Demand-Based Pricing in Podiatry

You're listening to podiatry marketing, conversations on building a successful podiatry practice with Tyson Franklin and Jim McDannald. Welcome back to podiatry marketing. I'm your host, Jim McDannald. Joined as always with my trusty cohost, Tyson Franklin. Tyson, what's going on today?

Not a lot, big Jim. I am just happy to be here. I love our weekly get together talking about podiatry marketing. So, no. No.

Life is good. How have you been doing?

Things are good here. You know, it's starting to warm up here in Canada, so I've got no complaints. Looking forward to a a fun spring and summer of twenty twenty four, and, yeah, obviously, enjoy all these weekly conversations with you as well.

So Yeah. I can't believe how fast this year is going. It's it's just it seems to be you just start the year, and yet, I always used to find January difficult. You sort of just trying to get back into the swing of things. I'm not sure what it's like over where you are in Canada.

But then when you get to the January, finally get to February, you're like, okay. Now we can just get the year going. And then all a sudden, February just disappears. March, April, and you're you're sort of just into the year. And before we know it, it'll be Christmas.

No. %. I think it's one of those things where I get like I said, I feel like I get a lot of good work done from like January to March. And then all of sudden, I look down and it's June. And then all of a sudden, it's the end of the year and just it flies by.

So we and hopefully, some of the kind of the the advice we can give today and some of the tips we provide on the show, people can really make some traction, know, before they look down and they see it's June.

Oh, I tell you, these tips today are just gonna blow them away. They're gonna just finish listening to this episode. They'll bouncing. They'll be in the car driving, and they'll be like a caged lion just wanting to get out so that they can apply it. So I should tell you what

we're yeah. What are we gonna do? What's today's topic? Yeah. That's I'm getting excited.

Okay. Today's topic is demand based pricing.

Alright.

So I'm gonna give a definition. Well, it's it's a part definition of what I found online, and I sort of reworded it a little So demand based pricing is a pricing strategy in which the price of a service or product changes based on the patient, customer, or client demand. So in other words, a provider increases the prices when the demand is high and decreases it when the demand is low. Therefore, the consumer's demand determines the price of a product or service. So it's pretty much what will the consumer pay?

That's what we're gonna talk about.

So basically, like, Uber surge pricing for for podiatry clinics.

Yeah. Yeah. Along those lines, I wanna give you some examples too. So a couple of months ago, I took a week off, went down to Airlie Beach, and I spoke about this on my other podcast on podiatry legends. But just very briefly, we're gonna go into a bit more detail here.

And when we're coming back from Airlie Beach, which is about seven and a half hours away from Cairns, there's a little town called Cardwell. The only reason you stop at Cardwell is to either get fuel or get breakfast because it's one of those places there's no reason to stay there. There's just nothing to do there. Anyway, as we're leaving Airlie Beach heading back towards Cairns, someone sent us a message and said, oh, do you know the roads are cut off at Tully, which is about half an hour past Cardwell? They said, oh, we've had heaps of torrential rain because we've had we've had so much rain over summer, the over the Christmas whole oh, over the whole summer period that we were cyclones and storm surges and all that.

So anyway, another storm surge, of course. We're going, Jeez. Okay. We're gonna have to find accommodation in Cardwell. So we got to Cardwell, we checked the roads, yep, still blocked.

Said my wife, ring a motel. I said, because it's only 02:00 in the afternoon now. I'd say by four or 05:00, there's gonna be so many people trying to come through here and it's cut off that because it's a very popular highway. So we booked, rang up. How much is it for a room?

Hundred and $40 for the night. Said, just take it. I said, I'd rather sleep at the motel than in the car on the street. Because Kabul is also not renowned for being a fantastic place to want to be sleeping on the street. So we did that.

Anyway, we get to the hotel. Oh, it's the only hotel too that you I've checked into where you actually check-in at the bottle shop. So they said, yes. When you pull up, just come through the drive through of the bottle shop, hop out of the car, and and we we do the check-in at the bottle shop. So while you check-in, you get a six pack of beer at the same time.

