January 2016
Volume 7, Issue 1

Avoiding the Commodity Trap

Add value to your services to avoid price wars

By Terry Fine

Dentists are price-sensitive shoppers — at least that’s the prevailing wisdom in the world of dental laboratory fees. In a marketplace marked by innovation in materials and processes, many laboratories defaulted to competing on price. After all, a laboratory owner could easily improve efficiencies with strides in technology, thus lowering production cost.

That has led to a marketplace in which laboratories compete primarily on price point. Once laboratories are only differentiating themselves by price, restorations become an interchangeable commodity. Why purchase a $99 full-contour unit when you can get it for $89 or even $79 at a laboratory on the other side of town? It’s time to compete on value, not prices.

To avoid commodification, your laboratory needs to add value to your relationships with dentists. Unless you want to be constantly dropping your prices — and watching your margins shrink – you’re no longer thinking about selling restorations; you’re thinking about selling your laboratory’s added value. What value-adds you bring to the table depends upon your strengths and what you feel will best differentiate you in your market.

Expanded Services

Practices’ revenues haven’t grown since 2011, according to the American Dental Association, and many business-savvy clinicians have started expanding their services in response to stagnant earnings. Whether it’s bringing in simple, single-implant surgeries they once referred to periodontists, treating sleep apnea with appliances, or making forays into cosmetic dentistry, many dentists are adding new procedures to boost their revenue streams. They’ll need a laboratory that supports this wider range of services. You need to be that laboratory. Prepare your laboratory to offer a full range of products or services — or identify a reliable outsource partner — to support dentists who expand their product offerings. Add value to your services as a laboratory that helps its dentists build their business.

Consultative and Chairside Services

Dentists who expand their practices are often moving out of their comfort zones, so many will seek out a laboratory that offers more than just the products they require – they’ll need consultation and additional support that will blur the division between laboratory and dentist responsibilities. Position your laboratory to be your clients’ go-to resource on virtually everything restorative. That can mean simple guidance on preferred material choices to collaborative case planning for complex cases. If you have the expertise to provide clinical assistance, chairside assistance adds even more value to working with your laboratory. As dentists recognize the potential for profit by offering implant-supported restorations, many will require help with proper impression taking, especially as digital impression systems continue to gain market share. In addition, dentists will need assistance with items such as converting existing removables to provisionals for full-arch implant-retained treatments.

Continuing Education

Consultation and chairside services help distinguish your laboratory as a partner rather than just a vendor, and offering continuing education opportunities only underscores your commitment to helping dentists evolve and stay relevant. Many manufacturers provide assistance organizing and programming seminars held at your laboratory or a third-party site, making it easy for you to engage dentists with a full slate of sessions that cover new materials as well as techniques. Think beyond the seminar — lunch-and-learn and study group presentations also offer a great opportunity to get in front of dentists to promote your laboratory’s extensive expertise and strengthen your relationship.

Ease Of Use

Simplified interaction with a laboratory is another value-add that many owners overlook. Every dentist interacts with laboratories differently, so you need to provide a means to do business with your laboratory that suits their preferences. Allow dentists to contact you in the medium they prefer: by telephone, email, or text message. Make case submission easy regardless of which method they choose: courier, shipping, or file upload. Dentists recognize the value of their time and intuitively find value in laboratories that help them preserve it.

Make Your Value Known

Once you identify the added value your laboratory brings to your relationship with dentists, it’s vital you communicate your value proposition to avoid the commodity trap. Of course, you should continue to spotlight your products, but communicate the array of support services that differentiates your laboratory from competitors. Every marketing touch should reinforce your value-adds — helping you reinforce that dentists receive much more than a restoration when they do business with you.

Terry Fine is President of AMG Creative in Fort Collins, CO.

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