What we can learn from Costco

On its surface, Costco seems like an odd place for a dentist to go to learn about how to run a dental office.

Costco sells giant packages of toilet paper and cereal at a large scale. Dentists deal with individual patients and offer treatment plans specific to a given patient.

But when we look a little closer, Costco’s business strategy offers some great clues to how to run a stable, successful dental office.

To see how, we need to look at where Costco makes its money. And when we do, we see that Costco is not exactly in the grocery business. Sure, they sell groceries, but they don’t make a lot of money from them.

A growing trend is for dental offices to offer subscription membership programs to their patients.

Rather, the biggest source of Costco’s profits is its membership program. Only members can shop at Costco, and it charges $60/year for its base membership.

This subscription revenue adds up, and it allows Costco to charge low prices in its stores and still make a bundle.

So, how does this fit into dentistry? Dentists typically view their business as transactional. A patient pays for a service and the transaction is over.

But a growing trend is for dental offices to offer subscription membership programs to their patients. The patient pays a set amount each month or year, and the dentist provides standard preventive care to the patient.

And the great part is, in terms of pricing it works a bit like Costco. With a membership plan, patients pay less and the dentist makes more. This is because patients are more loyal and you’re able to cut out the costly middleman we call dental insurance.

A membership plan doesn’t mean a dentist needs to sacrifice quality either. As anyone who shops at Costco knows, their in-house Kirkland brand is almost always far superior to higher priced name brands.

The same is true for a dental office with a membership plan. The office is able to offer superior care at a lower price—and still do well financially.

Learn how a dental membership program can help your practice attract new patients and build loyalty.

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