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a blog by Chris Barrow

Interest-free finance for dentistry

I’m in the middle of a good conversation with David Horobin of Bexley Orthodontics, about the merits of this relatively recent innovation. We are “best mates” with the lads at Medenta and have been happy to recommend them to our clients, as well as offer payment facilities to our own clients for coaching programmes – but (there is always a “but”) I’m becoming a little concerned about the rush towards offering “interest-free” as a standard by many dentists out there (whether it be with Medenta or other finance companies). The costs are considerable when expressed as a percentage of bottom line profit – and it’s all too easy to suggest that this cost be “hidden” in the basic pricing structure or accepted as a cost of attracting the bigger-ticket treatment plan. David mentioned to me earlier this week that a relative works in the motor trade, where “finance” is a profit centre and not a “give-away” – so why are so many dentists giving it away? My belief is that we have all been guilty of a basic mis-understanding of how it looks from the customers end (nothing new there then). To quote from my email to David this morning:

The more I think about it — the more I think the client/patient should pay for the finance. I’m just about to take delivery of a new car and I’ve financed the purchase — I don’t recall BMW offering interest-free — because they know I want the “experience” of owning the vehicle — its not about the engineering, its about how it will make me feel. So BMW are selling me an experience — not a heap of (very fast) metal. Strikes me that there is an interesting link here with all that blogging I’ve been doing on “commodities” versus “processes expressed as experiences”. You would shift a commodity by making “interest free finance” a feature that would avoid the price trap.  To paraphrase an earlier comment I made on the blog — braces are braces and there will always be somebody who will sell them cheaper somewhere else (I don’t see Hungarian braces or Chinese — but I guess there will be cheaper versions eventually in the UK market — the corporates will compete in the commodity trap area — with each other). So the smaller independent cannot compete on price and MUST compete on “transaction experience” = customer service and physical environment and also on “delivery experience” — you are getting invisible braces so that will cost more — and then on “outcome experience” — you have a lovely new smile! If you are selling an experience then why would you offer “interest free finance”? I think that’s the debate we have had at Breathe Business — the cost of the finance subsidy was too big a hit for us to swallow — and in any event, the “experience” we are selling is “more profit in less time with happier people” so why would you want to discount that or make it easier? I’m moving progressively towards the interest-bearing finance camp for the experiential dentist who does provide a quality customer service in nice surroundings. I think too many dentists are just falling into the “we can do this interest free” mantra without thinking it through.

Please don’t get me wrong here – I love working with the Medenta boys and want to continue to do that for a long time – but I also want to have the time to think this through very carefully.

If dentists are being trained to offer interest-free every time, as an inducement to close the sale, then (knowing them as I do) I think there is a danger that they will fall into the trap of devaluing the experience and the outcome – and making it about the commodity again – very dangerous.Â

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