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Will raising fees ease your financial strain?
How much a client will pay for a given service follows a time-tested formula.
There is a great television comedy I've been watching lately: Antiques Roadshow. Funny people bring prized objects to "experts" who sometimes appraise their value at thousands of dollars. Despite the thrilled squeals of the owners, no one to my knowledge has ever sold one of these treasures for anything remotely close to its appraised value.
The conventional wisdom from other financial "experts" in veterinary medicine was that a doctor should expect eventually to sell the practice for about the equivalent of one year's gross income. Some doctors are shocked and dismayed to discover that today the actual price paid at closing is much closer to 40 percent of that number.
One thing I learned from my Dad (later confirmed by real life) is that anything is exactly the amount of cash someone is willing to put into your hand — and not one cent more.
Financial "experts" could use any formula or evaluation process fashionable at the time but the only thing that really mattered was the dough you put in your pocket.
Veterinary student loan debt is a very pressing, hot-button topic lately. While a number of suggestions have been made to help alleviate the problem, the main thrust is for vets in private practice to raise their fees in order to pay associate vets a higher, "fairer" salary that is more in line with other professions. If only veterinarians would charge for services what the "experts" calculate is the "proper" (appraised) value, everyone's financial problems could be helped overnight.
From the client's point of view, a nail trim is a nail trim is a nail trim, and has a certain value. They don't really care that you have purchased a state-of-the-art, computer-guided laser nail trimmer with built-in air freshener. If you have made it more expensive to deliver the desired service, that's your problem, not the client's.
Despite pronouncements from financial "experts," veterinary services are worth exactly the amount of money the client is willing to put into your hand — and not one cent more.
Many veterinary service fees are paid from disposable income, and there is a point where the client will do without rather than pay the "appraised" value and resent you for having made him or her choose. We are beginning to see that clearly in action in these difficult economic times.
A simple suggestion for new graduates who feel overwhelmed by debt and are also feeling underpaid: Go get (another) huge bank loan, open or buy your own practice, charge fees the way they are supposed (experts) to be charged and solve all your own financial problems at 45 hours per week!
If you find it difficult in the real world to maintain a client base and still eat with that plan, check to see if you have any oil paintings in your attic that you could take to that TV show.
Hey, you never know!
McLaughlin is a small-animal practitioner in Plano, Texas.