THINKING BUSINESS
a blog by Chris Barrow

Dreaded Discounts

If you give a 20% discount on a fee per item treatment and your business has a 25% net profit before tax, then because you have given the discount on your retail price, it impacts right down at the bottom line (your variable and fixed costs remain the same) – you may have surrendered 80% of your profit – who on earth would ever do that?

If you give 0% finance to your patient, at a cost to the practice of 9% of your retail price, with the same net profit margin, you may have have surrendered 36% of your profit – who on earth would do that?

If you place one crown for £500 and the second crown for £250, at a cost to the practice of 25% of your full retail price, you may have surrendered 25% of your profit – whom on earth would do that?

Dentists – that’s who.

The only variation on that rule is what happens if an associate gives the discount or finance option – and, thus, shares the damage.

Retail discounts and 0% finance suck – period.

Better to give a wholesale discount.

If you give a patient free whitening, they perceive £250 of value whereas the wholesale cost to you may be £50.

If you give a patient an electric toothbrush, they perceive £100 of value whereas the wholesale cost to you may be £30.

If you give a patient a complimentary hygiene visit, they perceive value of £55 whereas the cost to you may be £17.50.

Don’t discount on retail – discount on wholesale by adding value.

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