So we get to our motel room. Was it was one level above our room was one level above being in a prison cell, I reckon. It wasn't really that great. But we're sitting there, and we're sitting outside, and we're just watching all these other cars coming through, and everybody's the same thing, getting a six pack of beer going back to their room. Then we said to the guy next to us, oh, out of curiosity, what did you pay?

He said, I checked in around eleven. I I paid a hundred. He said, you paid a hundred bucks. He went, yeah. I went, you paid a hundred and 40.

He goes, oh. So did the guy on the other side. He said, what did you pay? He said, I checked in around just after midday. I paid a hundred and 20.

I went, okay. And then somebody else said, oh, you know, I I paid a a hundred and 50. I said, when did you check-in? They said, 02:30. I said, well, we checked in at two.

So it's like, as people were checking in, it was getting more expensive each time. So I don't know what I think the motel room there normally is like $90. They must have known, okay. Let's put up to a hundred and see if people will pay that, and they did. Let's put up to a hundred and 20 and see if they pay that, and they did.

$1.30, 1 40. But what was interesting, they also told us, we got our room, it's the last room. We went, well, this is the last room. I'm paying the hundred and 40. Anyway, we saw some guy come walk across the desk.

He's waving to us, go with a set of keys. He goes, hey. I've got the last room for a hundred and 70. And we're all we're all laughing about it because it got really funny. Said, then we're asking everybody else.

Then the guy who paid a hundred, we went to the restaurant that night, came back, and he's chuckling away. And we said, oh, it's so funny. He goes, just talk to someone in the restaurant. They got the last room for 200. So now somebody complained and said, oh, this is a perfect example of price gouging.

I'm thinking, well, you know what? This motel is probably I don't know how old it is, but I reckon it's never been booked out before unless there was a flood previously. Every room was booked out. All of us are sitting at the front. All of us went back and got a second six pack of beer.

We are all having a fantastic night. None of us really cared about what we paid. And in the end, when I said to everybody else, when we worked out the different prices, said, did you really care? And they went, no. Not really.

If the option was sleeping out in your car out on the street to being here, we wouldn't have cared. So to me, I don't think it was price gouging. It was really it was simply supply and demand. There were so many people that were wanting rooms, and they just kept testing it. Will they pay $1.20?

Will they pay $1.40? Will they pay $1.70? And I tell you right now, if it was 05:30 in the afternoon, six o'clock heading in towards the evening, and they told me it was 200, I would have paid 200 without any problems at all. But I also look at it that by them making that sort of money on that night from the bottle shop, from the hotel, probably from their restaurant, they probably made more money on that night than they probably do in a month. So how much does that actually help their business at the same time, their employees, whoever, you know, the other people work there?

There's a lot of other funny stories that I can't share on this podcast, which I will tell you later because it was yeah. It involved the one armed man, which is whenever there's a one armed man, you know there's gonna be a funny story in there somewhere. But anyway.

Yeah. The the fugitive is what I think of when the the one armed man comes along, but

I thought the same. That was the comment that we were all making. The fugitive. It wasn't me. It was a one armed man.

No. That's a I I think the kind of surge pricing or the kind of the the kind of pricing based on supply demand is something that's a little bit more prevalent in society than most people think about. I think Yeah. Some sometimes especially, I don't know how it is in Australia, but especially in The US and in Canada, people are usually used to standardized pricing or this so for the most part, most purchases, they see a price and we pay it. But that's not the way it is in different parts of the world.

You know, like bartering, haggling for prices. Sometimes people do that in The US, but it it seems it's it's of not dying, but it's not as popular as it used to be. But it's so it's kinda interesting to hear that kind of you know, kind of demand and supply and demand pricing there with the hotel rooms. So I think there are instances, and I'm sure I'll get into them, where it's a little bit more common in our society than maybe we would think of

it. Yeah. And when we well, yeah. And when we think about price, yeah, supply and demand, airlines and hotels are a perfect example when that happens. Like, with airlines and hotels, there's high and low seasons.

