Simple Answer: - Absolutely not!
When an inexperienced podiatrist opens a new clinic in your area, their only marketing tactic may be to slash fees and try to be the cheapest podiatrist in town.
The reason they choose this particular marketing tactic is that they have no other tactics to rely upon just yet, and it sounds like a feasible idea.
But is it?
Hell no, it's the dumbest thing you can do and it is the fastest way to let the existing podiatrists in the area know they have nothing to worry about, it's just another podiatrist with no business strategy.
However, it will concern the existing cheapest podiatrist in town, so expect a race to the bottom.
Is being the cheapest a good strategy?
When I started my podiatry business in Cairns, there was only one other podiatry business in town. It was poorly run, and to be honest, they could get away with it because they previously had no competition.
My goal, from day one, was to set up a fantastic podiatry business, and I was going to make sure my fees reflected the service I was going to provide each patient.
My business grew fast, and the other podiatry business decided to compete by dropping their fees, as this was their only marketing tactic. In the end, my podiatry business prospered and their's withered away.
When I first arrived in Cairns, the other podiatry business had four podiatrists employed. Today the business comprises of one podiatrist working from a single room in a medical centre.
Loss of profits
Every time you drop your fees or offer a discount, you lose money and reduce your profits.
For example, if your fee for a brief consultation was $50, and you offered a 10% discount to complete with the new podiatrist, you are losing $5 per consultation.
Five dollars doesn't sound like a lot of money, but if your profit margin usually is 30% or $15 per brief consultation, then you've decreased your profit revenue by 33% ($5/$15).
Is this what you want to do, work harder for the same profits?
So if you're going to take a 33% loss in gross profits, this means you now have to work 33% harder to make the same money as the podiatrist that does not offer discounts or drop their fees to compete.
Is this really how you want to work?
As I previously mentioned, when I opened my business in Cairns, I only had one competitor. Over the next two decades, another ten podiatry businesses opened, and most of them tried to compete with each other on price.
Did this bother me?
Not really, because every time another podiatry business opened, my podiatry business got busier. Over the same two-decade period, my podiatry business never had a backward year financially.
I am proud to say that I've never dropped my fees to try and compete. Instead, I have stood behind my higher prices 100%, because I knew we offered a kick-arse service and were highly skilled podiatrists.
I encourage you to do the same.
Are you the new podiatrist?
If you're the new podiatrist in town, here's an important point you need to remember; it's tough to raise your fees later when you get busy.
Trying to be the cheapest may seem like a good tactic in the beginning, but it's not a good long-term strategy. Ask yourself, do you want a podiatry business full of 'bargain basement shoppers?'
They will leave you when another podiatrist opens who is cheaper than you.
How much do you charge?
In all the years I owned podiatry businesses, only a few patients ask about fees when making their appointment. In most circumstances, they are not asking to be impolite or to find the cheapest podiatrist; they are merely enquiring out of habit.
So the next time you hear of a podiatrist dropping their fees in your area, laugh, because when you're paid what you're worth you'll also be laughing all the way to the bank, and living the good life.
It's your choice, do you want to live in the outhouse or the penthouse.