37 Q1 2022 | Animal Health Solutions
Create a script of
what employees
should say.
If clients question fee increases, you
want frontline workers to be able to
answer. Never say, "You'll have to talk
to the manager or doctor about prices."
You risk creating angry clients if the
manager or doctor aren't immediately
available. Every employee must share
a concise, confident response.
SAY THIS: "I understand that
you're concerned about the cost of
veterinary care for your pet. [Shows
empathy.] Like many businesses,
our hospital has had price increases
in the products and services we buy
from vendors. We also invest in our
employees' ongoing education, so
they learn about medical advances
to improve patients' comfort and
treatment outcomes. [Shows
transparency and concisely states
specific reasons for fee changes.]
We try to keep fees affordable
while still sourcing the best
products and supplies to ensure
we are delivering the high-quality
veterinary care that you and your
pet deserve. [Shares how the price
increase will benefit the client and
pet.]. Thank you for your feedback.
I will share it with the doctor and
manager. You're welcome to reach
out to Dr. or with further questions. We
appreciate the opportunity to care
for ."
Your team also can share information
about preventive care plans, third-party
financing, and pet insurance to help pet
owners manage the cost of care.
Make small
increases to
professional
services quarterly.
While it's smart to raise prices when
vendors charge you more, when was
the last time you raised professional
fees for exams and procedures?
Inflation impacts your practice, too.
The U.S. inflation rate rose to 7.5%
in January 2022, reaching a 40 year
high.
2
Inflation has led to increases in
laboratory and vendor fees as high as
12% in the veterinary market.
Owen McCafferty, CPA, CVPM, and
founder of Owen E. McCafferty CPA
Inc. in Ponte Vedra Beach, Florida,
advises hospital leaders to stay ahead
of inflation with quarterly fee increases
and to monitor staffing. Let's say your
exam fee is $55, and you want to raise
it 12% to keep ahead of inflation. Raise
the fee 3% or $1.65 each quarter to
$56.65, $58.30, $59.95, and $61.60
respectively. Clients are less likely to
notice small increments compared to
an escalation from $55 to $61.60.
Many practices are operating short-
staffed and want to reward loyal
employees with raises. Because
employee wages and benefits average
48% to 52% of costs, you can't
give raises without upping prices,
McCafferty advises. Take care of core
employees who stick with you when
times get tough, he says. Good wages
and benefits will help you retain and
recruit employees.
Raise prices whenever products or vendor fees go up. While this seems obvious, it can happen without processes in place.
A technician unpacks products, updates the quantity in the inventory module of the practice management software,
stocks shelves, and passes the invoice to the bookkeeper. The bookkeeper pays and files the invoice. No one confirmed
whether the unit cost on the vendor invoice matched the unit cost in the inventory module.
Let's say a vendor increased an item from $10 to $11. The practice incurred a 10% increase that didn't get passed along
to clients and cut into profits.
To prevent this error, use the Purchase Order feature in AVImark
®
. This lets you "receipt the order," specifying which items
were received, any price change, which vendor sent the products, and apply shipping and taxes that were charged.
1
Be competitive on
shopped items.
Consumers shop prices on
three drug categories: 1) Flea and
tick preventatives, 2) Heartworm
preventatives, 3) Long-term drugs for
chronic conditions such as arthritis and
allergies. Parasiticides represent the
largest market share of pet medications
with 42% of sales.
3
Most of your
prescription approval requests from
internet pharmacies are flea/tick and
heartworm preventatives.
The Veterinary Fee Reference, 11th ed.,
reports a 65% average markup on
flea/tick and heartworm preventatives
compared to 107% on other
prescription medications.
4
If you
markup preventatives 107%, you will
lose sales to third-party pharmacies
and other area hospitals.
Tell employees
about price
increases before
they happen.
Your team needs to understand the
"WHY" behind fee changes. You don't
want employees to stumble when
responding to clients. Have a consistent
message, which will make it easier for
your team to explain price increases
and for clients to accept them. Your
message should be concise and
empathetic. Don't apologize because
raising prices is a normal aspect of
running a business. Your products and
services provide excellent value, and
you should charge accordingly.
Raising prices? What to tell clients
