Are Your Fees Too Low?
Many dentists I work with don’t want to talk about adjusting their fees. They’re afraid they’ll lose patients if they set their fees too high, so they opt to keep them exactly where they are.
While this might seem like a good way to keep your schedule full, trust me, it’s actually holding your practice back. If your fees stay the same from year to year, you likely don’t have the money to make necessary practice updates, whether that means investing in new technology or paying for team training. Skimping in these areas hurts the overall patient experience, and that makes patients more likely to leave your practice than a small $4 or $5 fee increase.
Remember that where you set your fees directly impacts your practice’s success. If they’re too low, you’ll struggle to make ends meet. I want your practice to thrive. Here’s how to tell if your fees might be too low and what you can do to get them where they should be.
You haven’t raised your fees in years. If this is the case in your practice, there’s a pretty good chance you’re undercharging, which could be costing your practice big. Let’s say you’re undercharging patients by about 7%. That doesn’t seem like a lot, right? Unfortunately it translates into thousands of dollars in lost revenue every year. And if you’re undercharging by as much as 50% (which many dentists are), your practice is taking a serious financial beating.
Now that I’ve got your attention, let’s talk about how to make fee adjustments. You have to base adjustments on logic; don’t let guilt or fear of losing patients keep you from raising fees when it’s time. Put a system in place to ensure you set up a fee structure that’s fair to both you and your patients. I recommend establishing a solid fee for each service and then adjusting the fee twice a year. Make the first fee increase 2% and the second 3% for an annual yearly increase of 5%. While this might not seem like a large increase, you’ll certainly notice the difference in your bottom line – without putting a large financial burden on your patients.
Your fees are the lowest in your community. You might think this is a great way to attract new patients to your practice, but it really isn’t. The truth is, the fees you set send current and potential patients a message about your practice. So if your practice happens to offer the lowest fees in the area, it’s the perfect target for price shoppers – not patients who are looking for a dental home.
If you haven’t already, now is a great time to find out how your fees compare to other dentists in your town. You can often find this information online or through your local dental society. If you discover your fees are the lowest, it might be time to consider an adjustment.
You haven’t researched the demographics in your area. Before setting or adjusting your fees, it’s important to contact your local chamber of commerce to collect information about your area’s demographics and income level. Your fees should be in line with the community you serve as well as reflect the level of service your practice offers.
You’re not meeting your financial goals. If you’re not bringing enough money in, not only does it keep you from updating your practice and investing in new technology, it also keeps you from meeting your personal goals. That’s why it’s so important to think about the lifestyle you want to lead and how many hours you want to work to get there before you set your fees. Having a clear vision and goals, both personally and professionally, will help you determine how much money you need to bring in each month, and that of course will help you establish your fees.
Your fees aren’t consistent. I’ve worked with dentists who opt to set their fees too low for certain services and too high for others. These dentists might keep hygiene fees lower than they should but charge a higher rate for crowns, for example. The problem? Rather than leading to practice growth, this confusing structure only serves to annoy patients. Base your fees on data from the community you serve as well as your goals and you’ll get much better results.
I know the thought of raising fees sends most dentists into a cold sweat, but it shouldn’t. Setting solid fees and adjusting them when it’s time really is an important part of growing your practice. Do your research, determine your goals and then establish the appropriate fees. If you provide exceptional care and show patients the value of dentistry and the services you provide, small fee increases won’t scare them away. In fact, most patients expect fee increases from time to time.
Still not comfortable adjusting your fees? Contact me and I’ll provide a Fee Analysis to help get you started.
Next week: Ready to raise your fees? Follow these tips
For additional information on this topic and more, visit my blog: The Lighter Side
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