Whether you’ve purchased an existing Veterinary practice or launched one from scratch, one of the most critical—and daunting—tasks is setting fees for your services and products. Product pricing might seem straightforward: just follow the Manufacturer’s Suggested Retail Price (MSRP), right? However, with online pharmacies and big-box pet stores offering steep discounts, blindly adhering to MSRP can erode your competitiveness. Service fees? Even bigger challenge.
How do you price your expertise to remain fair to clients while covering rising operational costs? How do you offer competitive salaries to attract top-tier staff? And doing all this while achieving a healthy profit margin (ideally 20% versus the industry’s typical 8-11%)?!
The answer lies in creating a logical, data-driven fee schedule. That means it has to reflect the services your practice delivers, and it must align with the economic realities of your area, specifically the Median Household Income (MHI).
Let’s examine flawed historical pricing models and propose a modern, actionable solution.
Historical Pricing Models: Pitfalls to Avoid
Veterinary practices have historically relied on subjective and often ineffective methods to set fees, leading to widespread undercharging (10-60% below optimal) and slim profit margins. Here are four common approaches and their drawbacks:
- Monkey-See, Monkey-Do Approach
Many practice owners call competing clinics or mystery-shop prices for procedures like spays to set their own fees. For example, if the clinic down the street charges $200 for a cat spay, they match or slightly undercut it. The problem? Over 80% of practices undercharge due to this same copycat approach, perpetuating a cycle of undervaluation. A practice in a high-cost urban area might charge $250 for a procedure that should be $400 to cover overhead and ensure profitability. This method lacks rational grounding and fails to account for your practice’s unique costs. - Postage Stamp Approach
This outdated model tied a 20-30 minute exam fee to the cost of a postage stamp. For instance, in 2005, when a first-class stamp cost 37 cents, an exam might be priced at $37. Other fees were set by intuition, raised incrementally until clients complained. This approach is highly subjective and ignores actual costs like staff salaries, equipment maintenance, or rent. For example, a dental cleaning requiring an hour of staff time and specialized equipment could be grossly underpriced at $100 when it should be $250 to reflect true costs. - Client Shoe Approach
Even more subjective, this method assumes a client’s appearance reflects their ability to pay. A client in polished Prada shoes might be charged more than one in dusty work boots. But appearances are deceptive. I once had a client in worn boots who owned a gravel quarry with lucrative government contracts and spent thousands on his dogs’ care. Conversely, a Prada-clad client might be maxed out on credit with little disposable income. Wacky? Yep. This approach risks alienating clients and misjudging their financial capacity, leading to lost revenue or strained relationships. - Regional Pricing Models
Local Veterinary associations sometimes survey state or provincial fees to provide pricing guidelines. For example, a state association might report an average spay fee of $220, prompting practices to align with this figure. While this offers a broader sample than the monkey-see approach, it still relies on data from practices that are likely undercharging, failing to account for local economic variations or individual practice needs.
The Solution: A Data-Driven Fee Schedule
To overcome these pitfalls, create a fee schedule that is:
- Service-based: Reflects the specific actions and expertise your practice provides.
- Localized: Tailored to your area’s MHI, ensuring fees are competitive with other household expenditures (e.g., dining out, car repairs) while supporting practice sustainability.
This approach ensures fairness to clients, covers costs, and boosts your Average Client Transaction (ACT)—the average revenue per client visit—while maintaining a healthy profit margin.
The Action Item Approach
Every task in a Veterinary practice, from answering the phone to performing complex surgery, can be broken into discrete action items. Each action varies in time, expertise, and resources, and fees should reflect these differences.
For example:
- Low-effort actions: Scheduling an appointment (5 minutes, front-desk staff) warrants a modest fee, like $10-15 (or as you will see later, a smaller % of the Median Household Income).
- High-effort actions: A 45-minute dental procedure requiring a veterinarian, technician, and anesthesia might justify a $300 fee (or a larger % of the MHI).
Consider a visit for two dogs: one office call ($15) to book the appointment, but two exams ($50 each) for the individual assessments. By assigning fees to each action item and accounting for quantity, you create a transparent, logical fee structure.
Additionally, adjust “front-end” fees—those quoted to prospective clients, like spays or vaccinations—to minimize pushback and retain long-term client value (a 12-year-old dog’s lifetime value averages $18,000).
