Don't act like you're not discounting - DVM
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Don't act like you're not discounting
You don't write it on the invoice, but you're doing it. Here's how it happens and how to stop it.


DVM360 MAGAZINE


Steer clear of discount clubs

Now cometh the much-vaunted discount clubs. These organizations offer new clients to you if you play by their rules. Here's one example:

Discount Club ABC, mandates a 15 percent discount and one free office visit for its members' clients. The club makes you sign an exclusive contract forbidding you from joining any other pet consumer group.

Another, Discount Group XYZ, mandates you offer clients an impossible 30 percent discount with a 50 percent remission of a $99 to $119 membership fee. The bottom line is, elective procedures and the competitive marketplace already force too many discounted shopped services on the practitioner. The last thing we need are organized mandated discounts. They are unaffordable insanity.

Some pet clubs offer discounts on airfare, hotels and other travel needs to veterinarians. That would be great if any of us had the time to take as much vacation annually as a private in the army (30 days).

Discount drugs

A veterinarian offers discounts from drug distributors who operate with lean margins. Drug distributors today whose stock is rapidly rising in value operate on a 20 percent to 25 percent markup. To discount meaningfully (at least 15 percent) would require losing 60 percent to 75 percent of their profits. They can't afford that and neither can we.


Table2 Discounts' dangerous effects
If you discount an item, you have to sell more of that item to generate the same profit you would've made without a discount. (See "Table 2" above.) And don't forget that each additional sale you require to produce the same profit carries with it an overhead factor in receptionist and computer time.

Nobody gets rich by cutting prices unless they buy directly from the manufacturer who shared in the price reduction. Wal-Mart and Sears can do it. But even big-box stores have trouble maintaining a profit margin from time to time. Trust me: Veterinary practices can't discount.

Dr. Snyder, a well-known consultant, publishes Veterinary Productivity, a newsletter for practice productivity. He can be reached at 112 Harmon Cove Towers Secaucus, NJ 07094; (800) 292-7995;
fax: (866) 908-6986.

For a complete list of articles by Dr. Snyder, visit http://dvm360.com/snyder/


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Source: DVM360 MAGAZINE,
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