hide behind the misleading linguistic trickery of the 1990’s.
Our Club Connect members openly debate topics like price and fee setting. They have their questions answered and their answers questioned. Club Connect members are confidently and knowledgeably increasing their prices.