Top 3 ways to price products and services

1. Price highly shopped services competitively

For price-sensitive services such as vaccinations and elective surgeries, use a competitive price strategy. Compare your fees for these services with other practices in your area. If you can, find out if these clinics provide a similar level of customer care and value. Also consider the other practice's number of doctors, practice hours, and community reputation. I recommend conducting a community survey to gather this market research. (Benchmarks 2011 includes a tool for this; visit dvm360.com/benchmarks2011 to learn more.)

2. Price inventory items based on cost

Here's how to use a cost-based pricing strategy: For a standard dispensed medication, add an average markup of 150 percent to the cost of the medicine, including sales tax and shipping. Also include a dispensing fee of $9 to $13. Compare this total to the amount of your minimum prescription fee. Then charge the client the higher amount. Dispensing fees and minimum prescription charges will vary based on your community's economics.

Mark up heartworm and flea control products and oncology medications 100 percent. If you stock drugs that remain on the shelf for three or more months, use a 200 percent to 275 percent markup to cover your additional carrying costs. Here's an example for a product that costs you $20:

Note: Remember to retain cost savings on bulk drug purchases. You're incurring the costs of maintaining inventory, so don't pass this savings on to the client.

3. Price doctors' services based on value

For services that involve the doctors' time and knowledge, use a value-based pricing strategy. Value-based services include lab procedures, diagnostic imaging, hospitalization, dentistry, and non-elective surgeries. Use the fees listed in Benchmarks 2011: A Study of Well-Managed Practices as a guide for pricing value-based services. Your value-based fees can be higher than any other practice in a community as long as clients receive the value they expect for the price. (To download an interactive spreadsheet, visit dvm360.com/comparefees.)

Review fees quarterly and implement increases as needed. If your fees are lower than the recommendations in published sources, if your costs have increased, if your practice has expanded, or if you've enhanced the level of care you provide, raise your fees. Monitor the quality of your client service and patient care to ensure that both reflect your fee structure.

Next, announce any fee changes in a staff meeting. It's important to get all of your doctors and team members on board with the increases. Make sure to emphasize the medical benefit of raising fees. It gives you the resources necessary to continue to elevate patient care—and focus on how to provide the value your clients desire with the greatest efficiency.