There'll be certain times of the year here in Cairns, the wet season, summer, it's hot. And if you wanna get a hotel up here, it is a lot cheaper. If you wanna get airfare up here, it's a lot cheaper. But you also risk the chance of being rained out for the whole week and being miserably hot and humid. Or it might be absolutely fantastic weather.

You don't know, but the airlines just know people don't usually wanna travel around that time. Also, there's special events on, like, in February, we had Taylor Swift and Pink. We're touring Australia pretty much at the same time. And if you wanted to get so four hours south from us is Townsville. Cardwell is halfway.

That's why people only stop there to get fuel and food. There were no rooms in Townsville. If you wanted to go down to Townsville for the Pink concert, four hour drive to go down there, there's no accommodation. Zero. And the accommodation that they did have there was, like, three times more than what it normally was because they knew people wanted to go to the pink concert, and it was the same as Taylor Swift.

Every city that she was in, prices went through the roof. Air airfares at the same time went through the roof. So it's just it's one of those things. But in our situation, the prices went up because of roads being flooded, and I didn't wanna sleep in my car, which I I thought was important. So it it comes down to how much value you actually put on what they're charging of whether you think it's worthwhile or not.

No. I I definitely understand the understand the reasoning there. And I've been in similar situations. You know, you wanna go to a concert or you wanna go somewhere, and if it's popular, you're just gonna have to pay more. So I think it I think it's a good way to look at things, but I'm I'm curious to see how you think about it when it comes to podiatry and some examples Well,

that's the thing. That's the question. Is it applicable to podiatry? And I think the answer is yes. It is.

But unlike other industries, we rarely will put our our prices or our fees down. So once you increase it, rarely is someone gonna go, I'm gonna I'm gonna bring my prices down. And and I've got a couple of exams here. If you feel if you feel you need to reduce your prices because, yeah, a service that you have is no longer sort of being used as often, then you're gonna think, well, should I keep that service going or that treatment going? Maybe it's something you shouldn't be doing anymore.

If nobody wants it, don't drop the prices to get people using it. Maybe it's just not wanted or or it's unnecessary. Another example could be if a competitor moves into town and they try to undercut you, don't get into a price war. Because if you've gotta drop your prices to try and be competitive with the other person, and they're prepared to go even lower, to me, it's it's just a battle to the bottom. And I think instead, what you should be doing is focusing on your other services that you have that are more profitable.

So it's not saying that you can't reduce your prices at certain times. If you wanted to, you could, But I'm thinking it's it's more in reverse. Try and create a demand for something that you have, and people will pay more for that.

That makes sense. I think, like you said, you just need to assess what you're doing and, you know, how are you highlighting or marketing certain services. And if you're not doing a good job of it, doesn't mean it's something you need to cut down the price of it. Just is that something you want to continue doing? Is it something that you used to reimburse very well or used to have a lot of demand in your practice, but maybe you've gone from sports medicine to pediatrics?

Or you've kind of shifted niches or you just the demographics of the area where you practice in maybe have changed over time. You need to be realistic about those things. And reassessing things before you just chop price makes a lot of sense to me.

Yeah. Well, know when we had the podiatry clinic, we had a shoe store attached to our podiatry clinic. We would bring in footwear. So that's a product that we sold. When a new style came through that was a particular running shoe, the demand for that was quite high.

And you could sell them at full retail price without any problems at all. But as the season went on and people were waiting for the next season of shoes to come through, all the ones that were left over, that was still as good a shoe as what they were when they came out six months before that, but you had to reduce the price because you needed to sell them to free up space so you could bring in the new stock, and it just helped with cash flow. So if you have footwear in your podiatry business, this definitely applies the supply and demand on on a actual product. But there's a big relationship too between the relationship between price and quantity. And this is one thing I think podiatrists don't understand.

