Pricing is a historically tricky endeavor in veterinary practice. And now – perhaps more than ever – rising costs, economic uncertainty, and competition from online retailers mean many practice owners feel conflicted about how to simultaneously cover expenses and offer affordable, accessible care.
Fair and sustainable pricing supports everything your practice does, including turning a profit, paying employees, buying equipment, and providing quality veterinary care. However, many practice managers and leaders struggle to find their pricing “sweet spot.”
Experts offer varying opinions on how to price veterinary services appropriately, and there isn’t a one-size-fits-all solution. However, The Provet Cloud team talked to a few experts in the field to learn about recent trends and current thoughts on pricing strategy. Here’s what we learned about fair pricing in an increasingly expensive world.
Value-based veterinary pricing
Value-based pricing aligns fees with the perceived worth (or value) of a service, which reflects the skill, time, and quality of care involved. However, a key tenet of value-based pricing is helping clients understand what they’re paying for.
Joel Parker, DVM, founder and CEO of Parker Business Systems, says, “Price becomes important [to clients] in the absence of understanding. Talk to the front desk and see how many people leave the exam room and have questions about their pet's care plan. When this happens, chances are they don’t understand what they’re paying for.”
Dr. Parker also thinks that many practices undercharge for their services. In his consulting business, working with privately owned veterinary practices, he notes that pricing is generally 20% to 50% below what it needs to be. When fees are too low, practices can struggle with high staff turnover, low take-home pay for owners, and difficulty attracting qualified applicants and investing in practice improvements.
"Price becomes important to clients in the absence of understanding what they're paying for."
—Joel Parker, DVM
Setting prices appropriately doesn’t mean raising prices across the board. Instead, practice owners must consider the value of skilled services and specialized equipment and take a category-by-category approach to pricing to determine where they’re charging too little and where they might be charging too much.
Smarter veterinary pricing strategies
Practices can set prices that feel fair to clients and businesses by moving away from traditional pricing models and toward a more strategic approach.
Dr. Parker recommends pricing based on the local community's median disposable income (MDI). MDI refers to the income remaining after taxes – what households actually have available for essentials and discretionary spending.
This approach aligns fees with what clients in your area can realistically afford rather than using blanket recommendations based on national or regional data. For practices interested in finding their “goldilocks” fee zone, Dr. Parker offers a practice potential analysis program.
Debbie Boone, BS, CVPM, owner of Debbie Boone Consulting, recommends a different strategy, explaining that accurate pricing requires a complete understanding of costs. “Many hospitals don’t understand the real cost of performing a service, which includes facility overhead, labor for everyone involved – including the customer service representative who books the appointment – and equipment and product costs.”
Boone thinks that veterinary pricing should be deliberate and requires a more nuanced approach. She explains, “Pricing is part of a marketing strategy, but practices must know who they are targeting first. As much as we would like the ease of simple math to charge 'X percent’ on a product, we must understand the competition and price our fees in order to attract clients.”
"Pricing is part of a marketing strategy, but practices must understand the competition and price their fees in order to attract clients.”
—Debbie Boone, CVPM
Boone recommends using outside services like Profit Solver to analyze fees and help you determine ideal pricing. You can also use time tracking systems to better understand what it actually takes to complete a service or procedure in the clinic. Additionally, she recommends checking out resources provided by the Veterinary Practice Managers Association (VHMA).
Both Dr. Parker and Boone mentioned adjusting pricing by service type and what clients want or need from you. Competitive pricing on parasite preventives or wellness exams attracts clients, who are then willing to spend more on higher-value services priced with margins that reflect their complexity.
Managing rising costs
Rising wages, supply costs, rent, and inflation impact the bottom line, but fee increases that adjust for this can receive pushback from owners and employees who don’t want to upset clients.
As a result, many practices delay price increases. However, Dr. Parker notes that going too long without increases means you might need significant adjustments to catch up. In those cases, he suggests owners shouldn’t wait. “In my experience, there isn’t significant pushback from clients. People just go about paying their bills,” he said.
That said, preparing your team for pricing conversations and helping them understand price changes is essential. Consider an open-book management style and share key financial information with your team so they can better grasp the realities of running a business.
Staff should also learn the difference between a comment (e.g., "This is more expensive than last time”) and a true objection (e.g., "I can’t afford this"). Empathetic communication, acknowledging the client’s concern, explaining service value, and offering payment options can help. In the face of financial constraints, consider adopting the spectrum of care concept and modifying the treatment plan to fit the client’s budget.
Technology that supports smart pricing
Cloud-based practice management systems like Provet Cloud can ease the pricing burden on teams while helping communicate value and provide better client experiences. Here are a few features that may help:
- Bundled services and care plans — Wellness plan integrations with service bundles can smooth out revenue fluctuations while attracting clients with competitively priced services.
- Pricing rules — Pricing that adjusts automatically based on species, weight, or other parameters provides consistency and removes the guesswork of manual adjustments.
- Client engagement — Messaging tools, telemedicine platforms, client education, and other convenient integrations make it easy to explain services and recommendations while providing clients with a seamless experience that conveys inherent value.
Key takeaways
- Value-based pricing helps practices charge appropriately for the level of care they provide.
- Fee structures based on the local economy can help solve problems related to under- or over-charging.
- Competitive pricing on “front-end” services like exams, wellness testing, and parasite prevention attracts clients and supports higher prices for skilled services.
- Fee adjustments require team member buy-in and training to communicate with clients in ways that emphasize value without dismissing concerns.
The Provet Cloud difference
Transparency and consistency go a long way in a world where everything feels more expensive. Provet Cloud’s veterinary practice management software provides solutions to assist with pricing, including pricing rules, inventory management, client engagement, and more.
Contact our team to set up a demo and learn how we can help you reach your goals.
