Do you know your margins? You should… after all, as a dentist you are a business owner, right?
What is your profit margin? Do you have any idea? Come on, please don’t guess. You need to know this. If you are not sure, would you promise to get on the phone with your accountant and ask him or her? He or she should have plenty of time to discuss this because typically this time of the year up until mid-April they don’t have much to do. They are probably just surfing the web and cleaning their closets anyway!
Why is it important to know this number? Because there is not a business person alive that should not pay close attention to their margin. OK, if you do not understand what a profit margin is, it is just another word for how much is left after your overhead/expenses are taken care of. If you have a $1 million practice and your overhead and expense come to $600,000, then your profit margin is 40%.
Here’s an interesting thought. Let’s say you have a really good patient coming in for a crown and you want to give her a 10% courtesy discount. We will use the numbers above and assume your profit margin is 40%. Let’s say your crown fee is $1500. Since your overhead is 60%, it costs you $900 to service this crown, making your profit before you give any discount, $600. Agree so far?
But you are such a nice guy or gal, you agreed to give the patient a 10% discount. Now please correct us if we are wrong, but that does not make it any less expensive to service the crown, correct? It still costs YOU the $900. So as far as we can see, the discount reduces the profit on the crown by the entire amount of the discount ($150), making your profit only $450.
We are not saying not to give discounts. As a matter of fact, in our one day course we give you some good examples of when you should ABSOLUTELY give discounts. We are only saying it is important to understand your margins so you can make an informed decision and understand what happens when you give a discount.
Speaking of margins, there is one other type of margin you should be aware of. It is your crown margins. How are they doing? Are you still frustrated with the amount of time and adjustment necessary to insert a crown? Have you taken us up on your THREE FREE CROWNS yet? If not, why not? WE are paying for them! There is no risk on your end!
Would you please take a look at the letter below that we recently received via Facebook?
Dear Madow Brothers – Just wanted to let you know how much I like Maverick. I did not realize how many adjustments and remakes I had to do with my old lab until I started with Maverick. No lab is perfect, but so far I have had very little trouble. Thanks again. Dr. Joanne Block, Owings Mills, MD
Are you even just a little frustrated? Just give Maverick a try. So many Madow members have done so and are incredibly pleased. CLICK HERE for more info. This will undoubtedly help you with several types of “margins!”
Have a great day!
Talk to you soon,?