After working in the dental industry for the last 23 years, I have discovered that there is one major issue that holds back growth, and it is that many dental practices operate in the dark when it comes to setting fees.
Dentists regularly guess at what they should be charging and give ballpark prices. When it comes to research, that usually means looking at what the competition nearby is doing and then undercutting them slightly. That just does not make sense as it leads to smaller profit margins and jeopardizing the future.
It is time to shed some light on the mysterious and elusive topic of pricing. Here are a few things you should know:-
Competing on price can be hazardous to the future of your practice
If you aren’t the cheapest, it makes no sense to be “one of the cheapest”. Because those who shop around for prices are all going to go to the cheapest. Which leaves you out in the cold. If you start undercutting your prices, because the other practices in your town are, then all that leads to is a race to the bottom. When this happens, everyone loses.
Don’t worry about so called “industry norms”
Many practice owners look at what their competitors are charging. They make note of the high price, the low price, and end up setting their prices somewhere in the middle. As unscientific as it may sound, this is the way most practices establish their fees. Only this week I was in a practice in London who openly admitted this is how they set their fees. The owner has their receptionist telephoning other practices every three months, so they can ensure that they are bang in the middle
Why not be the most expensive? Can your practice be in this arena? There are many advantages:
- You will make more profit
- You can invest in doing more marketing, thereby creating more opportunities
- You can invest in your team and equipment and of course you can invest in better quality furnishing in the practice itself
- Lastly, you can go on more courses to develop yourself and your team
If you are going to play in this arena, then you need to have a point of difference, in other words you need to have a USP (Unique Selling Proposition). You need to show that you offer something different to the other practices.
For example, if you place implants, you might give a five year guarantee on your work. Before you start shouting at me and telling me that you cannot do this, well you can. I recently spoke with a company who can insure this type of treatment. Please contact me if you want their details.
If you offer Invisalign, or similar types of short term ortho cases, then maybe you have an after-care package that no one else offers. You just need to use your imagination.
You also need to have a superbly trained team who can present fees with self-confidence and can communicate the differences and packages. If I woke them up at 4am in the morning, they should still be able to do this as if it was 10am and they were at work. These small, subtle differences allow you to set a higher price, because a direct comparison to lower prices can’t be made. Why? You’ve built in value-added benefits and features to your product and service – something the other practices locally to you don’t offer.
Avoid running your practice on fear. Many owners needlessly under-price their products or services. The fees your patients will pay is a result of the target market selected, perceived value, the value proposition presented, world class salesmanship, credibility, status and of course the patient journey. These are just a few of the factors that play into the buying decision.
Only occasionally do patients consider price as the only issue. I have a client whose practices sell implants at 30% higher than a practice in the same street and he has a three month waiting list. So, you should approach setting your fees courageously and creatively.
Not doing so can have serious impact on your profits and your ability to grow your practice.
Please contact me if you want some help in this area. Ashley@thesellingcoach.com