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05 June 2020

Why Discounting is Bad for Veterinary Practices


Vets have long debated whether discounting is good for their practice or not, and you could be on either side of the debate.

But I think you will agree with me when I say this:

Vets are unfairly expected to give discounts.

According to a study by the Canadian Federation of Small Businesses, 41% of vets offer discounts. Compare this to pharmacists, dentists, and orthodontists where the number is less than 10%.

And it’s about time we stop.

Have you ever wondered what discounting say about your practice?

That, all you care about is money, not the professional services. Not the care to your patients. Just money.

which is completely false.

It says that clients are overpaying the rest of the time and the services are only fairly charged when you are offering a discount.

But that’s not all.

Here’s a More Exhaustive Answer to Why Discounting is Bad

1. It’s unreliable for acquiring clients

If a pet owner is coming to you just because you are offering a 10 or 20 percent discount, who’s to say they won’t leave when someone offers a 25 percent discount?

If the beginning of this relationship is on the wrong footing, it’ll never last long.

Bottom line?

Discounting is an unreliable way to acquire new clients.

2. It eats into the budget

For every dollar you give away as a discount, you need to make up for it.

Why, you may ask?

Well, you still need to pay the staff and doctors. You will still be charged for electricity and other energies. You still have to pay for inventory.

3. Discounts promote more cuts

Picture this:

You offer a client a discount for one service. They ask for “special considerations” in other services.

It’s just human nature. We all tend to demand a meter when we are offered an inch.

What’s more?

It can lead to you feeling ill-treated or taken advantage of.

And that, among many other things can lead to burnout.

4. Your profit is more sensitive to discount than your revenue

Let’s see with this case:

Suppose the invoice value for a month was $60000.

And your net margin is 20% on this amount.

So:

Revenue (without discount) = $60,000

Cost: $48,000

Profit (without discount)= $12,000

Now, let’s say you gave an average of 10% discount on this amount.

Your costs remain the same.

As per the new calculations.

Revenue (with discount) = $54,000

Profit (with discount) = $6,000

% change in revenue: 10%

% change in profit: (50%)

Now you can see this.

A 10% discount affects your profit by 50%.

5. It incentivizes reckless behavior

Consider this:

If you incentivize people who bring more than one pet at a time, it can encourage pet owners to get more animals.

And the kicker?

They may not be able to care for them properly.

This leads to stress for the animals, the owners, and the vets – who now have to shoulder unnecessary responsibility.

But it has even more far reaching consequences.

6. It’s unfair to other clients

And it breeds resentment.

Hear me out:

In my experience, vet practices that offer discounts for multiple pets do this to build loyalty.

But if you are offering multiple pet discounts, aren’t clients with fewer pets subsidizing those who get them.

Bottom line?

It’s unfair to people who know their financial means and don’t choose to get multiple pets just to avail the discounts.

7. It leads to poor patient care

This is the most important of them.

When you offer your clients a discount for bringing in multiple pets, it means your doctor will be dealing with more than one patient at a time.

In my experience, every patient needs to be dealt with on its own.

And you know what that means?

Someone is getting short-changed.

What’s worse?

Most clients don’t internalize all the doctor’s recommendations when there are multiple pets in one visit.

And why would you want to incentivize a practice that promotes less care than what each pet deserves?

Now, you must be wondering if discounting is so bad, why do vet clinics still offer it?

Here's the point.

Which brings me to my next point…

When Used Wisely, Discounting Can be Quite Helpful

If managed effectively, it can be quite good for your practice.

How?

One of the most effective ways of ensuring discounting doesn’t cause loss of profit is by giving incentives to clients in the ‘low’ season.

Hear me out:

Vet services have some seasonal variations.

For instance, if you are managing a equine vet practice, you may see more clients in the season, but work may be less during the off season.

Use this to your advantage.

Give clients a discount when they seek your services, when work is not in full capacity.

Ask them to get their equine friends checked up during the off season for a discount.

Not only does it help your clinic by increasing overall revenue, but it does something else too:

Better patient care.

When there is less time pressure, you can administer better patient care and communicate in a more holistic way.

Thus, a good way to use discounts is to offer a small deduction in a soundness exam ahead of the high season. You can also plan upcoming appointments for the rest of the year at this time.

This approach has twofold benefits:

One, the animal will benefit from the enhanced care. And two, the value of the service will be enhanced.

Allowing and incentivizing the owner to pick a different time for a service does several things for you:

  • Increase in overall revenue.
  • Increase in usage of the vet team’s capacity in a more balanced way.
  • Optimization of quantity, value and quality of the service.

But this is just one example where discounting can be used in a good way.

… And the Problem Remains

Discounting is degrading.

Deeply so.

It feels tacky and demeaning.

In fact, it makes me feel like valuing down our services by discounting is no better than selling toilet paper at a cheaper price in a sale.

It strips down our work of all our professional expertise and commitment.

And that’s disrespectful.

Moreover, the idea that discounting can bring in more customers is outdated. There is no data to support that.

But the question remains:

How do you give back? How do you show clients that you don’t just care for money? And most importantly, how do you make things better for the fuzzy fur babies that made you take up this profession in the first place?

Worry not, we have some tricks up our sleeve.

There’s A Better Way To Show Clients That You Care

All professions need to give back to the community. Vet care included.

To this end, I suggest using two practices that can help your clinic stand out, without any of the mess that comes with discounting.

First - Charity

It’s simple:

Pick a charity organization that you are passionate about and donate to them.

Establish a budget for this. And tell the organization or rescue group that once the cap is reached, you will be charging normal fees.

Or here’s another idea:

Allow your doctors a charity account. Credit a set amount, say, $2000, to this account each year. And tell them they can use it at their discretion.

For instance, if a doctor wants to give a client a discount, they can deduct the discount amount from their charity account.

Once the $2000 limit is reached, the doctor can’t give anymore discounts.

The latter approach allows your vets to make their own choices regarding who they want to give discounts.

It will also inculcate a sense of gratitude in your clients towards their vet.

And the best part?

They now know that your clinic is not a non-profit organization.

That your services come at a price.

And that a discount is something to be thankful for, not demanded.

There’s another alternative to discounting, though…

Offering complimentary services

For instance, promote Pet Dental Month and offer a complimentary cleaning or dental care kit with other services.

This will do a couple of things:

The service will cost you less than the discount.

If the client is unfamiliar with the service, and then he has a good experience with it – he may start using it regularly in the future.

And lastly:

The service will have a higher perceived value for the client than a discount.

Which brings me to my next point…

Increase Value To Forego Discounts Completely

Here’s how the service industry works:

Value of the service = Benefit - Price

What does this mean?

The price of a service only matters if the value is not good enough.

And guess what?

There are two ways to increase value: decrease the price of the service, or increase the benefit from it.

Unfortunately, most people seem to take the easy way out by cutting prices and offering discounts.

But, there’s a better way:

Educate your clients about the benefits of your services.

How?

Explain what is involved in a procedure. Show videos of the procedure. Give a tour of the clinic. Explain what can happen if their pet doesn’t get certain services.

The bottom line?

Discounting can be helpful if used in a thoughtful manner. But if used in a reactionary and rash way, it can disrupt cash flow and affect revenue negatively.

Wouldn’t you rather educate your clients about the quality and importance of your services, instead of giving discounts?

And most importantly:

Isn’t it time you truly value your services and stop giving things away?

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