How should I price supplements, dewormers, and so on, to compete with online pharmacies? (Sponsored by Intervet/Schering-Plough Animal Health)

How should I price supplements, dewormers, and so on, to compete with online pharmacies? (Sponsored by Intervet/Schering-Plough Animal Health)

Don't focus on the competition


(PHOTO: GETTY IMAGES)
You really shouldn't attempt to compete with online pharmacies. The indirect cost for any product purchased for resale is about 30 percent. So it costs you about 30 percent for labor and storage. Some of these companies can sell a product with a 15 to 20 percent markup, which could be a disaster for you if you try to match it.

One of the largest expenses for equine practitioners is inventory. Your goal is to create a positive cash gap. So you want to buy the product, sell the product, and then pay for the product. Most practitioners experience a negative cash gap. So they buy the product, pay for it, and then sell it.

As an alternative to competing with online pharmacies, write your clients a letter and give them some options. They can buy from you (which may or may not cost them more) or you can write a prescription and let them get products from another source. That way you can reduce your inventory (and negative cash gap), keep your clients happy, and eliminate the heavy burden of competing with online pharmacies. Then concentrate more on generating revenue from the services you offer. That will help you balance the books more easily.

You can't be everything to everyone all of the time. So make a plan that works for your practice and addresses your clients' needs—and stick to it.

James E. Guenther, DVM, MBA, MHA, CVPM
Strategic Veterinary Consulting, Inc. Seminole, Fla.

Add value to services

People can be very cost conscious and online pharmacies provide an answer to their economic problems. So how do you respond when clients start clicking away at your profit margin? You have four options:

1. Give your clients a prescription and let them pay for it on their credit card instead of yours. That way, you won't have to deal with inventory, expiration dates, or sales people.

2. Charge less for the products you carry to simply outbid the online pharmacy. How to price is up to you and the right answer here depends on your specific geography, clientele, and the economics of your practice.

3. You can charge the same amount as the online pharmacy. But remember, to win this war you'll have to be more convenient, too.

4. The best option in most cases is to charge more for your services and add value to them. Now what that "added value" really is depends on you. But I've seen practitioners include things like free oral examinations or a smaller delivery fee. Some practices have technicians or supporting staff deliver the medications. The key is to look for a solution that works for you and for your clients.

Joe Bertone, DVM, MS, DACVIM
Professor, equine medicine Westen University of Health Sciences College of Veterinary Medicine Pomona, Calif.