And to give you example, higher prices can be charged when the quantity of something is low. And an example would be, like, a limited edition of anything. You get an artist that does a a drawing, does a print, and it's only a hundred of them are being done, signed by Picasso. And you did a hundred of them. Limited edition, people will pay more for that than if it's a print where 50,000 of them were done.

Relating it back to podiatry, yeah, we're we're not Picasso and podiatry, but your biomechanical assessments, orthotic therapy, using a swift machine, a lot of these things can only be done by a qualified, trained podiatrist. And a lot of podiatrists don't realize that that we have certain skills that we are the only people that are allowed to do that. Nobody else can. Whereas if the quantity of something is high, then that results in lower prices, and that's the example of cutting someone's toenails. And which is why because a podiatrist can do it, a foot health practitioner can do it, beauticians can do it, your mom can do it, your next door neighbor can do it, your 10 year old child can do it.

Doesn't mean they all do it the same, but they can all do it. So the the quantity of that service is readily available everywhere, which is why the price of it is really hard to to increase the price for a service that can be done by almost anybody. And I think if the whole profession did this and said, what are the things that we can do that nobody else can do as good as us? And you really focus in on that, then you can increase your prices for those services. And in the end, you're gonna make more money, and you're not fighting against every other person that can pick up a pair of clippers and cut a toner.

Yeah. Like it's when you're not when you're not differentiated, you know, you can kinda become seen as a commodity Yeah. In a way. And like you said, it's not necessarily that it's not a valuable service to the person you're doing it for. But the perceived value by other people is is much diminished if if everyone can't do those things.

Right? You know, I'm not saying that the the mom or the daughter cutting the toenails is gonna be as good as you are, but at the same time, the perceived value of something like you doing, you know, foot and ankle surgery or a custom orthotic or doing some, you know, wart removal like swift or something that people just can't get their hands on those devices because you have to be, you know, medically trained and have a license. It kinda makes you at a different level and providing a different level of care. So when you focus on those things and then it kinda perceived value is higher, you're more likely to to benefit from those things financially as opposed to like kind of like you said a fight to the bottom, but also just people not thinking that the care that you provide is necessarily something that they could do.

Yeah. But it's like, yeah, cutting someone's toenails. Don't get every podiatrist listening to this would have had someone when they've said to somebody, this is how much it costs for the initial consultation. And the person goes, but I just want my toenails cut. I can't believe you wanna charge me $80, a hundred dollars just to cut my toenails.

And you go, it is what it is. Well, yeah, this is just a rip off. You go, well, cut them yourself. Well, I can't reach. Well, get your husband to cut them.

He's blind. Okay. Okay. So all of a sudden, my skill set is starting to give me a bit more valuable, isn't it? But sometimes those patients will see you initially.

They'll pay that. But then through a friend through a friend, they'll find out, yeah, the the local beautician down the road can cut the toner from for $45. And that's where they end up going because they don't put value on that particular service. So there's no point trying to drop your prices trying to compete. They also don't realize with their toners, they might get some fungus as well, a little bit of a bonus that they weren't expecting.

So so what should you charge? And this is a question a lot people say, well, so what should I charge? I I don't know what to charge. To me, there's a couple of things. One, you need to test the waters, and the market will let you know if you're charging too much for anything.

And they will say, if you don't get five or 10% of people complaining every yeah. If if somebody if nobody if absolutely nobody's complaining about your fees, then you do not charge enough. It's as simple as that. So if you're going, oh, I'm so good because nobody ever complains, it's because you're too cheap. You're way too cheap.

And and I think there's it's a there's a really big difference too between difference between price and value. Price is what you charge. Value is what the patient gets. So if in their head, they're just comparing all these different podiatrists and this one charges they, and this one charges a hundred and 20 regardless of the service, when they come and see you, if they feel they got good value for the service that you're providing, they'll never complain about the fees. So if you're on time, you're polite, you provide a good service, it they had their whole experience of coming in and leaving your clinic is great.

