On prices – here we have the eternal juxtaposition of science (well, mathematics) and emotion.
Mathematics says “this is the price to make it profitable”.
Dentists are scientists and so you would expect them to have a spreadsheet to work that out.
But they rarely do.
Emotion says “this is the price I am confident to ask for – and the price I think the market will bear.”
The worst of all worlds is when the emotion beats the mathematics AND common sense – we end up with – “this is the price that stops them leaving the building without buying anything.”
It’s a world of discounts, interest-free finance, Groupon and the race to the bottom. It also attracts the worst possible patients.
So how do YOU set your prices?
- Mathematical analysis to achieve your desired level of profitability?
- Emotional reaction to external competition and internal confidence?
- A finger in the air and a stab in the dark?
And how often do you review?
For the dentist who lacks confidence, competition only ever affects price negatively – in that your confidence level goes down in the face of competition and so you reduce prices or delay increases.
The confident dentist works on the mathematical price, no matter what – unless over-confidence leads to the patients exercising their vote and leaving.
If that happens, your prices are wrong because your running costs are too high – either your personal or professional lifestyle is too flamboyant and the patients will call you on that.
So mathematical pricing is affected by emotion – the emotion of the dentist or the emotion of the patient.
Which is a very long-winded way of saying that you have to test your mathematical price in an emotional marketplace.
Option 1 – bury head in emotional sand and refuse to extricate head for fear of losing out.
Option 2 – confidently ask for the mathematical price (because that’s THE ONLY way you will ever find out) and be prepared to retreat quickly if the patients’ emotions prevail.
It’s a game of bluff.
my thanks to Dr. Stephen Franks, who got me started on this.