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Explain your veterinary practice pricing....or just having a whinge?

Posted in Operations @ May 2nd 2013 - By Judy Gillespie
Explain Your Veterinary Practice Pricing Or Just Having A Whinge Vetanswers Blog Post

Should you explain your veterinary practice expenses to clients?

As you know I’m a big fan of dvm360 blog posts but I wasn’t so sure about this one: Explain your clinic expenses.  Essentially it suggests that you should consider explaining your clinic expenses to your clients to help them understand where all the money goes.  The blog post also provides a link to a downloadable pdf document that you can print up and display to your clients to show them a list of the main expenses of running a veterinary practice.

It recommends that rather than having a heated discussion about clinic expenses when a client is upset about the cost of a service, posting the handout may be a better idea.  Finally the Post suggests that if clients have a better understanding of what it takes to keep your practice operating they might be less likely to resist when faced with their next bill.

Generally I’m a big supporter of full disclosure but something about this blog post didn’t sit properly with me but I couldn’t quite put my finger on why.

So as it was to do with ‘Pricing’ I thought the best person to turn to was the ‘Pricing Guru’ Jon Manning.  Jon was a recent Vetanswers Guest Blogger – Veterinary practice pricing: the good, the bad & the ugly and is the founder of both Sans Prix and Pricing Prophets.

His opinion?

“My response to this is very simple. Does Coca-Cola try and tell you what the cost of the can is, what the cost of the syrup and other ingredients is, or how many standard minutes of a person’s time was spent on creating a can of Diet / Zero / Cherry Coke? No…because no one cares about costs. They tell you it’s the most refreshing drink on the planet, because refreshment is the value it provides. 

 Talking about all these things is fine (I have no issues with the PDF), but it should be in the context that this is how we provide value to you as a pet owner. The context here is more reactive - use your costs to defend your pricing. The vet is already on the defensive backfoot”

So as Jon suggests, rather than trying to explain how expensive it is to run your veterinary practice (as a client – that’s really not my problem) perhaps you would be better off spending your time demonstrating and convincing your clients as to the value and quality of care you deliver (as a client – now I’m interested as it directly relates to me and my pet).

So what do you think? Should you be explaining your expenses to justify your pricing to clients or demonstrating the value you provide?  Tell us your opinion in the comments section below.

Special thanks to Jon Manning from Sans Prix & Pricing Prophets for his input and speedy email response (I did warn him that a blog post could be the end result!)

Comments

Gillian Shippen @ May 3rd 2013 1:41pm
Unfortunately what it actually boils down to in the veterinary industry is the value of the animal to the client. To this I mean client two clients same service value: A's pet is a valued member of the family so the charge is probably a pleasant surprise, they were expecting more. Client B's pet is more of a possession and as a consequence that person resents paying past a minimum that have they have set. The hard part can be working out who is client A and who is client B.and it doesn't have to come down to the owners personal wealth or lack off.
Judy @ May 3rd 2013 4:24pm
Thanks Gillian. I think that's why veterinary practices should target Client A's and then continue to deliver such awesome value that they continue to be happy with your charges. But then as I've already admitted - I'm a money hungry business person & proud of it ;-)
Jon Manning @ May 3rd 2013 6:10pm
Gillian - banks segment their customers. Airlines segment their customers. Telco's segment their customers. You've just described two customer segments, and unless regulation prohibits it (which to the best of my knowledge, it doesn't) you can charge different prices to different segments.
Gillian Shippen @ May 6th 2013 10:25am
Jon - sometimes we have difficulties working out which one is which. Very often the clients we least expect to quibble about charges do ..... We tend to be able to work out those that would struggle and act accordingly in an effort to help them out (and they never complain either) but its the ones that we know can afford it without question that throw us for a loop....because they creep up on you when you are least expecting it
Judy @ May 6th 2013 11:28am
Thanks Jon - that's an interesting suggestion that I think is just begging for some more detail! How would you suggest practices go about segmenting their clients?
Jon Manning @ May 12th 2013 4:26pm
Gillian, it's an iterative process, and customers may be put into one segment, but later exhibit behaviours of another segment. Thats the reason why I always say "pricing is a process, not a project"

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