August 25, 2014Overhead Control
How to Save Over $30,000 on Dental Supplies (Part I)
If you had the choice between paying $200 for a dental supply, or $150 for the exact same supply. Which would you buy?
Same product, same person made it, same shipping times, everything is the same.
Easy answer right?
In this series I’m going to show you, with real world examples:
- The most common (and costly) mistake practices make when it comes to ordering dental supplies.
- The Myth of the Product Triangle and Selling Propositions.
- The three different ways practices handle purchasing their dental supplies.
- The three cost-saving options every practice has when purchasing dental supplies. (But few take advantage of)
- And finally, my “Ultimate Guide to Cutting Your Dental Supplies by at least 25%” where I share the exact process and scripts I give to my clients to help them save thousands every month in dental supplies.
The Most Costly Mistake When Ordering Dental Supplies
I was meeting with a dentist the other day and we were going over his dental supply costs. The numbers just looked off. Looking further, his supplies were at 8% of his net production.
Our conversation went something like this, “Dr. John Doe, your supply costs look high. What are you doing to control your supply costs?”.
His response, “My supply rep handles all of my supply purchases for me.”
Would you let the car salesman pick out your car for you? Would you let him set the price for you? Heck no.
Now, before I receive a ton of hate-mail, let me say this. I’m not telling you that your supply rep is screwing you. There are a ton of them that work their butts off to help out their clients.
But, at the end of the day. They are salesmen.
- It is their job to sell you stuff.
- It is their job to sell you so much stuff that they get to keep their job.
- It is their job to get as high of a price as possible for the supplies they sell you.
- Just by their existence they are adding to the cost of your supplies.
So, now that I have that out of my system, they give you a lot for that price:
- Supply reps also have a job of keeping you happy.
- It is their job to keep things convenient for you.
- It is their job to keep you up to date with technology and changes in supplies.
And a LOT of them do all of these responsibilities simultaneously. They keep you happy and their bosses happy.
I was speaking to the same dentist, and he assured me that he was paying the lowest prices possible. His rep promised that they would price match pretty much anything.
When I asked the last time he received a price match, the dentist said he’d never asked the rep for one. So while his rep gave him a warm fuzzy feeling, that feeling wasn’t worth any real dollars.
This is a common problem. (If Dr Doe is reading this, thanks for letting me share!)
I asked other clients and they pretty much all said the same of their reps. This is a common promise, but few follow through. I’m guessing they are trained to say that.
The True Cost of Using a Dental Supply Rep
It all boiled down to convenience and loyalty. Both qualities are extremely important in business.
With that being said, I’m going to make a statement here that may get me in trouble:
The cost of a dental supply rep equals the difference in price between what you could pay for dental supplies, and what you do pay. That premium is the cost of your loyalty to the rep and whatever convenience they bring you.
So let’s move out of the hypothetical and into the reality.
Where the Rubber Meets the Road
I was asked to price check some Burs.
These were Midwest Carbide Operative Burs.
The price quote I was given was about $24. (which I was guaranteed I couldn’t find a better price, they were even running a promotion)
The doctor expected me to get back to him on a price. I wiped out my cellphone and found this in about a minute of research:
So $22.95. $1.00 off. That’s a 4% discount. Same promotion. I wasn’t happy with that discount so I went to the next result and here is what I found:
Sweet! $18.25 and the same deal as the other sites! That is almost 25% off the cost of burs.
My client orders at least 200 of these a year. At $5.70 savings a pop, that’s $1,170 in my client’s pocket. Now that’s not going to buy you your Porsche, but if you save that amount for 20 years on freaking burs, you’ll pay for a couple weeks worth of college for your kids!
I know we could have found even better prices if we were to keep searching.
For this client, 5-6% of net productions would be an ideal supply cost. He was at 8%. That would mean he needs to reduce his costs by around 20-30% to be able to get to those numbers.
To put it in real dollar terms, he spends around $120,000 a year in supplies. If he reduces his supply costs by 25%, he’ll save $30,000 this year in just his dental supplies.
Do you think the $30,000 is worth it for the convenience and loyalty? The only person who can answer this is the practice owner.
In my next post, I’m going to share the Myth of the Product Triangle and Selling Propositions when it comes to dental supplies. Be sure to subscribe so you can receive the updates.