This is why you need to adjust your product prices!
Part 1: Why change your prices?
A price change is a sensitive issue and is often swept under the carpet for another time, however, it is a vital process to keep your veterinary practice profitable. A small increase, such as an inflation correction at the beginning of the year, is regularly expected and a good practice. However, a ‘real’ price increase is more difficult to explain to your customers and also to your staff. Nevertheless, such price increases are part of the process for every successful veterinary clinic.
There is never a right time to adjust prices but we recommend the best time is when you are adjusting for inflation – a single combined increase is better for the customer to deal with rather than two separate increases. So, how should you go about raising prices? Begin by reviewing your own pricing – do you ask enough for your products and services? Not asking enough can mean that there is little room for future investments. Asking too much may make customers turn to your competitors.
Determine your expenses
Do you remember what your cost price is? You probably calculated it a few years ago when determining income without making a loss on the product or service. Often this cost price is neglected, despite outside cost changes such as supplier increases and rising staff costs. Now is the time to re-calculate these cost prices.
What do clinics in the area do?
If you can, find out what prices your competitors are charging and ensure your prices are inline; some may publish a price list online or in their practice. If competitor prices have dropped, ask yourself whether it is wise to change your pricing. Always remain honest and think about what it means to your practice; an investment in staff training or a new X-ray machine has to be paid for somewhere, and don’t forget that your customers and clients ultimately benefit from an increase.
What if you keep your prices the same?
The main question you need to address is whether you can still pay salaries, and bills without endangering your practice and future development. If you do not raise your prices is there a risk of loss? Take your time to answer this – the answer will need to be based on your own research, but you can use tools such as the variety of product reports in Animana. You should also consult colleagues and representatives of the industry, it’s also a good opportunity to review your suppliers to see if you can purchase products more favourably. Instead of increasing (or decreasing) your prices, it is also possible to increase the value of your service or product.
We will cover this in part 2 of this article, and also cover how to communicate your price changes.
Related Links
To get started with price changes, we advise you review the following articles from our extensive Knowledge Base:
- How do I update my product prices?
- How can I match up my current products and pricing with the ones from a supplier pricelist?
- How do I create financial reports for current and historical prices?
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