In the early 1990s, a wise distribution leader faced off with a veterinarian irate over 5¢ difference in a bottle of oxytocin. He asked the vet, “. . .would your customer notice a 10¢ increase in your price on oxytocin?” Floundering, the vet answered, “no. . . but that’s not the point!” This story is a backdrop to where Karen Felstad, CPA, MS, DVM, CVPM, starts the article referenced in this AHD post.
In my work, I have noticed that many practices are delaying <competitive charges> analysis and simply increasing their prices by a set percentage each year, which can eventually work against the practice.” – Karen Felstad, CPA, MS, DVM, CVPM
Source: AAHA NEWStat, September 10, 2020. Link. Felstad says the following are indicators of a healthy practice with accurately set service fees and a client base accepting of the fees as structured:
- Your practice is truly profitable
- Your practice is experiencing real growth
- Clients are readily accepting your recommendations
INSIGHTS: Fees aside, setting a price for dispensing an item based on cost-based pricing instead of establishing a market price with an acceptable margin (price-based costing) is an element of inventory and practice management system purview that needs a consistent strategy. Too many practices have assigned a markup and let it ride.
Market pricing management is one of the benefits of home delivery platforms that provide pricing recommendations for dispensed items.