One of the simple rules of business is to make more [money] than you spend.
And that makes sense.
Otherwise, if you spend more than you make, you go out of business.
I see dentists all the time sailing close to the breeze when a new shiny object comes along….
You see what happens is this…. the dentist takes the shiny object on “terms” rather than paying cash straight out.
The reason he takes terms is simple. He justifies that the extra small amount of money each month needed to pay for the shiny object will be easily achievable from this new shiny object, and in no time the new shiny object will have paid for itself many times over.
Or if the new shiny object is not a piece of dental equipment but is rather a new toy, then the dentist justifies that the monthly payment for this new toy can be easily achieved by doing one or two more cleans or one or two more fillings per month.
And then what happens is that just after he acquires the new shiny object another shiny object appears. And the dentist takes the new shiny object too, also on terms. And then another shiny object will appear. And they get that one too. Followed by another. And another. And another….
Sooner or later the dentist finds himself with a cupboard, or a spare room, or a home garage, overflowing with shiny objects that do not seem to be doing the job as well as they should be, or not providing the entertainment that they thought they would….. and they’ve also acquired a small pile of long term contracts that slowly drip money in cumulative amounts out of their bank accounts and into the accounts of finance companies and big lending banks.
I see dentists setting their fees using “feelings” rather than mathematics.
This is wrong.
They “feel” that their fees need to be “average” or need to be lower than their neighbouring dentists.
And so this is how they set their fees.
Let me tell you that when I ran my dental practice I never knew what my neighbours were charging for their dentistry.
And I did not care.
All I cared about was making sure that the fees I charged were reflective of the overheads that I had, and were reflective of the investments I had made in acquiring a dental degree and in acquiring the knowledge I needed to provide excellent care to my customers, clients and patients.
My fees also needed to be reflective of the investment I had made in acquiring my dental office.
“Feelings” had nothing to do with it.
What I discovered was that a fair percentage of the population [20-25%] were happy to pay the fees I charged so long as they received excellent service and excellent care, and so long as I did not hurt them.
What I found was that serving this section of the population provided me with eighty percent or more of my income.
It’s the Pareto Principle.
I also found that setting my fees based on mathematics allowed me to sleep better at night, because I worried a heck of a lot less.
In this day and age across the whole world there is a lot more competition in dentistry.
However, there will always be that section of the population who will not choose you on price, but rather, will choose your dental office because of the way that you and your team treat them.
Don’t be caught up in fee setting based on feelings, or in buying new shiny objects based on “terms”.
These are both recipes for a stressful life.
And who wants that?
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