One of the most foundational principles of economics, regardless of industry, is the law of supply and demand. These concepts govern how prices are determined through the interaction between consumers and providers in a marketplace. In simplest terms, the law of demand states that as prices increase, consumer demand tends to decrease. Conversely, the law of supply indicates that as prices rise, producers are more incentivized to supply goods or services, which often results in a surplus.
In practical terms, consumers enter every purchasing decision with a personal “willingness to pay” threshold. This threshold is influenced by income, perceived value, product features, and personal priorities. Even when customers are seeking the same service, such as a wellness exam or dental procedure, their willingness to pay can vary dramatically. As prices rise, the number of customers willing to pay tends to decrease; as prices fall, more customers are likely to find the cost acceptable and make a purchase. Pricing decisions, therefore, directly influence not only customer behavior but also the total volume of care delivered.
These fundamental economic dynamics have become particularly relevant in Veterinary medicine over the past several years. The COVID-19 pandemic introduced an unprecedented demand shock to the industry. As people spent more time at home and curtailed travel and leisure spending, many adopted new pets or increased their attention to existing ones. At the same time, Veterinary practices faced operational restrictions due to staffing shortages, curbside service models, and enhanced sanitation protocols, shrinking the supply of available appointments.
This imbalance, soaring demand paired with constrained supply, created the perfect environment for price escalation. Many practices raised prices, some significantly. It was not unusual to see across-the-board increases of 20%, with some hospitals implementing price hikes exceeding 30%. And for a time, this made economic sense. Clients were willing to pay more, wait longer, and drive farther to access care. Stimulus checks and reallocated discretionary income helped soften the blow of rising costs.
But the pandemic surge was not permanent.
As society has normalized, so too have consumer behaviors. Pet ownership has stabilized, discretionary spending is tightening amid inflationary pressures, and clients are once again scrutinizing the cost of care. Many practices now find themselves grappling with the consequences of having priced services at pandemic-era peaks, even as demand recedes. Clients are complaining about costs, appointment volumes are down, and practices are increasingly anxious about their financial stability, especially with ongoing economic uncertainty and recession talk.
During my time as CEO of a Veterinary group, we faced this very challenge. Our appointment counts and new client acquisition had plateaued. Rather than continue to push prices higher, we took a different approach: we lowered them by 20%. At face value, that may seem like a risky move. Intuitively, you’d expect a 20% price cut to lead to a corresponding 20% drop in revenue. But that’s not what happened.
In the first month following our pricing adjustment, revenue dropped only 8%. By the second and third months, revenues had largely normalized. This rebound didn’t come from a sudden surge of new clients, it came from our existing clients choosing to say “yes” to more care. More diagnostics. More dentals. More preventive treatments. The lower price point met their willingness to pay, and they responded by investing more comprehensively in their pets’ health.
Even more encouraging were the secondary benefits we observed. Following the pricing change, we saw a noticeable increase in our positive Google reviews, improved scores on customer service surveys, and an uptick in client satisfaction. Within just a few months, our visit numbers and new client counts began to climb, driven not by aggressive marketing, but by word-of-mouth and improved perceptions of value.
This experience illustrates a critical truth: pricing is not just about maximizing revenue per transaction; it’s about optimizing access, compliance, and long-term value. In Veterinary medicine, where the goal is to deliver the best possible care to the greatest number of pets, pricing decisions must reflect not only economic theory but also the realities of client behavior and trust.
As we look ahead in a post-pandemic world, Veterinary practices will need to reassess pricing strategies with fresh eyes. Blanket price increases can no longer be the default solution. Instead, we must consider how to align pricing with client expectations, market conditions, and the long-term sustainability of our profession.