Our Veterinary Client Was Afraid to Raise Prices. The Numbers Showed Us Where the Real Problem Was.
By ProfitWise - a Visa Business Plans company
One of our veterinary clients had been watching the cost of running her practice increase for some time.
Because we handle the practice’s specialized bookkeeping, we could see it in the monthly financials. Revenue was growing, and the practice remained busy, but margins were gradually shrinking.
During one of our monthly meetings, we started looking more closely at what had changed.
The veterinarian already had a pretty good idea. Medications and medical supplies were costing more, outside lab fees had increased, and payroll had gone up as she worked to retain good employees.
She also knew that she probably needed to revisit some of her prices.
She just didn’t want to.
Her Clients Were Already Complaining About the Cost of Veterinary Care
This was an important part of the conversation.
Our client wasn’t ignoring the financial side of her practice. She was very aware that pet owners were feeling the impact of higher veterinary costs, and she didn’t want to respond to every increase in her own expenses by simply passing it along to them.
We understood that.
So instead of starting with the assumption that the entire fee schedule needed to increase, we used the financial information we already had to understand where the practice was actually feeling the pressure.
That led to a much more useful conversation.
We Didn’t Look at Every Service the Same Way
A routine exam, a dental procedure and a diagnostic test don’t have the same economics.
Each requires a different combination of veterinarian time, technician time, medications, supplies, laboratory work and equipment.
As those underlying costs change, a service that was priced appropriately a few years ago may no longer be producing the same margin.
That doesn’t necessarily mean every service needs a price increase.
By looking more closely at the practice’s expenses and the costs associated with different areas of the business, we could help the owner identify where the financial pressure was actually coming from.
If laboratory costs had increased substantially, for example, it made sense to look at the services that relied heavily on outside labs instead of assuming that routine exam fees needed the same adjustment.
That is a very different approach from increasing everything by an arbitrary percentage.
Revenue Wasn’t Telling Her the Whole Story
This is also why we weren’t particularly concerned with the fact that total revenue was growing.
That was good news, but it didn’t tell us what the practice was keeping.
If the practice collected more from clients while simultaneously spending considerably more to provide those services, the owner could be working harder and generating more revenue without seeing a comparable improvement in profit.
During our monthly meetings, we explain those relationships in plain English.
We want the owner to understand not only that an expense increased, but what that increase means for the practice. When we compare the numbers over several months, we can also distinguish between an unusual expense and a change that is becoming part of the normal cost of doing business.
That context matters before making a pricing decision.
Raising Prices Wasn’t the Only Thing We Looked At
Once we understood where margins were tightening, we could look at what was actually driving them.
In some areas, pricing might need attention. In others, the issue could be how supplies were being purchased, how services were being staffed, or whether certain outside costs had increased enough to warrant another look at vendors.
The objective wasn’t to find a reason to raise prices.
It was to understand why the practice was becoming more expensive to operate and determine which changes would make a meaningful difference without compromising the quality of care.
That’s where the analysis can go beyond the bookkeeping itself.
Our bookkeeping gives us a reliable history of what has been happening inside the practice. When a client needs to make a decision like this, our Fractional CFO work lets us take that information further and evaluate the financial impact of different options before the owner implements them.
The Answer Wasn’t “Raise Everything”
For this veterinarian, that mattered.
She didn’t want to make veterinary care more expensive simply because her own costs had increased. At the same time, continually absorbing those increases wasn’t a sustainable solution for the practice either.
Having the numbers in front of us allowed us to have a much more specific conversation about where pricing still made sense and where the economics had changed enough to deserve attention.
Some services might need an adjustment. Others might not.
More importantly, the owner could understand why.
That’s what we want our clients to get from their financial information.
The numbers shouldn’t simply tell a veterinarian that the practice made more or less money last month. They should help explain what is changing inside the business so the owner can make thoughtful decisions about what to do next.
For this client, that meant finding a balance between keeping her practice financially healthy and remaining sensitive to what veterinary care was costing the people who trusted her with their pets.