À La Carte vs. Bundled Services
Two approaches to presenting fees are the à la carte and bundled services models:
- À La Carte Approach
This method itemizes each action on the invoice, enabling staff to walk clients through the Patient Care Plan (PCP) with clarity. For example, a yearly wellness visit for two dogs might include:- 1 x Office call: $15
- 2 x Wellness exams: $50 each ($100 total)
- 2 x Fecal analyses: $30 each ($60 total)
- 1 x Nail trim: $20
- 2 x Distemper/Parvo vaccines: $25 each ($50 total)
- 1 x Rabies vaccine: $20
Total: $265
This transparency builds trust, clarifies value, and empowers non-DVM staff to present invoices confidently. For instance, a receptionist can explain, “The $15 office call covers scheduling, while the $50 exam includes a full physical assessment.”
Clients appreciate understanding what they’re paying for, reducing objections.
- Bundled Services Approach
Here, services are packaged into a single fee, e.g., $350 per dog for a wellness program. While simpler, this can obscure individual service values and often requires a veterinarian to present the invoice, limiting delegation. For example, a client might question a $350 bundle without understanding it includes vaccines, exams, and diagnostics, leading to confusion or pushback. The à la carte approach is often more flexible and staff friendly.
Setting Fees as a Multiple of the Median Household Income
To assign dollar values to action items, use your area’s Median Household Income (MHI), and a percentage or multiple of (I.E. Blood Collection & Handling = .0005 x MHI), as a guide. MHI reflects your client base’s economic capacity, helping you set fees that compete with other discretionary spending while optimizing ACT.
A practice in a rural area with an MHI of $50,000 might set a spay fee at $250, while an urban practice with an MHI of $80,000 could charge $400 for the same procedure, reflecting higher costs and client expectations.
More examples:
- In a ZIP code with an MHI of $60,000, a routine exam might be priced at .001 x MHI, $60.
- In a wealthier area with an MHI of $100,000, the same exam could be the same 0.001 x MHI, yet now $100.
- Complex procedures like surgery, with more action items, would be the same percentage of the MHI, but might now range $1000-$5000 in a $60,000 MHI area.
To find MHI, check U.S. Census Bureau data or local economic reports (e.g., census.gov or local government websites).
Managing Front-End Shopper Fees
Clients often compare “shopper” fees like spays or vaccinations before choosing a practice. Overpricing these can deter clients, costing you their lifetime value. For example, a $500 spay quote might drive away a client whose pet could generate $18,000 over 12 years. Instead, set these fees competitively—say, $250 in a $60,000 MHI area—while ensuring profitability through other services like diagnostics or follow-ups.
Regularly review client feedback to identify fees causing friction and adjust accordingly.
- Catalog Action Items: List every task, from scheduling to surgery. Include small blocks of time reflecting complexity and the staff involved. E.g. quantity X minutes of anesthesia and surgery that multiplied times a value (% of your MHI).
- Update PIMS: Enter action items into your Practice Management Software for streamlined invoicing.
- Research MHI: Use census data or local reports to find your area’s MHI.
- Assign Fees: Set dollar values for the various action items based on MHI, time, and expertise. For example, a large dog hospitalized for pancreatitis might have the same quantity of hospital days, but the size of the kennel take would command a higher daily price than let’s say perhaps a small dog or cat with a similar condition.
- Adjust Front-End Quotable Fees: Keep shopper fees competitive to retain clients. For example, lower a $395 basic dental package could keep you competitive with shoppers but make additional profit with add-on minutes for oral radiographs and extractions.
Another example is low front-end quotable canine spay and neuter prices but add-on extras for Ortolani (under anesthesia) hip-exams, hip radiographs, or extra surgical minutes for deep-chested dog gastropexies.
- Update and Train: Regularly update PIMS and train staff to present fees confidently, emphasizing value (e.g., “This exam ensures we catch issues early”).
Free Resource
Struggling with your fee schedule? Download our free Beta-version Fee Schedule tool!
- Click the link below.
- Receive an email with the attachment Fee Schedule.
- Download the attachment.
- Input your area’s MHI.
- Calculate suggested fees tailored to your practice.
Conclusion
A logical, MHI-based fee schedule empowers your practice to thrive financially while delivering value to clients. By moving away from outdated, subjective pricing models and embracing a transparent, action-item approach, you’ll build trust, optimize revenue, and ensure long-term sustainability. Stop guessing—start pricing smarter today.