The value of an annual fee increase
Originally published in OVMA Focus Magazine January/February 2024
BY NANCY POPPE
A new year has rolled around again and it’s time to consider the fees you’re charging. Should they be increased? Over the past year you may have had clients complain about your fees, and you may be sensitive to your clients’ ability or willingness to pay more for services.
We’ve all felt the effects of inflation at the grocery store, gas pumps and with any purchases we make. Your practice isn’t immune to inflation and its effect on your bottom line. As OVMA’s Accounting Service, we know that DVM and non-DVM wages make up half of the expenses in a veterinary hospital. To retain and attract staff, wages need to increase as the cost- of-living increases. An annual fee increase is a necessity to keep your practice financially healthy.
Ultimately how your fees are perceived comes down to value. Veterinarians offer a valuable service to pet owners, who want to provide the best care for their animals. When clients are educated on what they’re paying for, they will value the service.
OVMA’s 2023 Ontario Pet Owners Report indicates that being interested in a pet’s well-being was the most important factor for pet owners when choosing a veterinarian. However, offering reasonably priced services was also highly rated when choosing a veterinarian. How do we reconcile these two factors? Clients value honesty and communication— they must understand procedures and feel comfortable with the recommendations being made. Team members who communicate services with confidence and clarity will give clients the knowledge they need to see the value in the service being recommended. Once the value of a service is understood by the client, the fee becomes less of a concern and more readily accepted. All team members need to be on the same page. A team that speaks with one voice will give clients a consistent message and achieve the goal of excellent client education.
Review your current fees and compare them to OVMA’s fee guides. Now is the time to make the necessary corrections to your fees. Once you’ve decided on your annual increase, be sure to educate your staff on the changes. It’s imperative that staff understand the fees. If they think a fee is too high, they won’t effectively communicate value to clients.
Team members see revenue coming in, but they don’t see the costs of running the practice. Without a clear understanding of the whole picture, they may jump to the conclusion that the clinic is charging too much. Share this information with the team. You might consider using a pie chart to illustrate the cost percentages for your clinic, without sharing your financials. Staff will understand that the practice needs to set fees appropriately to cover the costs of day-to-day operations. Once your team is on board, they will be your best asset in advocating for your practice.
Annual fee increases should be embraced rather than dreaded. They’re necessary to operate a healthy practice. When you have your team on board, the fee increase will go smoothly and be accepted by clients.
Nancy Poppe, CVPM, CPB, is practice advisor at VetCPA.
Reprinted from the Ontario Veterinary Medical Association’s Focus magazine www.ovma.org
