Why you do NOT have to compete on price in aesthetics
Every few weeks, Dr Tim Pearce hears from aesthetic clinicians who are in fear of the falling prices within the aesthetic sector; plagued with worry and anxiety about how they can compete with the deals, discounts, and freebies that are flooding the marketplace. It seems like a problem that they just cannot solve.
In this blog, Dr Tim Pearce offers some advice on pricing in the aesthetic sector and attempts to change the mindset of aesthetic clinicians away from worrying about this problem, explaining why you should never have to compete on price within medical aesthetics.
Dr Tim will be discussing more medical aesthetic training tips as part of his upcoming webinar series, so if you’re looking to increase your CPD-certified learning and want to learn more skills to make you a better clinician, then step one is to register for the free webinars by Dr Tim.
Are you an aesthetic clinician or a commodity?
Dr Tim is sad about discussing this topic because it shows that there are many aesthetic clinicians who regard themselves as a commodity – they sell filler by the ml, botulinum toxin by the area, and believe this is how the public will choose them over others.
The extrapolation from this is that they believe that their potential patients are seeking a treatment and choosing their practitioner by scouting around for prices, making a list in a spreadsheet, ranking them by price, and then just choosing the cheapest.
This is both sad for the clinicians and sad for the patients, who often care much more about the problem that they want to solve than they do about how much money they might save. This leads instead to the patient ending up with a clinician who is much more focused on price, than with one who is focused on solving their problems.
Clinicians who are in this mindset will focus upon and talk mostly about their prices on their social media posts too, instead of sounding off about the value that they bring to their patients. They post their price lists more often than others, offer discounts and package deals, and feel stressed when they see other people’s pricing. They are forced by the economics and the game that they are playing to direct their attention to finding ways to cut prices, and if they struggle to make a profit, they tend to keep prices low but look for cheaper products or attempt to use less product to achieve the same results, creating dissatisfaction with their customer base.
When you compete on price, this is the reality for those who sit at the boundary of profitability, you become fixated and focused on how to save money, and this is not a fun way to run a business.
Moreover, if the clinician is more focused on their prices, they attract patients who are also more price-led – they ask for discounts more often, attend every free follow-up appointment they can get because they are time rich and cash poor.
Dr Tim notes that he is not in judgement of either the clinicians or the patients in this scenario, he has had scarcity in his life too, looking for the cheapest deal, trying to save instead of creating more value, but he has learnt that it is a poor business strategy.
Why being cheap is a poor business strategy in aesthetics
There are so many hidden costs involved in trying to be ‘cheap’ or buying cheap, which is something you only learn with experience, he concludes.
When you are trying to be cheap, you are playing a game where there can only be one winner, because being the second cheapest in your town is essentially a death sentence for you and your business.
The second cheapest business in town has precious few clients, but also nearly the same, thin, almost non-existent profit margin as the cheapest operator. It is a sad reality that patients who can only afford to choose by price, end up choosing clinicians who are also making decisions based on price, which is not ideal when ultimately, they are treating and making decisions about someone’s face and their health. However, just because someone is cheap does not mean that they are bad at what they do, but economics dictates that the effort required for caring for the patient or improving skills is unsustainable, if so much effort must instead go towards saving on costs; this is the nature of the game they have chosen to play.
If you want to treat patients with your heart, you must price with your head. If you love going the extra mile and delighting your patients, it must be priced correctly, or you will not be able to sustainably achieve your aim.
Understanding profit in medical aesthetics
The next major problem seen with a pricing mindset relates to profit.
Those who are new to the aesthetic sector, and business, often make several mistakes when they think about profit. Firstly, they forget that the money they need to be paid to live is not profit, turning up to work to treat patients has running costs, whether that is you or someone else. A business must pay its workers, or they will quit, so it is not profit. Your salary is a cost to your business. It is essential that you pay yourself, or eventually you too will quit.
If you are subtracting the price paid by the patient from the cost of product(s) used, this is gross profit, but it is not profit. It is very easy to make a large gross profit but end up making a net loss because of all the other indirect costs that every clinician will have to factor into their business – training, insurance, equipment, the space you work in, all need to be considered.
Net profit is your actual profit that is left over once you have covered everything you need to pay for, but this profit is similarly not something that can be just spent on luxuries, truth is most businesses, even the biggest and most profitable, will retain profit for a specific reason.
Reasons to retain profit include for research and development – the sector is always changing, and it will always cost you money to keep up, you should retain profits to help your business to develop as a necessity to keep it thriving; unexpected events – from lockdowns to price hikes, you need to retain profits to absorb these, which although unexpected, should be expected and mitigated.
Setting your prices in aesthetics
Although there are several cost factors which dictate your pricing, it is important that you do not fall into the trap of thinking that the only way you can justify your prices is based on those costs. Ideally, for the single-handed practitioner, the first role of your pricing structure should be to inspire you, to excite you about the future of your business and what you can create, if you earn the money required, it can lead you to future goals such as your own premises or bigger premises, better holidays, or other luxuries. If you can build these goals into your prices, you will be much more inspired to do the hard work and take the necessary risks needed to build a business.
Nobody will pay you more than you are worth. When we commit to a purchase, we all make the decision that the money is worth less to us than the thing we are exchanging it for, if people do not value your offering, that is their will, your job however, is to make your offering more compelling, less risky, more enjoyable, and their job is to find the best practitioner for them. You do not have to be everyone’s first choice, you never will be, you just need to be the first choice for the customers or patients that you really want.
Of course, there is always the worry of rejection. If you put up your prices, will the clients who have been with you for some years turn tail and leave to go somewhere else? Dr Tim notes that this has not been his experience, if your patients trust and value you for the service, effort, and care you put into your work with them, they will usually not worry about a few extra pounds on the price. You are not a commodity after all.
Aesthetics Mastery Show
Why you do NOT have to compete on price in aesthetics
This blog follows our recent Aesthetics Mastery Show, in which Dr Tim Pearce explains why he thinks Aesthetic Clinicians should NOT have to compete on price, and uncovers 3 important mistakes business owners make when setting their prices. Watch the full Aesthetics Mastery Show below and join in the debate on our YouTube channel.
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Dr Tim Pearce eLearning
Dr Tim Pearce MBChB BSc (Hons) MRCGP founded his eLearning concept in 2016 in order to provide readily accessible BOTOX® and dermal filler online courses for fellow Medical Aesthetics practitioners. His objective was to raise standards within the industry – a principle which remains just as relevant today.
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