Here’s What To Do During Times Of High Inflation…

Many years ago, while I was running my own dental practice, my receptionist came to me to tell me that patients were complaining that my fees were high.

Which confused me, because, at that time, our nation was still dealing with the post Hawke/Keating government aftermath, where that government had allowed double digit inflation to run continually like a runaway train, year in and year out, for many years.

And while our economy was running amuck, small businesses like mine were meant to behave “responsibly” to help that government with its feeble attempt to try and rein the economy in.

Sadly for Hawke and Keating, that plan wasn’t working, and finally the Australian people woke up to them and voted them out.

Enough was enough.

Anyway, when my receptionist [let’s call her Annette] came to me and told me that patients were complaining that my fees were high, I was horrified, because I’d not raised my fees for over two years, and in my mind, I was due to raise them.

In fact, I was overdue to be raising my fees.

And that’s because, during periods of high inflation, when a business fails to raise its fees and prices to at least the same amount as the Consumer Price Index [CPI] cost of living, then that business is effectively giving itself a pay decrease by the difference between the CPI and whatever they choose to increase their fees by.

So what was I to do?

I thought long and hard about this.

How could this be?

How could patients be complaining that my fees were high, when in reality, my fees were in need of an increase just in order to catch up with the high inflation rate and the high cost of living?

What should I do?

Should I reduce my fees?

Or should I continue on and delay given my fees their much overdue rise?

Here’s what I decided to do…

Here’s what I thought:

If patients thought my fees were high, and I thought my fees were low, and I hadn’t put my fees up for over two years, then what I actually really needed to go and do was to PUT MY FEES UP BY AN AMOUNT THAT THEY WERE OVERDUE TO GO UP BY, and see how the patients responded, and should have responded, to that needed increase.

And so that’s what I did.

In 1997 I raised my fees by 10% across the board… and guess how many patients objected to that?

Not a one.

Zero.

Nil.

Nicks.

Nought….

Nobody…..

Nobody complained.

In fact, nobody at all complained that my fees were high, particularly and specifically after I had raised those fees just then because a fee increase was overdue.

Sadly…

Sadly, Annette had looked at the situation about the fees in terms of her “present” being her reality, when in fact the situation was only HER PERCEPTION of a false reality, created by her not looking at the situation openly and objectively.

In reality…

In reality, we went on to put the practice fees up 8% every year for the next three years. And then as the new government took control of the economy, and the CPI began to fall, we then chose to only raise our fees by 6% annually for the subsequent three years.

Following that time, we then decided to increase our restorative fees by 3% every six months for two years.

The decision to know the market, and to follow the data rather than follow “feelings and emotions”, was probably one of the most critical business decisions I ever made…

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