It’s never been more important to understand the true cost of the products you buy, particularly pharmaceuticals, with the CMA’s focus on veterinary medicine pricing.
If you want to compete with corporate practices and online retailers on price, you need to start by knowing what those products cost your practice.
That doesn’t mean competing on price is necessarily the right strategy. But whatever your approach, knowing your costs helps you make informed pricing decisions.
The terms net price and net net price are often bandied about, but what do they actually mean?
💷 Net price is the price you pay on the invoice, after any upfront discount from the wholesaler’s list price.
💷 Net net price is the effective cost after rebates have been taken into account.
Your net net price therefore gives you a clearer picture of the actual product cost. In effect, this is the net price minus the rebate value.
How you then price that product is a separate discussion.
Do you apply a markup to list price, or to net net cost?
Traditionally, many small animal practices have used list price as their starting point, while pricing from net net cost has been more common in farm and equine practice.
Will that approach change as the sector responds to the CMA? We’ll have to wait and see.
But understanding what you actually pay is a good place to start.