Why do consumers think vet services are expensive - and is that really a bad thing?

by Ramsden, J
15 Nov 2018
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Recently while at a friend’s dinner party the topic of conversation turned to pets. Phones were immediately brought out and Instagram photos shared, funny stories delightedly retold like one big 21st party. But then just as suddenly the delight turned sour, the mood shifting to from joviality to slight annoyance. Someone had mentioned vet fees. Everyone had a story to tell about the 'outrageous' fees they had been subjected to on a visit to the vet. I sat and listened...

It’s a sentiment echoed in online customer reviews for vets across the internet: “The staff were fantastic, and my pet is doing great, but gee was it expensive!” While we all know that this isn’t true, the general public doesn’t. It’s what they call in public relations, an ‘image problem.’ If anything, we’re not charging enough, while fees continue to drop due to a very competitive marketplace. So why do consumers think vet services are expensive and is that such a bad thing?

The role of pets in people's lives has evolved considerably. In the book A Short History of the Twentieth Century, author Geoffrey Blainey mentions pets in the first few pages as being “one of the most significant changes in western family life in the last one hundred years.”

The growing importance of pets in people’s lives means that people are prepared to spend more on their animals and this is linked to more discussion about price. From the consumer’s perspective, seeing a service as expensive can be due to a number of factors, the perception that they didn’t quite get the value they anticipated or a general misunderstanding of the service on offer.

Emotional purchases are more inclined to elicit the response of being “expensive” than commodity purchases. Commodities, by their nature, are generally well understood from a price point of view, the consumer can make a clear decision about buying based on the dollar amount.

Not so for emotional purchases. When consumers engage with a vet, particularly for their pets, the emotional component is most significant and it’s hard to price.

Consumers that are well-bonded to their vet clinic are unlikely to change vet clinics due to price. In other words, they value the relationship with the clinic more highly than the price paid for the services. They believe that the service is “expensive” but this is almost always trumped by the high value they place in the care of the vet team and the relationship they have with the practice.

For these clients saying that their vet is “expensive” is normal and independent of the actual fees. Another way of saying this is that we could double our fees and have the same level of people complaining about vet fees. Of course, there are exceptions to this, for example, there’s a requirement to provide welfare services or in some situations, non-vets compete for the same service and drive prices down.

One solution is to develop more ‘consumer-friendly’ services, tailored so the consumer can easily perceive their value. This work can be done by individual practices and industry associations and requires an ongoing investment. A good example is shifting traditional vet services to a subscription model. Traditionally, vet services have come in a lump with large single payments. Looking at consumer trends, the move to subscription is strong and driven largely by technology.

Netflix is probably the best example. The thought of buying a movie today seems crazy when I can spend a few dollars a month and access as many movies as I want. Given a range of factors, consumers find this model appealing and lots of services are moving this way.

Supporting that, clinic wellness plans and food purchase plans do well, consumers perceive them to be valuable. It is important to keep in mind that consumers want a fair price for a fair service and will buy the same product cheaper if given the chance, most of us with our consumer hat on would do the same.

Looking at our mindsets, as a general rule we do not understand or cope well with the statistical nature of sales. If we were expert salespeople, we’d understand and be comfortable with 20% of our clients saying we’re too expensive. However, we’re caring science types and don’t stand up well to this sort of judgement, even if it is driven by universal rules that we can’t control.

The mindset of the vet is to succumb to the pressure of the complaining client or even the perception that people think we’re expensive and reduce prices in an effort to make those comments go away, as if it will make people happier.

Unfortunately, the comments won't go away. The combination of strong emotional connection that people have with their animals, the sometimes poorly understood veterinary services provided and the unrelated behaviour of people to respond this way will contribute to people saying, regardless of the price: “the vet is so expensive.”

That does not also mean they are unhappy. Most clients of vet practices are very happy (we see this every day through the Google and Facebook reviews left by clients) with these same people will also say the vet is expensive. With happy clients, you might have these comments qualified by “expensive but so worth it” or “Cost me $20,000 but the vet saved him. He’s my baby, I’d do anything for him.”

The last 30 years have seen specialist services grow significantly in this country. This has been an interesting test case for increasing fees. If we take away the technical abilities of specialists, what they've been able to do is remarkable.

The cost can be 10 times what a consumer is used to paying at the general practice – and the specialists are busy, consumers are lining up to visit.

It’s an interesting case study where consumers are given the choice to have the problem solved in the general practice or go to the specialist - and they choose the specialist knowing that the price might be ten times as much. We know there are technical differences and the specialist probably was able to do a better job. However, the client doesn’t really understand this - they only perceive a difference, value it and pay for it.

So, what is it about a general practice that means we don’t put our prices up and are worried about consumers saying we're expensive? There is definitely an issue with the current veterinary business mindset, which translates to being reluctant to put up prices. A more strategic view of business management would see price increases or other ways to drive revenue as integral to the success of the business.

Competition plays an important role and one that can't be ignored. It’s quite likely that competition among vets has kept vet prices low, not high. Discounting is often used and in the long-term is an expensive form of marketing, you lose more than you gain. And even in this context, where prices are being discounted, consumers are still saying vets are expensive, clearly not connected to the reality but to the perception.

While hearing a consumer say that the “vet is expensive” can be uncomfortable, as a profession we need to learn to see past that and focus on improving our businesses. Putting fees up is part of that process, but also a greater investment in business management and a focus on becoming more consumer-focused, ensuring we’re delivering services that are what consumers want.

The main way that vets can increase their fees without threatening their business is to do it independently and selectively. A clinic will increase their fees on consults, or a distinct service type, and only increase it by a few percent, maybe 10%. In all the cases I’ve been involved in, there’s never been a clinic who reported lost business as a result. Regular small increases are an effective way to increase revenue without losing clients.

The other way is if the veterinary community all began to increase fees. This will take a collective change of heart about fees as this behaviour can’t be regulated (by law we’re not able to all agree to put up prices). It’s up to the individual business owners to do it.

For a business with many outlets, a significant percentage of all the clinics could do it and make a big change in the profession, others would follow suit.

The third way is to create new services and packages, different ways that the service is delivered. In effect, matching consumer demand more closely. This is where investment in business management and marketing strategies will bear fruit.

As a profession, as business owners, we need to push through the fear of people saying we’re expensive and start charging for our services in a way that makes clear the value of what’s delivered to be much more in line what the consumer values. Currently, we undervalue significantly.

We need to push through this is for the long-term viability of the profession, the team members quality of life, the health of the animals we look after and the happiness of the clients we serve.

To do so will take courage. And the effort needs to be in the area of how we run our businesses, not in better veterinary technical training. There’s a clear path forward and it’s up to us to take it.

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