‘This is the first price increase I have had in eight years, but my expenses have increased so much I don’t think I have a choice.’
What’s been stopping you?
You might be worried that your clients will complain. You might think you have no right to charge more. You might wonder if your service is even worth an increase.
Sometimes this resistance to increase our prices is rooted in a bit of a warped money mindset. We all hold beliefs about money ingrained in us from childhood. For example, ‘Money doesn’t bring you happiness’ or ‘More money, more problems.’ These are the kinds of philosophical nuggets we hear from time to time as we’re growing up.
Unfortunately, they give rise to ideas about ourselves and the value of our work that can limit us and our business in ways we do not even realise.
If you have studied to be a Vetrehabber, you have sacrificed time and money to get to where you are today. And these sacrifices have to be valued.
At the same time, people are not paying you because of your credentials. They are paying you for the value they receive from your treatment. When they perceive your treatment as valuable they will be prepared to pay more for it.
We often try to sell our services by listing all the modalities we offer, but what we should be selling is the outcome. What will the transformation in their pet be after we have treated them? What can they expect?
If you focus only on the services you offer, and someone down the road opens with the same services, how will you set yourself apart from them? By stressing what you can do for the animals you see, you shift the focus to results and the customer experience. This is what draws and keeps customers.
We need to understand we are in the customer experience business. The experience you give your customers is something that cannot be copied. The way you treat your clients and patients and the outcomes you attain are unique to you.
This, in the end, is what helps you stand out!
Sometimes what we need most is a mindset shift. Charging low prices will often attract the clients who are looking for low prices above all, while higher prices attract the clients who are looking for value for money; there is a huge difference.
Why we should be increasing our fees
The bottom line is that every year expenses and costs go up, and if you are not increasing your prices you are at risk of the following:
- Decreased profits: Your profit is what is left over after you have paid all your expenses, including your own salary. The higher your expenses, the less is left over.
- Deterioration in your work-life balance: If you are not increasing your prices at the same rate as your expenses are increasing, you will end up making less money per consult. In order to earn the same amount of money you will need to see more patients every day just to stay afloat. That’s a sure recipe for stress and burnout.
- Decreased standard of practice: If you have to see loads of patients in a day, you might not have time to reflect on your cases; when you’re too busy, it’s difficult to give each case 100% of your attention. Customers pick up on this.
- Less holiday: You might not be able to afford to go on holiday. Working all year with no break is not good for you!
- Risk of burnout: Working longer hours and being under constant financial pressure puts you at risk of becoming burned out. Then you are of no use to any of your patients.
So what prices should you be putting up?
- Professional fees
- Transport fees
- Product fees
How much should you be charging?
When we first open our practice, what we charge is generally a bit of a thumb suck. We look at what everyone else is charging and charge something similar. We consider our experience and the people we are comparing ourselves with, and if they are more experienced than we are, we charge slightly less.
The factors you need to take into account when setting and raising your prices are:
- Your salary: This is an expense. You should not pay all your expenses and then pay yourself what is left over. You should set your salary and include it in your expenses. Know how much you want to earn per month.
- Your expenses: Be sure to make sure you include all expenses, including some that you might be paying for in your personal capacity. Speak to your accountant to find out what you can claim for. Examples are a percentage of your rent as office space, internet bill, telephone bill, percentage of petrol and working expenses of your car, entertainment, etc.
- Your profit: Your practice should be making a profit. If it is not, then you might just as well be working for someone else who is underpaying you and working you too hard. Owning your own business is stressful and it comes with risks. Profit is what you earn because of the risk and the stress. If you are not making a profit, you need to work out why. Click here to book a free 20-min strategy call with me. I will help you work out where the issues are and direct you in how to correct them.
- How many hours per day and days per week do you want to work? You will need to have an idea about this in order to set your prices. Now think really carefully about something:
You have two options: You can either see fewer patients per day, have longer consultation times and charge more, or you can see more patients, have shorter consultation times and charge less.
