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I suggested to my clients in Q4 of 2021 that they increase their FPI prices by at least 20% in Q1 of 2020.
As usual, 20% of then went ahead and 80% increased by lower amounts (15%, 10%, 5%).
Without exception, all of my clients reported that patients "didn't bat an eyelid".
I suggested to my clients in Q3 of 2022 that they increase their FPI prices by ANOTHER 20% in Q4 of 2022.
So far, very few of then (if any) seem to have taken the advice.
My guess is that they are scared of the consequences, or (to put it another way) they are fantasising about an exodus of patients and/or declined treatment plans.
F.E.A.R.
Fantasy expressed as reality.
Let's set some context here:
Before any Truss cap, energy bills are up 50-60% this year so far;
We all know what's happening at petrol stations and on supermarket shelves;
I tried to book a standard class one-way ticket from Stockport to Plymouth yesterday - over £400;
Last year my wife flew Premium Economy, Manchester to New York (via LHR) for £750 return, the same journey this year will be £1,500;
Supply-chain delays are affecting every sector of the economy - even my new iPhone 14 can't be guaranteed a delivery any time soon;
The media are doing a fantastic marketing job for us all at the moment by highlighting "dental deserts" all over the UK;
The demand for high-value dentistry has historically been very robust in recessions (think 2008-2010) and the waiting lists for treatment are getting longer - scarcity creates demand.
I'm certain that you will have similar examples of everything getting more expensive and, as an aside, that's why your team are either asking for more wages or looking around for better pay.
The KPI for wages for the last 25 years has been 17.50% of sales - I'm advising my clients that this will be at 25% by Q1 2023 (and will stay there). That's 7.5% of your profits gone unless you do something about it.
Options:
Increase the average daily production of all of your fee -earners;
Increase your prices.
Actually - they aren't options - you must do both - and you must start NOW. If you don't, less profit - period.
And less profit doesn't just mean less profit - it also means less EBITDA in a market that now expects multiples for goodwill valuations to decline because of the Portman/Dentex merger and increased cost of borrowing.
If you are looking to grow - put your prices up.
If you are looking to sell - put your prices up.
If you are looking to keep your team together - put your prices up.
If you want to recruit - put your prices up.
Flippin 'eck.
All of that was leading me to encourage action but also to remind you that there are 4 places where you have to be careful about price rises and (the good news) a lot more places where you don't.
The 4 areas of price sensitivity in dental services and products
The cost of a dental health review (check up);
The cost of a hygiene visit;
The monthly cost of a dental membership plan;
Your price for Invisalign.
The first three because they are regular repeats ("it didn't cost me that much last time") and the 4th because it is a globally commoditised product and the public are savvy.
In these 4 areas, you have to exercise some caution, but what does caution mean?
Up to 2021 - caution meant keep the rise to no more than 5% a year.
2022 - caution means 10-15% IMHO.
As for everything else - 20 - 25% please - and now (if you didn't raise prices last January you will still be behind but will have to catch up over the next 12 months).
You don't need to wait for January - nothing's going to get either better or easier and another 3 months of low profit helps nobody in your business.
So get your fee per item price list out in the next 7 days - go through it, revise the prices and start from 1st October.
If there's a price list on your website - change it at the start of next month - there is NO NEED to mail your patients unless you make changes to the first 3 on my sensitivity list.
Your financial ship is leaking profit as you read this post.
Leadership requires action.
Put your prices up.