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Price Is a Result, Not a Strategy
Around year two or three, many membership practices hit a quiet stall. A cheaper competitor opens nearby, and a voice says: just drop the price. Business research, a famous car launch and a study of how medical training shapes physicians all point the other way.
Start here: the questions this brief answers
Tap a question for the short answer, then jump to the evidence.
Cutting your fee to fill a panel feels generous. It is usually a strategy problem dressed up as kindness. Harvard Business Review research on price wars found that the combatants tend to end up worse off, and that low prices can lower how buyers judge quality. Strategy research warns that a business trying to be both the cheapest and the most personal ends up stuck in the middle. When Lexus launched the LS 400 at about $35,000 in 1989, the price was the output of six years of work on what customers resented, not the starting point. And a study of 733 medical students found the profession's altruism is real, which is exactly why physicians need a deliberate pricing process instead of a guilty one. Start with what your patients cannot get anywhere else. Let price follow.
“A price built out of guilt is not more altruistic than a price built out of strategy. A closed practice serves no one. Find out what your patients can't get anywhere else, build that with discipline, and let the price follow.”
Should I lower my fee when a cheaper practice opens nearby?
Not as a first move. Price-war research found that companies that join price wars usually end up worse off, and that non-price responses often work better.
Go to the full answer ↓What does "stuck in the middle" mean for a practice?
Trying to be the low-price option while promising the most personal care. Strategy research says firms in that position generally perform poorly.
Go to the full answer ↓What does a car launch have to do with my practice?
Lexus spent six years studying what luxury buyers resented before it set a price. The low price was a result of that work, not the strategy.
Go to the full answer ↓Why do physicians undercharge?
Medical training builds patient-regarding altruism, which is a strength. A Cologne study of 733 students also linked lower profit orientation with lower income expectations. CMT's inference: it can tilt pricing toward guilt.
Go to the full answer ↓What do patients say matters most?
In a long-running CMT patient poll, 64% chose a doctor they know, like and trust; 11% chose cost. The poll is self-selected and directional.
Go to the full answer ↓Where do I start?
Part 5: ask patients what frustrates them about care they have had elsewhere, remove those frustrations, then set a price you can explain in one sentence. The Community Marketing Planner helps you build the plan.
Go to the full answer ↓The quiet voice that says: just drop the price
There is a moment almost every membership practice hits, usually around year two or three. Growth that felt automatic starts to flatten. You notice it before you can explain it.
Then a competitor opens down the road at a lower fee. And a quiet voice says: drop the price. Fill the seats. Worry about margin later.
That instinct is understandable. Here is the problem with it.
In a Harvard Business Review study of price wars across industries, the authors put it bluntly: “No matter who wins, the combatants all seem to end up worse off than before they joined the battle.” They found managers start price wars because they see a price change as “an easy, quick, and reversible action.” It rarely is.1 Practice Insight
The same authors flagged a second risk that matters even more in medicine: “Lower costs often tempt a business to cut its prices, but doing so can diminish consumers’ perceptions of quality.”1 The discount meant to win the patient can be the very thing that tells the patient your care isn’t worth much.
When rival hotels in Kuala Lumpur started cutting rates, the Ritz-Carlton there did not follow. It kept its rates and added services instead, including a technology butler and personal reservation lines. Its occupancy rose while its competitors fought over price.1
The lesson for a practice: the answer to a cheaper competitor is usually a clearer reason to choose you, not a smaller number.
Three paths, and the one that doesn't work
Michael Porter’s work on competitive strategy describes a few durable ways to win: be the low-cost leader, be clearly different in ways customers value, or focus on a specific niche. Strategy textbooks summarizing his framework describe a fourth position nobody chooses on purpose: stuck in the middle. “Firms that are stuck in the middle generally perform poorly.”2 Practice Insight
Here is what that looks like in a membership practice. You lower your fee to compete on cost, while still promising same-day access, unhurried visits and a personal relationship. You’re now selling a premium experience at a discount price. The math doesn’t hold, and both promises start to erode at once.
| Path | What it requires in a membership practice | Honest question to ask |
|---|---|---|
| Lowest cost | Real scale, tight systems and a lean service model you can sustain for years | Can we be the most efficient practice in our market, or are we just the cheapest this month? |
| Clearly different | A specific experience patients value enough to pay for, delivered every time | What do we do that a patient cannot get anywhere else here? |
| Focused niche | A defined group of patients you serve better than anyone | Who exactly are we for, and who are we not for? |
| Stuck in the middle | Discount pricing plus premium promises | Which promise will we break first? |
CMT analysis applying Porter's generic strategies, as summarized in an open strategy textbook.2 Evidence type: Practice Insight.
