Priced to Sell: Dental Fee Psychology

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When presenting fees to patients, case acceptance often hinges on how many options are presented, and the manner in which those options are presented.

Consider the following scenarios:

1. The patient is offered one fee – $5,000, for example. The patient has two choices: accept or decline the treatment. Even if this is a very reasonable fee for the proposed treatment, the presentation comes down to a "take it or leave it" offer.

2. The patient is offered two options: $5,000 for the recommended treatment plan and $3,500 as another option, which, while not ideal, will still provide the patient with benefits. When presented with two options, most (but not all) patients will opt for the lower of the two fees. Hence, offering two options actually creates three choices: accept the ideal treatment plan, accept lesser but still salutary treatment or decline all treatment. The number of patients who choose to do nothing will decrease because some people who do not elect the $5,000 treatment plan will accept the $3,500 option. When it is clinically impractical to offer two options, consider phasing treatment. The patient is given the option of doing everything now for a fee of $5,000, or doing just Phase One now for a fee of $3,500. Phase Two can be completed later for about $1,500.

3. The patient is offered three options: good, better, best. The fees might look something like this: good ($3,000), better ($5,000) and best ($7,000). When offered three treatment options, many patients will talk themselves into the middle option. This strategy is what I call "Goldilocks" pricing. The patient might decide that the best option is too expensive, the least costly option might not totally solve the problem, but the middle option is "just right." Keep in mind that because doing nothing is always an option for the patient, three options are actually four, and the more choices presented, the less likely it is that the null option will be chosen.

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To further improve the odds that the patient will choose one of the treatment options presented (instead of the unspoken fourth option of declining treatment), take a page from author Dan Ariely, whose influential book "Predictably Irrational" offers many good insights. Ariely discusses hard and soft anchor prices. He states that consumers view prices ending in zero as soft anchors; people want to move off them. Prices that end in other numbers, however, are hard anchors, because, while everyone wants a deal, people are more accepting of odd-looking prices. For example, retailers know that an item priced at $19.95 is more likely to sell than the same item priced at $20. Consumers do not care about the nickel, but that very round number of $20 becomes an unacceptable price point to some. Ariely makes the point that because consumers are more likely to purchase an item priced at $19.95 than an identical one priced at $20, their behavior is at once predictable and irrational because consumers report in surveys that a five-cent price difference is insignificant. The lesson for dentistry is that fees need to be quoted using hard anchor prices. Using this model, the three options might be presented this way: good ($3,185), better ($5,273) and best ($7,183).

This example contains a double dose of psychology: three options, which inherently increase the chances that the patient will accept some form of treatment (often the midpriced choice); and odd-ball, hard anchor pricing to make all the fees seem more palatable than large, round numbers ending in zero.

A real-life example illustrates the point. There was a doctor who presented a number of patients with the option of implant-retained overdentures. Many patients simply declined treatment, which is not surprising because they were given an all-or-nothing choice. This doctor then started offering his patients three options: good (conventional dentures), better (overdentures) and best (full fixed implant case). He used odd-ball pricing for each of the three options and explained to patients the limitations of conventional dentures, the benefits of overdentures, and the benefits but admittedly high cost of a full fixed implant case. He asked patients to make their own decision and said he would not be

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disappointed if the patient did not take the best option, as the overdenture option would provide a very satisfactory result. Patients were naturally drawn to the middle option, and when the doctor in effect gave the patient permission to choose overdentures, barriers dropped away and case acceptance soared.

4. Another strategy also takes a page from Ariely's book. Instead of offering three distinct options, present three choices where the third possibility is a value-added version of the second. For example, the patient is offered the following restorative choices: upper teeth only ($3,715); upper and lower teeth ($7,727); upper and lower teeth and free in-office whitening ($7,727). Note that the fee for the second and third options are exactly the same; the important difference is that the "free in-office whitening" is now a value add. Ariely argues persuasively that when consumers are presented with three options and the third is a value-added version of the second, a significant number of people choose the third option. In this example, I have used whitening as the value add because many restorative doctors have told me that when they do a fairly large restorative case, they "throw in" the whitening. It is fine to throw in the whitening; however, this extra service should not be treated as though it were an afterthought, but instead made an integral part of the overall pricing strategy. By offering whitening (or some other service) as a third option in the form of a value add, the practice will end up closing larger cases.

Doctors should analyze their case acceptance patterns and endeavor to use these templates. It is not always the amount of the fee that makes the critical difference, but how the fee is presented in relation to other options. By being aware of price psychology, doctors can create value in the patient's mind for proposed treatment.