5 Signs It's Time to Adjust Your Fees
Where you set your fees is a personal decision, but it’s one that directly impacts your practice’s success. If you set them too high you run the risk of deterring patients from making your practice their dental home, but if your fees are too low your practice will never meet its full potential.
Whether you decide it’s time to raise your fees or lower them, there are a few key points you should consider before making your move. Here are five signs it’s time to adjust your fees, and tips to help you determine the best fee schedule for both your patients and your practice.
1. You have no idea what other dentists in your community charge. Often, dentists establish their fees without checking what other dentists in the area charge. Sound familiar? Then you need to find out how your fees compare to other practices in your community. If yours are significantly lower or higher, you’ll want to make adjustments.
Beyond researching other dental offices in your area, I suggest contacting your Chamber of Commerce to collect information on your area’s demographics and income level. These are two important factors you should consider when establishing or adjusting fees. You can also find more information on dental fees online or through your local dental society. Just remember that fees not only need to be in-line with the community you’re serving, they should reflect your practice and the level of service you provide.
2. Your fees are the lowest or highest in your area. Like it or not, the fees you set send current and potential patients a message about your practice. If your fees are the lowest in the area, your practice is the perfect target for price shoppers who are more focused on finding a deal than a dental home. If your fees are the highest, you have to make sure the level of service you offer warrants the rates you charge. Do you offer exceptional customer service, or provide an experience that no other dentist in the area can match? If you can’t justify your high rates, it actually might be time to slightly decrease your fees so they’re more in-line with your competition.
3. You can’t remember the last time you raised your fees. If it’s been years since you’ve made a fee increase, or if you have no system in place for making rate adjustments, now is the time to make sure you’re not undercharging. This is important, because if you’re undercharging it’s costing your practice big. Don’t believe me? Think about this. Undercharging patients by as little as 7-8% costs you thousands of dollars in lost revenue each year, and undercharging by 40-50% translates into a serious financial pounding.
You have to base fee adjustments on logic, not on a fear of losing patients or because you feel guilty about raising rates. I suggest establishing a solid fee for each service, and then adjusting twice a year. For example, the first fee increase could be 2%, followed by 3% for an annual yearly increase of 5%. This might not seem like a lot, but even if you’re only raising fees $4-$5 per procedure, you’ll still notice a significant difference in your bottom line.
4. Your fees aren’t consistent. Some dentists set fees too low for certain services, and too high for others. For example, they may keep hygiene fees well below what they should be, then charge a much higher rate for crowns. This seesaw fee structure isn’t going to help your practice grow, and will likely only serve to confuse and annoy patients. Base your fees on your goals and data from the community you serve, and you’ll find your practice will be much more successful.
5. You’re not meeting your financial goals. You have to stay focused on your practice vision and goals. Think about what you want from your career and the lifestyle you’d like to lead, and then determine how much revenue your practice needs to bring in to make your goals a reality. This allows you to establish fees that will help you meet your personal and professional goals.
Remember, you need to create value for your patients. Provide the best care possible, and a level of dentistry that achieves the greatest return for your patients. When patients understand the value of the services you provide, they’ll be much less likely to balk at fee increases.
Still not sure if it’s time to adjust your fees? I’d be happy to provide a Fee Analysis for your practice. Give me a call at 877-777-6151 and we’ll get started.
Next week, How to establish a solid fee schedule.
For additional information on this topic and more, visit my blog: The Lighter Side
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