BUSINESS

  BUSINESS STRATEGIES

IT’S ABOUT VALUE

HERE’S WHY A MERCEDES DOESN’T COST $14

A DOCTOR EMAILED me, “I am concerned about what I charge for a pair of glasses. The price even shocks me. On occasion, I get complaints.”

The biggest issue with this doctor’s pricing is not pricing at all. After all, he said complaints were occasional, and we know, “you can’t please all of the people all of the time.” He will always have complaints. With that constant in mind, we recommend clients keep patient pricing complaints to less than 20% and to gauge that via surveys.

On the same survey, query consumers on their likelihood of returning. That number should be greater than 90%. So, if 18% of patients complain about pricing, but 91% indicate a proclivity to return, you’re okay. Don’t look at pricing complaints in a vacuum.

WHAT IS YOUR POLICY?

It’s this doctor’s own shock about pricing that relates to the time-honored value equation:

Value = Quality/Price, sometimes stated as Value = perceived benefits/price.

With quality or benefits fixed, value drops as price increases. Our doctor isn’t really concerned with price, he’s worried about low value. Simple math gives him the solution (raise value). With a constant price, he needs to increase quality and perceived benefits.

To help with this, remember that there are two prices in every transaction. The anticipated perceived price and the actual price. That is the reason a Mercedes doesn’t cost $14. The brand radiates a perception of high quality with the associated expectation of high price.

Similarly, if you’re profit driven, you want to attract patients who perceive your pricing as on the higher end of the scale and expect high value to come with that high price. When they actually see the higher prices, their expectations are met.

Of course, you could “exceed” expectations with a lower price, but you can do that without lowering prices.

Eyeglasses #1: This is sold in a non-caring rushed fashion by a poorly educated salesperson. When the glasses are picked up, they are presented in a lab tray with dirty lenses and no case.

Eyeglasses #2: While choosing the frame, the consumer is offered a soft drink by a highly educated optician who relays a story about the manufacturing process of the frame. When the consumer returns home, a “thank you” email or answering machine message is waiting for him or her. When the consumer picks up the glasses, the glasses are presented in a jewelry box with a high-end case, eyeglass cleaner and a brochure containing directions about how to wear and care for them. When the consumer returns home, another email is sent thanking him or her for the purchase.

WHICH PAIR IS WORTH MORE?

What if I now told you that both pairs of glasses were exactly the same? Do you think #2 could be sold at a higher price? With two different scenarios for the exact same pair of glasses, the question to be asked is simply, “Which frame has a higher value?”

The answer is obvious and demonstrates that exemplary service helps to support higher product fees, increases value – and in our case, decreases the doctors’ angst! OM

GARY GERBER, O.D., is the president of the Power Practice, which specializes in making optometrists more profitable. Learn more atpowerpractice.com, or call (888) 356-4447. Visit tinyurl.com/OMcomment to comment.