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16 Covetrus | ph: 855.724.3461 | fx: 888.329.3861 | northamerica.covetrus.com Overcoming inflation: Rethink your pricing strategy to succeed today Where do you start? First, keep in mind that consumer prices are already rising for just about everything. A trip to the grocery store or gas pump proves the point. The best way to increase prices— while minimizing concerns among pet owners—is to simply explain why you're doing it. Like every other business, you need to raise your fees to maintain the same level of high- quality service that your customers have come to expect. Many pet owners will appreciate the honesty, and it may even strengthen your bond with them. Then there's another consideration: with prices rising everywhere you look, will a lot of pet owners question—or even notice—if you raise yours by an average of five percent? As you consider the most effective way to rethink your pricing strategy, ask yourself these questions: 1 Today's inflation aside, are the prices for any of your products or services simply out of date? Has it been far too long since you evaluated them? An average price increase of five percent may not be enough to ensure an adequate profit margin on these out-of-date items. 2 Are your prices in line with your local market? Determine how much other veterinary practices in your community are charging for the same products and services. For the value your customers receive, are you charging too little? 3 Put another way, are you charging what you're worth? As you know so well, not all veterinary practices are created equal. The stronger your brand is in your community, the greater your perceived value. You've worked hard to build your reputation, and you deserve to be compensated fairly for it. When you think about it, there are really two ways to increase prices: "cost-plus,"—where you're simply adding a profit margin to your cost for a product or service—and "value-based," which compensates you for something more intangible: your emotional connection with your customers. The deeper this bond—the more your practice is the first choice in your community—the greater the value and the more justified a higher price. 4 Should you discontinue some items? Are there products or services that simply won't be profitable even with a price adjustment? 5 Once you raise prices, is your staff ready to explain the increase to pet owners? Effective communication with your customers begins with educating your staff. Make sure they're comfortable having these conversations with your customers. Finally, there are other ways to increase revenue during inflationary times, such as boosting customer loyalty. Strategies including rewards programs, membership plans and discounts for bundled services can all help offset your rising costs, while building what matters most: stronger relationships with the owners and pets you serve. After all, isn't that why you began your veterinary practice in the first place? For more financial service tools to help your practice visit, cvet.co/financial-services or call 855-724-3461. About the author Andrew McDonnell is the Director of Global Financial Services at Covetrus. He is a graduate of the University of Maine with a BS in Accounting and a graduate of Plymouth State University with a Master of Business Administration. 1. CNBC.com. "Inflation rose 7.9% in February, as food and energy costs push prices to highest in more than 40 years." March 10, 2022. 2. WSJ.com. "Fed Raises Interest Rates for First Time Since 2018." March16, 2022. 3. AAHA.com. "Inflation hitting veterinary practices." January 12, 2022. 4. www.in2013dollars.com/Veterinarian-services/price-inflation 5. AAHA.com. "Inflation hitting veterinary practices." January 12, 2022. 6. "Pet ownership stable, veterinary care variable." AVMA.org. 2018. 7. "Pathways: The Pet Owner Journey." Market research conducted for CareCredit. November 2019. Like every other business, you need to raise your fees to maintain the same level of high-quality service that your customers have come to expect.