Biting the hand that feeds you

Paws for Thought: Insights on Pet Care Pricing

A month ago, I had to take my dog to the vet. She had an infection of the womb called Pyometra.

The vet looked at me and said: “This is very serious. We need to operate on your dog now to remove her womb or she could die. Pyometra kills a lot of dogs very quickly.”

She very quickly went on to explain the prices:

• Blood test – £200
• Scan – £600
• Operation – £1200

Four hours later and £2000 down, I was relieved we’d caught it early but astounded at the price of pet care.

UK prices have gone up all round, but that was punchy.

I thought about it. The vet’s surgery looked nicer than it did last time. The logo had changed. And the really awful receptionist had been replaced by a friendly, efficient and sympathetic one.

I googled the surgery and sure enough, it had been bought, rebranded and partnered with a number of other vets in London.

Private equity was at play. It turns out, a number of PE firms have been buying up vet practices all over the world, creating cost savings and driving prices up.

I went back to the vet a week later.

“May I ask why it has become so expensive?” I said.

“Well I’m new, but a lot of things have been changing here lately. The vets don’t see much of it though. But your dog’s surgery was classed as ‘emergency’ so it would have been more expensive.”

I tried to close my mouth.

There hasn’t been much press on it, but the UK government’s Competition and Markets Authority (CMA) has four open cases on M&A activity veterinary acquisitions to investigate pricing, service and transparency of information for pet owners.

Sarah Cardell, CEO of the CMA, said: “There has been a lot of consolidation in the vet industry in recent years, so now is the right time to take a look at how the market is working. When a pet is unwell, they often need urgent treatment, which means that pet owners may not shop around for the best deal, like they do with other services. This means they may not have the relevant information to make informed decisions at what can be a distressing time.”

The move caused publicly listed petcare share prices to crash last year.

Like many others who have been in this position, I had no choice but to pay the money. But misfortune-based pet care pricing is a poor business strategy – any unfair pricing is.

Investors might get short-term, hockey-stick growth profiles from these types of investment, but are unlikely to see long-term, steady, sustainable top-line growth. It’s a ticking time bomb to stronger market forces or sterner regulators. Either way, customers will walk or call for more protection as soon as they’re empowered.

So CEO questions for this week:

• Are you pricing for shareholder value or customer satisfaction? You can do both, but you can’t milk the customer and expect loyalty.
• Are your employees clear and on board with that charging structure? If not, what happens when they see this kind of thing?

Have a great week.

PS – Bee (pictured), my ugly-but-awesome bulldog, is fine. Yes I have insurance, but no they haven’t paid out yet.

PPS – We have a City breakfast on the cyber security market this week. The next one is on marketing AI. Send me a message if you’re keen to attend.

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