Finance32: Dental School’s Missing Curriculum
Finance32: Dental School’s Missing Curriculum
Great clinical skills simply are not enough for dentists to achieve financial success. Let Buckingham Strategic Wealth's Practice Integration Advisors share what else you need to know to realize your lifetime goals and obtain financial peace of mind.
Buckingham Strategic Wealth

Is It Time to Raise Your Fees?

Is It Time to Raise Your Fees?

7/31/2023 10:52:09 AM   |   Comments: 0   |   Views: 122

As a financial planner specializing in supporting the unique needs of dental practitioners, I also have the opportunity to learn about some the most pressing wealth issues facing our dental community. While my perspective comes from that of an advisor and not a provider, my role offers insight into the common threads that you may be facing. With today’s economy, one of the most frequent questions I hear pertains to fees … and the potential for raising them. So, let’s dig in!

We have found that a number of our clients held off on increasing their fees in 2020, 2021 and even 2022. While they saw basic expenses such as the cost of labor and supplies snowball during that time, they chose not to increase their fees to match the upsurge in cost. The result? They most likely absorbed the increased expenses from their bottom line and their personal bank account.

The question becomes: Is this the right time to raise your fees? 

The short answer: Absolutely! 

Many industries have increased their costs to keep pace with the overall price hikes over the past few years, and as a business your dental practice shouldn’t be any different. Besides paying more for day-to-day expenses, the current cost to finance new equipment has increased with interest rate hikes. In addition, the labor market is still experiencing a shortage of qualified team members, thus increasing hourly wages over the past few years. If you’re not regularly increasing your fees, then your income and profit is what is absorbing these increases and that is not a long-term successful solution.

How do you start thinking about a fee increase? In the past, a “standard” fee increase was around 3%. But is there such a thing as standard now? Over the past one to two years, we’ve encouraged practice owners to consider a fee increase between 5% and 10%. If you aren’t comfortable with a 10% increase, we recommend two 5% increases over a 12-month period. Practice owners may consider a fee increase across the board or choose to be more strategic by reviewing procedures individually, helping to ensure a specific procedure doesn’t pass a designated dollar mark. As always, it is up to each practitioner’s comfort level to designate the ratio of the fee increase.

How do you handle feedback, post fee increase? Our clients are, rightfully, concerned about the feedback they may get regarding the changes. The good news is that we rarely hear of issues. In fact, in many cases patients are unphased by the increase. However, being prepared to communicate these changes is key. It will be helpful to explain that costs have gone up over the past few years, and the increase has been in reaction to those economic changes. Sharing a perspective of how long you have held on pricing increases can give an additional perspective. Most patients will understand the increase of fees is to match increased costs.

What’s next? The team at Buckingham looks forward to sharing additional perspectives on some of the most pressing financial questions from our clients.  If you are one of the many with questions about how the new Secure 2.0 Act may impact your employee’s retirement plans, you won’t want to miss our next post! My colleague and Practice Integration Advisor Tom Bodin will be breaking down this complicated legislation to help you and your staff get the most out of your money.

As always, if there are specific topics you’d like us to tackle, please reach out to our team!

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third party data and may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. 

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