The document discusses pricing strategies for veterinary services. It recommends developing a pricing strategy that provides more value to customers while also generating more profit. Various pricing techniques are examined, including dynamic pricing, bundled pricing, and loyalty programs. The importance of measuring customer loyalty through metrics like the Net Promoter Score is also highlighted. Effective pricing requires understanding costs, customer perceptions of value, and competitors' prices.

1. Pricing Veterinary
Services
Mike Pownall, DVM, MBA
www.slideshare.net/mpownall

3. Veterinary Pricing
3

4. Competitive

5. • Annual

7. • 30 Responses
• 61% Raised Prices within 1 year
• 9% Average Increase

11. Prove It

13. What is Good Pricing?
Doing the same, or less, but
giving more value to the
customer
and more profit to the business

14. What is Good Pricing?
Encourages client behavior
that benefits both client,
business, and pet

15. 2.6 5.3

17. Pricing Challenges

19. 1% Price Increase
$5000

20. 10% Price Decrease
$50,000

24. Freemium

25. Freemium

26. Loss Leaders

28. Penetration Pricing

30. Dynamic Pricing

32. Dynamic Pricing

33. Variable Pricing
Fortune.com April 29, 2014

35. Monthly Fees

36. Pay for Performance

37. Full Price Transparency

38. Comparative Pricing

40. Price Elasticity

41. …change in price affects
demand...

46. Price Elasticity
• 89% of horse owners would tolerate
10% price increase
• 77% would tolerate 20%
• 73% feel fees are low compared to
value of horses

47. Dynamic Pricing
in
Vet Med?

48. Dentistry Promotion
No Call Fee
February only

49. 164% increase in dentistry
45% increase in extras
93% increase in billing
9% Discount

50. 6% New Clients
10% increase in dentistry
over next 3 months

51. Strategy & Pricing

52. What is Strategy?
A description of how we identify
what our clients value and how
we can deliver it by competing
with a sustainable advantage
over our competitors

53. Value
Value = benefit to client - cost

54. Client Value
UPSTREAM DOWNSTREAM
VALUE

55. Client Value
UPSTREAM DOWNSTREAM
VALUE

56. Client Value
UPSTREAM DOWNSTREAM
VALUE

57. Clients

58. everytable.com

59. The Loyalty Effect

60. What is a Loyal Customer?
• Engages the practice frequently
• Has a positive attitude about the practice
• Recommends the practice to friends and
colleagues
• Less price sensitive
More Profitable

61. Probability of Buying
Loyal Clients 60% - 70%
Lost Clients 20% - 40%
Prospective Client 5% - 20%
Source: The Loyalty Effect and Loyalty Rules by Frederick Reichheld

62. Drivers of Client Loyalty
4

63. Attitude
Customer/Patient Focused

64. Customer Experience
Perceived quality
Purchasing process
Supportive & caring staff

65. Brand Image
Industry Leader
Trustworthy
Innovative

66. Perceived Value
Product
Service

67. Pricing & Customer Loyalty

69. Hard Benefits

70. Soft Benefits

71. Bundled Pricing

72. Customer 1
Willing to
Pay
Customer 2
Willing to
Pay
Expected Sales Most Likely
Service 1
$18 $12
At $18 will sell 1
At $12 will sell 2
$12
$24
Service 2 $17 $21
At $21 will sell 1
At $17 will sell 2
$17
$34
Bundled
Price
$35
$0
$33
$66
$29
$58

74. 5%
off all services & meds in
year
Paid in Full by March 31
Account must be current

75. 50%

76. $99/Year
2 day free shipping
Video, song and book access
Unlimited photo storage

77. Shop more – 2x
Spend More – 40%
Membership is increasing – 50%
Why??
uk.businessinsider.com 10/21/15

79. What do We Sell?
Knowledge in units of time

80. TDABC
Time Driven
Activity Based Costing

81. TDABC
• Labor
• Fixed Costs
• Cost of Equipment

82. TDABC
• Cost per minute of labor
• Cost per X-ray, Ultrasound,
etc
• Cost per mile

84. Cost of Goods Sold
Only sell with a transaction

85. Payroll

87. Labor

88. Payroll

89. Payroll

90. Payroll

92. Operating Expenses
&
Vehicle

93. Digital Radiographs

94. Digital Radiographs

95. Digital Radiographs

96. Digital Radiographs

97. Total Costs

98. Client Type
• New
• Single horse
• Multi horse
• CC on file
• Bad Payer

99. Client Type Time
New 10 Min
Existing 5 Min
Single Horse Same Drive
Multi Horse Same Drive
CC on File 10 Min
Bad Payer 60 Min

100. Example #1
• New single horse owner
• Rides for pleasure
• CC on file
• 30 minute drive
• 20 miles one way
• 30 min exam for “Swollen Eye”

