Clinics Profits – How Price Rises or Cuts Affect Them

10% Off Has a Huge Impact on Clinics Profits

Understanding exactly what your clinics profits are and you’re making on each of your treatments or products is essential to running a successful clinic. Too many times I see clinics offering 10% off as an incentive, and not realising that (based on most profit margins) this can be hugely detrimental.

Lose Clients and You Can Still Increase The Clinics Profits

If your margins are 10%, for example, and you increase your price by 10%, how many customers can you afford to lose? Believe it or not, you could lose 50% of your customers and still turn over the same. Don’t believe me? Just follow these numbers to see exactly what I mean…

If you buy a product at 9 and you sell at 10, and you sell 10 you’ve made 10 profit.
If you buy a product at 9 and you sell at 11, and you sell 5, you’ve still made 10 profit.

So conversely, in the above example if they bought for 9, cut their price by 5% and sold at 9.5%, they’d need to sell 20 products to make the same amount of money, 20. Typically, across the business world a simple 1% increase in price will equal an 11% increase in profit.

Clinics Profits Need To Be Monitored

So just be really aware of the profit you’re making for each treatment or product, and I’m not saying never discount because you do have to consider the lifetime value of a client, but make sure that if you’re offering discounts or deals that the client knows and appreciates what the price should be and what an incredibly high level of service you are giving.

Use Value Based Offers To Increase Clinics Profits

Also it’s worth offering something with a high perceived value but with a low in-cost to you. This might be a product that costs you £20 to buy, but which the client would actually have to pay £40 for it. The client is getting a perceived £40 reduction but the actual cost to you is half this. You can also use this to reduce your spend on offers and so increase your clinics profits.

By Alan Adams The Clinic Coach