What's your time worth?
Read the title and quickly answer the question. What is your time worth? What? You don’t know? You better figure it out. NOW!
Yesterday there was a discussion on our Orthopreneurs FB group about whether or not we should be giving out free orthodontic exams, or if we should be charging appropriately. I added the word “appropriately” because while nobody else in the discussion used that word, I ask why you would charge if it wasn’t appropriate. Would you charge as a barrier to entry alone? Maybe you want to recoup just some of your costs. Perhaps you just like to piss off patients? Maybe you’re charging to encourage patients to go to another doctor? If you aren’t charging an appropriate amount for your time, then why are you charging at all? I got it! You’re charging because your time is worth something, right?
Again, I ask: “How much is your time worth?” If you don’t know the answer, how do you know how much to charge?
I was once asked this question as a witness in a court case. I didn’t want anything to do with it and was asked by the attorney to give them a fee for my time. Luckily, I had recently figured this out. After all, if you don’t know what your time is worth, how do you figure out things like production goals and how to schedule for production?
It may sound like a daunting task, but it’s actually pretty straightforward. The goal is to figure out what your time is worth, all the way down to the minute so that you can properly and accurately determine what you need to charge for things around the office, like exams, if that’s what you want to do.
Let’s say you work 185 days a year (I like days/year instead of days/month or week. It’s a far easier number to pick.) Let’s also assume that you work, on average, 8 hours a day (working IN the practice, not ON the practice). That’s 1480 hours/year you’re working on patients. If your practice grosses $1,480,000/year (an easy number for our math an certainly within the reach of any hard working clinician) that means that for every hour in the office you need to produce on average, $1000 to meet your production goals.
If you’re not sure if it’s production tied to you, ask yourself if that production could happen if you called in sick. Remember that while things like adjustments and appliance cementation are productive in terms of moving a patient forward, they aren’t counted towards production. The office is generally “productive” when the doctor is involved. If you spend 10 minutes in an exam (and I’m guessing that anyone charging for an exam is spending at least that much time including explanations to patients) your time in that exam is worth $100. Easy math. The “high ticket” items such as bonding (or crowns or implants in other areas of dentistry) are disproportionately productive relative to the rest of your day but that’s how you hit goals.
I consider the exam as part of the process of “bonding” and while many patients may not get started with treatment, it’s not a big deal. It factors into the exams that do accept treatment and if you know your acceptance rate, you can even factor in that lost time value.
Of course there are more accurate ways to assess your time value in terms of dollars, but they involve time audits (awesome things) that unfortunately, most dentists do not do. This is a quick “down and dirty” way to look at the issue for those who may never have considered it.
So, the next time you want to charge for something, figure out what your time is really worth. It’ll make you look at your fee schedule with a little more objectivity.
All the best,
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