I know what I would choose. Fewer patients, more time means I am able to practise better. It also means less admin. Fewer accounts, invoices, paperwork and vet reports!
So decide how you want to practise.
- How many weeks’ holiday do you want to take per year?
You want to make sure you charge enough throughout the year so that taking a two-week break at the end of the year doesn’t put you into overdraft.
Click here to access the price calculator. I designed this calculator to take into account a percentage of profit added to every fee, and to cover time to do admin and marketing.
Some Vetrehabbers look at the inflation rate (the consumer price index) and increase their prices by that percentage. In most countries, this is 3-8%. I don’t think this is a very sound way of increasing your prices, as it does not take into account your expenses. But it is an easy way if you don’t want to spend time working everything out.
We must remember the amount of time we spend treating our patients.
As Jenny Taylor from VROMP says, ‘Nowhere else in veterinary medicine does a DVM or team member spend so much time with one patient and client, and it should be valued appropriately.’
Francisco Maia of K9 Business Accelerator says, ‘If you are not getting some pushback on your prices, you are not charging enough.’
How to increase your prices
This is the awkward bit. How do we tell our clients that prices are going up?
In my opinion, this is not something you need to post on social media, although you can. First things first, though:
- Give your current clients adequate warning (at least two months).
- Try and tell them in person when you see them. The best approach is to explain to them that this is happening for them and not to them. By increasing your prices you are able to maintain the standard of care they are used to. By telling them personally, we show that we respect and value them.
- Put a sign up in the practice stating the date and amount of the increase. You can also let clients know every time you send them an invoice via email.
- Send out an email to all your current clients explaining the increase. Remember to share how the increase will enable you to keep treating their pet optimally. Share the journey of your practice growth with your clients – they love to be a part of it. Show how much you value them!
We had some great discussions in the business Vetrehabbers Facebook group on tips to make the price increase transition smoother. Here are some of the suggestions:
- Offer your current clients the opportunity to buy bundles of consultations and hydrotherapy at the older prices. This helps your cash flow and also allows them the opportunity to save.
- Keep charging your current clients the older price, giving them six months’ grace. Only charge your new clients the increased prices. This shows you really value your current clients. Makes them feel really special – but the con is that it can be tricky to manage from an admin perspective. You don’t want to get it wrong and charge a new client the cheaper rate.
Let’s look at a few examples:
Let say you charge $50 a consult.
You see six patients a day and you work five days a week, taking a total of three weeks off a year.
What change would a 5% increase in your prices give you?
5% of $50 = $2.5.
$2.5 x 6 x 5 = $75 extra a week.
75 x 49 weeks of work = $36 750 a year ($306 extra per month).
What would that extra money every month mean for you? Would it mean you could take an extra holiday at the end of the year? Would it mean that you could buy that laser you have so badly been wanting to buy? Would it mean you can pay an assistant to help you with all the admin that you hate doing, giving you the time to spend with your kids or go horse riding?
Once you know what a certain fee increase means in real terms to your family or business, you can start to see the value of one small change. That slight increase may dismay some clients (less so, however, if you have explained it to them personally) – but what you gain with a new piece of equipment or a new employee can free you up to do more. You could make more profit in the long run, or simply derive more enjoyment from life.
Fees are never a thumb suck. They are based on your qualifications, time, skills, quality of service and expenses, much of which can be pinned to a specific amount. Isn’t it time you got over your reluctance to charge what you’re worth, and possibly deepen the quality of the service you offer as a result?
Resources to help you:
- The Vetrehabbers Fee Calculator
- Why Mindset Matters, with Nicola Kinnard
- Money Mindset, with Nicola Kinnard
- Mindset for Business Success, with Nicola Kinnard
- Discovering your niche and staying in your lane, with Nicola Kinnard
- Attracting new clients and retaining old ones, with Nicola Kinnard