In this guest blog from Ashley Latter, he urges dentists to consider the real cost to their business of discounting their fees.
Talking to patients about the cost of treatments is something many dentists find uncomfortable. As is pointed out quite often, the business side of dentistry is not something that’s covered in the BDS syllabus, so graduates are not often equipped to deal with it. Treatment fees are what keeps your business going so, getting them right is vitally important.
Discounting treatments is often something the dentist works out in their own head. Nothing is written down so usually the patient has no idea that a discount has been applied to their treatment. In a lot of cases, it’s something that happens on the spur of the moment. The dentist may intend to charge the full amount for the procedure but by the time they’ve informed the patient of the fee, they’ve given them a discount! I deliver courses worldwide, not just in the UK, and I find this is something common across all countries. Dentists hand out discounts unaware of the effect this has on their business.
I came across a dentist recently who confessed that he discounted his fees at least twice, if not three times, per day. His usual working week is five clinical days, sometimes six, which means on around 15 occasion each week he’s asking for reduced fees. Over the year, that will amount to tens of thousands of pounds of lost revenue. It turned out that he wasn’t the only course member who was offering discounts regularly as quite a few of the attendees were doing the same thing.
How does discounting affect your bottom line?
By discounting or charging incorrect fees you are giving away more money than you may at first realise.
Maths has a way of appearing counterintuitive sometimes! For example, by discounting your fees by 10% this can reduce your profits not just by 10% but by as much as 28%. Here’s how it works.
If your fees are – full retail price £100.00, costs £65.00, then your profit is £35.00.
However, if you reduce the price on the spur of the moment by just 10%, then the retail price becomes £90.00, your costs are still £65.00 and your profit falls to £25.00.
Although the difference in profit is only £10.00, which doesn’t seem much, that equates to 28% off your profit. Which is not inconsiderable. Over the course of a year, that will amount to a large sum of money you will have given away without really considering the consequences to you and your business.
Other effects
Besides the financial adverse effects of discounting, the practise can also be detrimental to the dentist’s own wellbeing.
Frequent discounters tend to also work the longest hours. If they’re giving away their profits so readily, the only way to make up for this is to work harder to replace it. They also tend to be the ones who take very few holidays or time off work. This is often quite simply because they can’t afford to do so.
All this can have a negative effect upon morale and general health. It’s important for us all to be able to rest and recharge. If you’re not getting the opportunity to do that because you’re working all the time, then that will catch up with you eventually. By doing this you’re putting yourself at risk of burnout, your morale will suffer, and you may even start to become disenchanted with your profession altogether as you begin to feel undervalued.
There can also be dire consequences for your relationships with your loved ones too. Working long hours six days a week doesn’t leave much time or energy to devote to children, partners and friends. Like gardens, relationships need tending to be able to thrive.
I am not against discounting per se. There is a place for it on occasions, but it needs to be part of a well thought out strategy and not just something offered on a whim if you want your business to remain healthy.
