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Veterinary Practice Pricing: The Good, The Bad & The Ugly

Posted in Guest Blogger @ Apr 17th 2013 - By Jon Manning, Sans Prix & Pricing Prophets
can we talk about our prices?

I was recently at my local Veterinary Clinic when I noticed a sign on the counter that read:

 OUR PRICES ARE CHANGING

(With some significant reductions)

 Effective 27th March 

  1.  We have recently managed to favourably adjust our pricing on many dispensed pharmacy products and have achieved price reductions of up to 20%.
  2. Due to increased operating costs our consultation and vaccination fees during standard consulting hours have increased by up to 4%.
  3. To provide a more flexible service and to attend to urgent cases we open our clinic for extended hours on weekdays from 5:30pm and on the weekend. Our incremental operating costs during these times necessitate that a $7 surcharge will be applied for any consultations and vaccinations.

We are confident that these minor adjustments will result in an overall reduced cost to most sick pet visits.

We look forward to an ongoing relationship with you and your pet to ensure they have the longest, happiest and healthiest life possible.

 Staff and Management

I’m used to reading communications like this. Not because I have a sickness-prone pet, but because I’m a pricing consultant. I see companies communicating price increases in a variety of ways. What I liked about this sign was that it started with the good news (cheaper pharmacy products), before moving on to the bad news (higher consultations & vaccinations fees).

But unfortunately, there is more to dislike than like in this pricing communications: 

1. Dispensed pharmacy products will experience price reductions of up to 20%. The Practice has clearly told me about the maximum price decrease, because it's a big number, and it applies to “many”, but not all products, so I’m suspicious. 

  • What the Practice should be doing is telling me the range of price reductions (so is it 1% - 20%, or is it 15% - 20%?). What is the average price reduction? How many is “many”? And most importantly, give me some common examples that a dog owner and a cat owner can relate to. 

2. I’m then told that consultations and vaccination will increase during standard consulting hours by up to 4%, because of increased operating costs. Like the dispensed pharmacy products, there are a couple of repeat problems here: Firstly, 4% is the maximum, but what are the average and the range of the increases? Is this a carte blanche price increase or are there some services where prices have been frozen? And secondly, we’re lacking specific examples. Show me what it will mean for a typical consultation or vaccination for my dog or cat. 

  • Another problem we have here is that the Practice attributes this price increase to increased operating costs. It’s all about the Practice when it should be all about the client. Clients don’t care about what it costs you to run your Practice. They care about the value they receive. You’re trying to justify your price increase on something clients just don’t care about. 

3. Finally, a surcharge is being introduced for after-hours consultations, once again, due to incremental operating costs. This sounds like a bit of a money grab because it's not about what the client cares about (their pet), it's about the costs associated with running your practice, which clients don’t care about. 

The best way to get price increases over the line with clients is to add value at the same time (e.g., extend the after-hours operation of your practice when you increase prices), and reinforce the convenience you provide to pet owners.

I hope that by dissecting this simple price change announcement, you’ve found better ways to communicate your next price increase or decrease. There are good ways and bad ways to change prices, both up and down.  Oh, and one final thing: personalise the message with something a little more descript that just “Staff and Management”.

Now tell me your thoughts on my Veterinary Clinic's pricing communication in the comments section below.  Do you agree with my views?

JON MANNING has spent most of his career pricing products and services, in both the corporate world, as well as advising clients via his consulting business Sans Prix. In 2011, he launched the world’s first and only crowdsourcing platform for Pricing (PricingProphets.com) where companies can ask a panel of global pricing experts and thought-leaders what price they should charge for a product or service, and why.

  

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