Spring is upon us! And while many of you are still dealing with blizzards and frigid temperatures, the anticipation of warm sunshine and longer days brings hope of another summer. For most practices, spring and summer bring the busier time of year. It is during this season that we generate a majority of our income and profitability. In expectation of that, one of the things we may be considering is whether or not to increase our fees. Well, help is here. In this issue of the newsletter, we have the data from the VHMA’s annual fee survey. This valuable study provides insights into what our colleagues are doing with fees this year and on what products and services.
For many years we have relied on annual or semi-annual fee increases to keep up with inflation or increased expenses. But in this issue, rather than focusing on fees, let’s talk about pricing. With more than 79% indicating they plan to raise fees in one way or another, the real question is, “what’s your pricing strategy?” In other words, how will you determine a new price for your products and services?
This is a challenging and complex issue that my colleagues and I often deliberate about. While I can’t say I have an answer, through these discussions, I’ve been able to identify key considerations regarding pricing.
First, pricing decisions should not be made lightly. A simple decision to decrease the cost of service to compete with the practice down the street can have serious ramifications in the long term. Prices are like dominos, once you make a move the action can have an impact throughout the entire chain.
Second, don’t depend on your clients to set prices. According to author Ash Mauyra, “An optimal price is one that is accepted, but not without resistance in some form, from the client.” Clients are unreliable because either they are not aware or can’t tell you where the tipping point falls.
Third, pricing is not an end, but a means to an end. Pricing should be considered within the context of the practice’s overall goals. Remember, charging a fair price must include profit for the practice.
Fourth, pricing is a profit driver, but is often the most neglected part of marketing. Please give your pricing decisions the attention they deserve!
I also encourage you raise the issue with your VHMA colleagues. One of the best aspects of being a VHMA member and living the VHMA Life is that we are always here for you to get clarification, bounce ideas off and collaborate to devise solutions that benefit from the input of VHMA “brain trust!”
Jim Nash, MHA, CVPM
VHMA President