101. Total Time = 90 minutes
Vet - 90 x $0.75 = $67.50
Tech - 90 x $0.42 = $37.80
CSR - 20 x $0.31 = $6.20
Total labor Cost = $111.50
Driving - 40 km x $0.41 = $16.40
Transaction Cost = $24.91
Total Cost = $152.81

102. Swollen Eye
Profit for basic eye exam
$0

103. Lameness Workups
• 4 horses at trainer barn
• Absent owners
• 2 have credit cards
• 2 are new clients with no info
• 30 minute drive
• 20 miles away
• 1.5 hour visit
• 8 X-rays total

104. Total Time = 150 minutes
Vet - 150 x $0.75 = $112.50
Tech - 150 x $0.42 = $63.00
CSR - 2 x 15 x $0.31 = $9.30
- 2 x 60 x $0.31= $34.10
Total labor Cost = $218.90

105. Driving - 40 miles x $0.41 = $16.40
Transactions - 4 x $24.91 = $99.64
X-Ray Cost - 8 x $25.28 = $202.24
Total Cost = $537.18

106. Lameness Exams
Profit for 4 Lameness Exams
$164

107. What is Good Pricing
Doing the same, or less, but
giving more value to customer
and more profit to business

108. What is Good Pricing?
Encourages client behavior
that benefits both client,
business
and horse

109. Dynamic Pricing
Incentivize
through scheduling

110. Swollen Eye
$0 Profit
2.5 hours of vet work = no profit
5 hours of driving = no billing
7.5 hours & no profit
15% of vet time

111. What if….
Bundled 5 calls together
Reduce Call Fee by
50% ?

112. For Example
2 hour total drive time rather than 5
$70 x 5 hours = $350
$70 x 2 hours = $140
Saving $210

113. Reduced Call Fee Effect
Call fee = $60
5 calls x $60 = $300
5 reduced call fees = $150
$210 - $150 = $60 Profit

114. Swollen Eye
2.5 hours of vet work = $60 Profit
2 hours of driving = no billing
4% of vet time

115. Reduced Call Fee Effect
3 extra hours in week @$192/hour
156 extra hours in year = $29,952
6% increase in sales
• Lowered vet & tech cost
• Lowered transaction cost
• Increased profit
• Happy & loyal clients

116. Efficiencies
Client type
COD
Better scheduling
Better use of HR

117. Dynamic Pricing
Time of year
• Dentistry
Locations
• Reduced call fee

118. Measuring Client Loyaty

119. The Net Promoter Score

120. Past Customer Surveys

121. Useless
• Inconvenient
• Intrusive
• Annoying
• Nothing measureable
• <10% response rate

122. The NPS
• Promoters (9-10)
• Passives (7-8)
• Detractors (0-6)
Promoters – Detractors = NPS

123. The NPS
• Promoters (9-10) 30%
• Passives (7-8) 60%
• Detractors (0-6) 10%
Promoters – Detractors = NPS
30%(P) – 10%(D) = 20% NPS

124. Good Profit vs Bad Profit

125. The NPS
• 4 questions
• constantcontact.com
• Surveymonkey.com
• Target clients
• Results shared
McKee-Pownall Equine Services Customer Feedback
Survey
1.
How likely is it that you would recommend our company to a friend of
colleague?
0 - Not at all likely 1 2 3 4 5 - Neutral 6 7 8 9 10 - Extremely likely
2.
If you scored us above 8 on the above question, what is the primary reason for
the score you gave us?
350 characters left.
3.
If you scored us below 8 on the above question, what is the primary reason for
the score you have us? If you would like to discuss your recent visit and how
it impacted your score, please add your name and number.
350 characters left.
4.
How long have you been a client of McKee-Pownall?
1 year or less
1 - 3 years
3 - 5 years
5 + years
Finish

130. Results
• Ave NPS score = 84%
• Ave response rate = 33%

131. Challenges
•Time
•Repeating clients
•No industry standard

133. 100 Pennies
• Insurance
• Accounting/Legal
• Facility
• Equipment Repair
• Telephones
• Bad Debt
• Inventory
• Vet/Tech Wages
• Office Wages
• Advertising
• Vehicles
• Benefits

134. Profit??

135. Inventory
23%

136. Vet/Tech Wages
33.6%

137. Office Wages
14%

138. Advertising
1.3%

139. Vehicles
3%

140. Benefits
1%

141. Accounting/Legal
1%

142. Facility
5%

143. Equipment Repair
.07%

144. Telephone
1%

145. Bad Debt
.05%

146. Profit??
8.5%

147. Pricing Tips
• Strategy
• Discount carefully
• Train staff
• Log complaints
• Measure
• Be creative

148. • mpownall@oculusinsights.net
• www.oculusinsights.net
www.slideshare.net/mpownall