They're gonna go, wow. That was worth it. But if you're running late and you push them out early and or you just talk about you, you don't talk about them, the receptionist is rude, your clinic smells of, yeah, glue or or the tobacco re you know, coming off the receptionist because she just had a quick diary out the back, then it doesn't matter what they pay, they're gonna think that was an awful experience. It wasn't the value was not there. And so that's the thing.

It's test the waters. Add every time see, every new patient that rings your clinic, they do not know how much the initial consultation is. So you can add a little bit more to it and see what happens, then add a little bit more to it and see what happens. Add a little bit more. Just keep testing it.

Your market will tell you whether whether you're charging too much.

That's some advice. Like you said, you don't know until you test it. If you're just, you know, making assumptions or you know, kind of being nervous there, not not testing it out, you know, inflation is keeps on going higher and you know, you're gonna have to raise your prices at some point. So why not start today? Why not test things out a little bit and kinda see where things can go?

Yeah. But I was talking to somebody in one particular town. So every now and then I'll get people ring me up. We'll do like a half hour just discovery call about their business. And this one person ring me up and I said to him, oh, what are you charging here?

And I said, look, this is what you should probably be charging. Oh, and I couldn't charge it because nobody in my area would pay that sort of money. I went, okay. A couple weeks later, someone from that area became a client of mine. And I said to them, what are you charging me?

It was the same as what the other person was. I said, charge this. I said, actually, add another $10 on it. Charge a bit more. This is what I told the other person.

They did. I said, how many complaints you had? None. So here was the other person, same town, who wouldn't add the extra fees because they said, my patients will not pay that. The other person told me the same thing, they actually made the change and then came back to me and said, my god, not one person could buy it.

And just by making this one change that they did, added an extra $1,502 to their bottom line without doing any extra work, and therefore, it also paid for my coaching fee. So I told him that. I said, do this, and I'll be and I'm free. That's how it works out. So two points I I wanna finish on.

Unless you get some of your say on that, Jim, before

No. No. I think I'm ready for those final points.

Okay. Final points is don't keep your fees where they are right now because it's easy, the easiest thing to do. A lot of people go, oh, yeah. I'll increase my fees. I'm gonna do it on the, you know, the June 1 because it's yeah.

It's a couple months, but I wanna get give my patients warning. And then you could get to midway through June, you go. So if you told your patient, oh, yeah. I'm thinking I might just do it, like, July 1 because that's, like, for us in Australia. That's the beginning of the new financial year, so I'll I'll do it then.

And then you'll talk to him closely. I've decided that you know what? Because I haven't told them all yet, I I think we might put it in the newsletter. I'm just gonna just just do it. And so a lot of times people don't do it because it's just so hard to do.

And the second point is a $2 fee increase is not an increase. You're kidding yourself. That is not if you go, oh, I've just put my initial consultation fee up, $2. It's like, whoop de doo. That that is not an increase.

Put it up by a substantial amount and see what happens. And if people complain, then, you know, okay, maybe it was too high. Tyson was wrong.

You mean you've been wrong before?

Nope. Not not when it comes to this. I I tell you right now, everybody that puts their fees up in certain areas so there's certain parts of podiatry where you can substantially increase it, and patients will never complain. But most people aren't prepared to do it. And once they do it in that area, then it's easy to to do in other areas.

Makes sense.

So there we go. Demand based pricing is there's gonna be certain things about podiatry that people really want from you. So make sure when because there can be people in your area you know. Like if you're listening to this right now, you know you are better than other podiatrists in your area at a particular thing. So charge more for it, become known for that thing.

I like that. I like that. I think it's gonna be really helpful for people to maybe just get off the fence and charge with the word. So you know, you're providing tremendous amount of value, so make sure your prices reflect that.

That's it. Okay, Jim. I look forward to talking to you next week.

Sounds great, Tyson. Okay. Bye. Bye. Thanks for listening to Podiatry Marketing with Tyson Franklin and Jim McDaniel.

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