Pricing Strategies That Can Help Improve Profitability at Your Veterinary Hospital
The start of a new year is a great time for veterinary hospital owners to update their business strategies and goals for the year. But it’s also a great time to update pricing. As you review your hospital’s pricing strategies, here are a few considerations that can help set your hospital up for success in the year ahead.
In order to combat the inflationary demands and rising labor costs currently facing the veterinary industry, hospital owners should first evaluate a minimum fee increase to apply across all hospital products and services. In 2021, many hospitals were able to increase fees by 2-3% each quarter with little pushback from clients. Even though a small increase may seem minimal, it can make a substantial impact to the bottom line of the business when it is applied across all service lines.
As your hospital receives updated pricing from vendors on the products being sold, it’s imperative that these updated costs are reflected in the practice management system. Remember, fees that end up on your client invoices are calculated using internal markups and vendor pricing as it was last entered. By updating the practice management system to reflect the most current information, you can ensure that the prices being charged are accurate and maximize revenue.
While making pricing changes at the beginning of the year is a great start, we also recommend reviewing the fee structure on an ongoing basis throughout the year. By reviewing pricing regularly, you can gain a better understanding of the price elasticity of specific service lines. Remember, pricing is not an exact science. If you find that a fee increase is being questioned by clients or is reducing demand of a service line, you can always adjust the fee accordingly.
If you need help evaluating and improving your hospital’s profitability, please contact KSM’s veterinary consulting team.
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