- Drew Leahy
Price Is the Only Way to Capture the Value You Create for Patients. Raise Them.
Lowering prices reduces revenues and erodes profitability: same work, less value captured for yourself.
Lowering prices disintegrates resources for your practice: same work, fewer resources gained.
Lowering prices communicates your confidence level in yourself: middle of the road prices communicate middle of the road services. Underpricing undermines your brand perception.
Lowering prices reduces your marketing investment. Less profit means less opportunity to reinvest those profits in growing your practice.
Lowering prices legitimize your lower-cost competitors. “If the price is the same, the service must be the same.”
Lowering your prices destroys goodwill with existing patients. “If you’re lowering your prices now, you’ve been overcharging me in the past.”
Lowering prices doesn’t correlate with new buyers. Research shows that we don’t buy strange brands just because of price cuts or promotions.
Lowering prices is more likely to preempt a price war and encourage your existing patients to try elsewhere. Price wars create commodity markets.
And lowering prices is an axe anyone can swing: you can’t differentiate on price alone- there’s always someone else willing to go out of business faster than you.
So what’s my pricing advice then? Raise them.
Price is the only tool in your arsenal that can both capture the value you create for patients and create resources for your practice. The only one.
Everything else (marketing, service innovation, management, software and tools, etc.) either consume resources or create value for your customers, not your practice.
Even devices or tools that promise to make you more efficient, and thus more profitable, create value for your customers, not you. How? Don’t be fooled- when everyone has access to the same tools and devices, prices lower, and those cost savings go directly to your customers, not you.
Surgical and non-invasive treatments are relatively inelastic: demand won’t decrease with incremental price increases like 1%. And price increases go directly to your bottom line. Research has shown that a 1% price increase can lead to 10% more profit (when you increase price, not volume, and costs remain the same, profit goes up- a lot). So what does this all mean for your medical practice? Raise your prices