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This week Question: Should I Lower My Prices to Compete?
I have questions about my fees: Do I need to lower them to compete in this market?
Dear Dr. S,
Thanks for a great question and one that is asked often by surgeons all over the country.
In order for you to maximize your profits, you are going to need to choose from 3 pricing strategies. Every single business has to do this so it’s not to be taken lightly.
And, on top of that, you need to commit to THE ONE once you choose the right strategy for YOU (taking into account your personality, your image, your staff and your preferences).
Here are the 3 pricing strategies*:
- Lowest Price
- Best Product
- Best Total Solution
*(Excerpts Taken from Success Magazine, November 2014)
If you choose Lowest Price like Walmart, you will always compete on price and that becomes your differentiator and that’s difficult because that can be a race to the bottom – and bust. It’s all about lowering your costs and increasing your volume.
If you choose Best Product like Mercedes-Benz, you have way less patients BUT they are paying you more so you have a higher margin to work with.Now you compete by being the clear leader in your field. To make this work, you have to provide skills and results so much better (or at least perceived as so much better) than your competitors that patients will pay a premium for them. This is a game of “Quality vs. Quantity” so you need to spend a lot on PR, name recognition, reputation, skills and proof that show you are better. You also need to put in the time, money and effort to market you as the Best Choice by having the finest office, the finest staff, the best customer service as well as an incredible patient experience so your patients “sell” you to their other luxury friends who buy only the best.
If you choose Best Total Solution like Westin, you provide the best overall solution for your patients. Take Westin, for example, compared to the super pricey Ritz-Carlton who spends massive amounts of money on customer service, The Westin is a super nice experience with a killer Heavenly Bed for a lot less than the Ritz but it’s a cut above MOST of the cheaper hotel alternatives. So, they attract a nice size of the market that appreciate quality at a fair price.
In this pricing strategy, you are a hybrid between price and quality of skill and service. You’re not the cheapest and busiest but you are skilled, you have an aesthetically-pleasing office, with nice staff who are friendly, caring and highly-trained, your processes are smooth and consistent so the patient has a great experience with you, either on the phone or in person AND they get a great result at a FAIR price.
This Best Total Solution is the smartest approach for most surgeons. That means you play the game better than most of your competitors who are dropping their prices and going after the “price-shoppers”.
You, on the other hand, decide to spend more time, money and resources on:
- getting the friendliest, most caring staff to promote you and take great care of your patients
- training your staff to convert professionally without pushing
- creating a comfortable, upscale environment
- constantly improve upon your patient’s experience
But here’s the pearl: you need to pick one pricing strategy and focus. You’ll struggle otherwise because you, your staff and your patients won’t have clarity on who you are and what you stand for.
If you decide to be the cheapest, you have to be willing to abandon those patients who want more and are willing to pay for it.
If you go with the Best Product or Best Total Solution, you have to stop catering to the price-shoppers who nickel and dime you.
I have seen all 3 of these pricing strategies work in aesthetic practices throughout the country. You have to know what your own personality will tolerate. Some surgeons run a factory-type, marketing machine based on low price and efficiency while others have spent a fortune to get to be known as the “Premier Practice” that charges 3x that of their competitors.
The bottom line is to just pick one strategy because the beauty of focus is that you will save time, money, hassle and frustration when you STOP catering to all types of patients and focus on a certain group of patients who appreciate your particular pricing strategy.
You will also get much better results because all of your efforts will now go towards a certain group and not the entire market.
Lastly, you and your staff will have more clarity to make better decisions based on your “Branding”. For example, your patient coordinator who is in charge of “closing” will now be more clear what your objectives are so they can just sell price OR they can learn how to sell value.
What has been your pricing strategy?
Has it changed as the competition heated up? Is it working?
She is a business/marketing consultant to plastic surgeons. She speaks at medical conferences all over the world on cash practice building and trains staff to be converting rock stars.