Is Your Veterinary Practice Profitable or Just Busy? A Case Study on What Really Drives Margin

A lesson from my MBA on why not all revenue is created equal.

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There is a phrase we often hear in veterinary medicine:

"We can't charge more for that. Clients will never pay it."

Maybe, but how do we know? And just as importantly, how do we know if what we charge today actually supports a healthy, sustainable practice?

For many hospitals, pricing is based on emotion. We adjust fees based on what we think clients will tolerate, not on what our cost structure requires. We guess at which services are profitable and which lose money, then we make strategic decisions based on intuition instead of evidence.

In a profession that constantly balances compassion and financial reality, that approach is risky. Emotion is not a business strategy. Data is.

To run a sustainable veterinary practice, we have to know which services are pulling their weight, which are breaking even, and which are draining time and resources. This is where data literacy becomes a critical leadership skill.

The Case Study: The “Low-Margin Product” Problem

In my MBA statistics course, a classmate and I analyzed 9,894 sales orders from a large online retailer. The goal seemed pretty straightforward: determine whether profitability differed across their three main product categories.

At first, leadership assumed that because sales volume was high, the business was healthy. More sales meant more success. Simple.

Except the data told a very different story.

The company sold three main categories: Furniture, Office Supplies, and Technology. We used a statistical tool called One-Way ANOVA to test whether average profits were meaningfully different between the three groups. ANOVA is simply a way to determine whether differences between categories are real or just noise.

The results were not noise. They were a clear sign of a deep, structural problem:

• Technology was the clear winner, with an average profit of $20.98 per item.

• Office Supplies were in the middle, with an average profit of $5.76 per item.

• Furniture was a disaster, with an average profit of only $1.97 per item.

Furniture was significantly less profitable than both Office Supplies and Technology, with 90 percent confidence. The company was investing time, promotional energy, and warehouse space into a category that produced almost no return.

They were incredibly busy, yet remained financially stagnant.

When I saw this pattern, I thought about veterinary practice. How many of us spend our days “selling furniture,” believing that a full schedule automatically means financial health?

Are Your Services High-Margin or Low-Margin?

Veterinarians are trained to measure success by how full the schedule is. But just like this retailer, not all revenue contributes equally to the financial health of the business.

A clinic packed with low-margin services may be running itself into the ground. A clinic structured around high-margin services can fund competitive wages, reduce stress, and build long-term independence.

Let’s translate this case study into veterinary language...

1. Low-Margin Services (High Effort, Low Return)

These are services that demand significant labor, equipment, time, or overhead but produce very little profit. They feel productive, but the return is minimal.

Examples:

• Heavily discounted wellness exams

• Boarding

• Time-intensive visits with limited billable components

In our report, we recommended the retailer do a deep dive into cost structures and pricing strategies for its Furniture category. Practice leaders must do the same. Without clarity, these services can drain time and energy while contributing very little financially.

2. Middle-Margin Services (Reliable, But Limited Growth)

These services help pay the bills. They are steady and dependable, but they will not be the primary engine of practice investment.

Examples:

• Vaccine appointments

• Routine spay/neuter

• Basic diagnostics

They are essential, but if they dominate your schedule, you may find yourself working hard without building financial resilience.

3. High-Margin Services (Your True Profit Engine)

These services combine specialized skills, advanced equipment, and strong perceived client value. They drive sustainable financial health.

Examples:

• Dentistry

• Ultrasound or advanced imaging

• Orthopedic surgery

In the case study, the Technology category produced the highest profit per item, yet it had the lowest transaction count. The company’s biggest opportunity was underutilized.

Is your practice doing the same? Are high-margin services squeezed between low-margin appointments simply because that is how the schedule “fills”? Or are they actively prioritized?

Stop Guessing. Start Measuring.

The problem is not that low-margin services exist. The problem is that many practices do not know which services are low-margin, middle-margin, or high-margin. Decisions are made based on gut feelings instead of data.

As veterinarians, we are trained to be data-driven diagnosticians. We diagnose patients systematically, and we should analyze our business the same way.

Here are three questions to start:

1. What is the true cost of my top five services, including labor, materials, and time?

2. Which 20 percent of my services drive 80 percent of my profit, not just revenue?

3. Is my schedule structured to prioritize high-margin services, or is it filled with low-margin ones?

Understanding these answers is the first step toward protecting your business. It allows you to set sustainable pricing, invest wisely, and support your team.

This is not about upselling clients with diagnostics and procedures that their animals don't need. This is about charging appropriately based on your real costs so you can provide ethical care without sacrificing financial stability. True sustainability benefits patients, clients, and the entire veterinary team.

A Data-Informed Veterinary Practice Is a Stronger Veterinary Practice

In our case study, the retailer's assumptions about profitability were deeply flawed. Only if their leadership examines category-level profitability will they make smarter, more strategic decisions.

Veterinary practice is no different. A practice that understands its margins can pay its team fairly, purchase better equipment, and remain independent. A practice that does not is vulnerable to burnout, turnover, and external pressure.

Data is not the opposite of compassion. It is what allows compassion to survive.

Ready to make sense of your numbers?

If you want to understand which services truly drive your practice, I would love to help. Contact me to evaluate your service mix so you can price confidently and build a more sustainable practice.