Competing on price isn’t the most sustainable way to run a dental lab. If dental labs compete to be the cheapest service, then it just becomes a matter of who can sacrifice the most.
Attempting to provide the cheapest service will leave little profit for the business. This means that the business can’t innovate, or worse, the lab would have to shut down.
A good way to increase revenue and profits is by securing high-end clients. These are clients who are willing to pay more. With the right marketing, operations, and pricing strategy, dental labs can acquire high-end dentists that are willing to pay a premium price for a premium service.
Evident conducted a webinar interview with Pinhas Adar, founder and CEO of Adar Dental Network. He explains to us how he acquires high-end customers, effectively becoming a “big fish in a big pond.”
High-End Customer Acquisition
An integral part of Adar Dental Network’s marketing was doing courses, seminars, lectures, talks, and publications. This means that Adar Dental Network provides value to dentists through informative resources.
What this does is establish Adar Dental Network as a reliable, trustworthy service in the dental lab industry. As a result, dentists look up to the lab and, hence, are more open to availing premium services from that lab.
Pinhas further states that lab owners must network and connect themselves with high-value dentists. This means attending meetings, seminars, and events that “valuable” dentists hang out at.
Some labs work with universities on dentistry courses. So that when the students graduate and eventually start their own dental practice, they’ll remember that lab as a trustworthy, valuable service.
Lastly, Pinhas knows the value of social media. His lab markets on the dominant social media platforms, such as Instagram and Facebook. Using social media gives labs a greater online presence as opposed to solely relying on a website. Labs may learn more about the ins and outs of social media marketing to acquire more customers.
Pricing Structure
To determine how much to charge, Pinhas advises the following method:
Step#1
First, lab managers and owners must decide 1) how many hours they want to work in a year and 2) how much money they want to make annually.
Divide the desired annual income by the desired number of working hours. That will be the ideal hourly rate. So, if a lab owner wishes to make $70,000 annually and work 2,080 hours a year, they may charge based on a $34/hour rate.
Step#2
The next step is to time everything. Have an idea of how long each stage of the restoration process takes. Pinhas recommends that labs set a stopwatch to see how long it takes them to do something.
Once labs know their hourly rate and how long a case will take, they can tailor rates to each dentist’s needs. Suppose a dentist doesn’t need staining and glazing; a lab applying this method can easily deduct staining hours from the order fee.
However, it’s one thing to set a premium price. The challenging part is backing that up with valuable service.
Instead of ROI, Focus on Return on Time (ROT)
Pinhas’ philosophy when operating his lab business doesn’t focus on ROI. Instead, Pinhas values time. Whenever he decides to adopt a new technique or invest in new equipment, Pinhas always looks at how it can save him time.
He doesn’t worry so much about immediate returns. Pinhas believes that as long as a lab is running quick and efficient operations, any investment can pay for itself in no time.
Saving time increases a lab’s capacity and output. As a result, more restorations are produced within a day, and dentists can get their cases sooner. Hence, focusing on ROT improves a lab’s business operations and provides a more satisfying service to dentists.
Provide a Quality Service
Labs must back up a premium price tag with premium-quality service. This will retain clients and provide an additional stream of clientele through word of mouth.
Also, it’s only fair that dentists get the value they’ve paid for.
Here are some fundamental practices that can make any lab’s services better than the competition.
Set Expectations
Pinhas mentioned that not all experts in the dental lab industry know how to communicate. Though they have the technical knowledge, they don’t necessarily have the “people knowledge.”
Dental techs must provide consistent updates to their clients. This includes updating them about any crucial changes that happen during fabrication, not just upfront.
So, if a lab discovers the complexity of a case as it’s being made, they must update the dentist on any changes to the turnaround time and the price.
It helps larger labs to have account managers to keep clients updated. It’s an ideal option for labs with a larger clientele.
Being open and consistent with communication is valuable for dentists. Dentists have to know when to call their patients back in and calculate their business expenses. So, be the lab that helps them out instead of giving them a headache on “hidden costs.”
Utilize Technology
Adar Dental Lab utilizes digital methods for quicker and more efficient operations. As a result, Adar Dental Lab can produce restorations much faster than if they were to solely rely on analog methods.
Investing in digital dentistry is in line with Pinhas’ philosophy of getting a “return on time.” Different labs mention having different increases in output after they’ve shifted to a digital workflow. These increases range from a 33% increase to a 20x increase in output.
A digital workflow typically includes 1) scanners to convert physical wax-up models to digital ones, 2) CAD/CAM software to design the restorations based on the digital wax-ups, and 3) printers and/or mills to bring the digital design to life.
Adar Dental Lab works with an open system, utilizing tools from Zirkonzahn, Roland, Asiga, exocad, and Kulzer. An open system allows for maximum interoperability, compatibility, and flexibility. This can be very useful in providing services to different dentists who prefer different systems and brands.
Outsource Partners
Dental labs should also consider outsourcing partners. This is in line with delivering a faster, quality-assured service.
Third-party vendors can do some of the work that labs don’t have the capacity or ability to do. Strategically choosing partners allows labs to scale their growth and offer services they hadn’t initially offered.
However, in order to maintain quality operations, labs must also choose quality partners.
Here at Evident, we staff over a hundred expert digital designers proficient with CAD/CAM software. We’re a quick and reliable design center that integrates directly into any lab’s workflow.
Simply send us the patient’s scans, Rx, and any other notes from the dentist. We’ll create a ready-to-print model file that can be printed or milled on any system.
Our services give labs the opportunity to increase their capacity and optimize their delivery. Call us at your earliest convenience to start fabricating restorations with us.
Securing High End Customers
Acquiring high-end customers is critical to increasing lab revenue. High-end customers can afford more and, hence, pay more.
Labs must provide value to their niche. This allows labs to become authoritative and trustworthy figures in their market. High-value clients will be willing to pay more as a result. But labs must also support that higher price with stellar service. So, set expectations, utilize technology, and outsource partners.
Pinhas clarifies that these tips work regardless of how large a lab is, from one-man bands to 100-employee enterprises.
