Apply fixed costs
to prices
When setting prices for lab tests, should we consider fixed expenses
as part of the cost? Our rent for the lab and other fixed cost remain
constant whether volume increases or decreases.
Yes, you must consider some portion of fixed expenses in your cost
http://www.youtube.com/watch?v=3CMS9xnBRkc
answer by your lab's average revenue per test. The final number
will reflect the annual monetary potential of your market area.
Keeping clients
on your turf
What can I do when competitive labs target my clients?
You have several options. First, neutralize competitors by matching
any offer they make. Second, retaliate by targeting opponents'
customers yourself. A third option is to concentrate on a
competitor's customers in another market area, forcing your rival
to defend its turf. Finally, you can choose to do nothing. If you
provide superior service, your clients should remain loyal.
Service worth the price
The fees at our small community-based laboratory are considerably
higher than those charged by several large national labs that also serve
the area. Since we can't lower our prices without losing our
profit, how can we overcome their price advantage?
This is probably the most frequently asked marketing question in the
lab industry. I respond to any price challenge as follows: "My
prices are higher and that's exactly why you should use us."
This thought-provoking and seemingly contradictory answer makes the
prospective customer eager to hear more. You'll have created an
opening to give the reasons for your prices and make a second sales
pitch. Your objective is to make your service appear a better value.
Among items you'll want to mention or describe are staff
credentials, JCAHO and/or CAP accreditation of the facility, local
presence in the community, service centers, personalized service aimed
at individual needs, and fast turnaround time. Explain that it costs
more to provide high quality.
Benefits of
health plans
Several large health plans in our area bid out their referred
laboratory work. The winning bids are typically so low that we cannot
compete with them. Why do labs vie for this work?
Labs love such arrangements because they stand to gain a great deal
from them in volume and in obtaining new customers. Most health plans,
such as preferred provider organizations and health maintenance
organizations, have large physician networks. Contracts awarded to such
groups by health plans usually require that the providers use a
designated lab. The laboratory thus gets the opportunity to prove itself
to a large number of clients who might otherwise not have tried it.
If the lab's service is up to par, it stands to acquire a
substantial amount of fee-for-service work. In addition, any lab that
can dominate the larger health plans in the area can actually make it
inconvenient for local practitioners to use anyone else, since a
substantial portion of work is designated for that specific lab.
My recommendation is that you acquire at least one major plan and
consider the loss a marketing expense. Such plans are here to stay; why
not obtain your share of their business?