Strategy, as that textbook puts it, “is as much about executives deciding what a firm is not going to do.”2 For a practice, that might be the hardest sentence in this brief.
The Lexus lesson: the price was the output
Michael Tetreault is a self-described car guy, and one automotive story keeps coming up in his writing because it answers this exact question.
In 1983, Toyota’s chairman Eiji Toyoda launched a project to build a flagship luxury car. Lexus says the effort involved 60 designers, 1,400 engineers and 2,300 technicians, and roughly 450 prototypes were built before the LS 400 was finished.3 One motoring publication reports more than three million miles of testing and 1,600 quality checks on a dedicated assembly line.4 Industry Research
The car went on sale in September 1989 at about $35,000.3,
Lexus also treated the buying experience as part of the product. In its first year, only 121 dealers were allowed to sell the car.3 When an early recall hit 8,000 cars, technicians repaired and returned them within 20 days.3
The low price was not the strategy. It was the output of the strategy.
Toyota didn’t set out to build a cheaper Mercedes and work backward. It did years of work on quality and on the experience customers wanted, and only then set a price the market would reward.5
A practice that lowers its fee without first doing that work is doing the opposite of what Lexus did. It is cutting the price before it has earned the right to. Most practices considering a discount have not spent six weeks asking patients what is broken in the care they get elsewhere.5 That is CMT's editorial view, not a finding of the sources above.
The altruism problem nobody names out loud
Here is the part that doesn’t show up in a business school case.
Physicians are trained, on purpose, to put the patient first. That is a strength, and nobody should coach it out of you. But it has a side effect worth naming.
Researchers from the University of Cologne and partner universities followed 733 medical students from 2017 to 2020. Patient-regarding altruism was highest in first-year students, fell during training, and rose again in the practical year without returning to first-year levels. Students who put less weight on their own profit also expected lower incomes in practice.6 Population Data
CMT’s inference: the same formation that makes physicians trustworthy can quietly nudge them toward the lowest defensible price instead of a price that reflects the access, time and sustainability their patients rely on. The study measured students, not pricing decisions, so treat this as a hypothesis, not a finding.
Am I a good doctor? Am I running a sustainable practice? Two different questions. Stress tangles them together.
What patients say they are choosing
Cost matters. But in CMT’s own long-running poll, patients who were shopping for a doctor ranked trust and convenience far above price. CMT physician polling from 2022 to 2025 also found 58.62% of responding practices used an annual membership and 20.69% a monthly subscription.9 Neither poll is representative, so read them as direction, not proof.
These figures describe direct primary care (DPC), not concierge medicine. DPC usually operates outside insurance billing at lower monthly fees. They are shown here, separately, for context only and should not be read as concierge data.
Change the starting question
Instead of asking what is the lowest price that will fill my panel?, ask: what does my practice do that a patient cannot get anywhere else here, and does my price reflect that honestly?
That might be same-day access. Visit length. A clinical focus. A specific population. A relationship with a local employer. Differentiation doesn’t require the highest price in town. It requires a clear, honest reason for the price you chose, one you can say out loud to a patient without flinching.5
Go and see
Ask ten current or prospective patients what frustrated them about care they received somewhere else. Write their words down exactly.
Remove one frustration
Pick the most common one and fix it for every patient, every time, before you touch your price.
Say it in one sentence
Write the reason someone would choose you. If your team can't repeat it, your patients can't either.
Then price it
Set or confirm a fee that sustains that experience for years, with your accountant and attorney. Price follows the work.
Find the patients who value what you do best, and build a 90-day plan to reach them.
Free. No sign-up. Your answers stay in your browser. Step 3 of CMT's Learn, Build, Lead tools. It helps you pick the patient segments that fit your practice, find where they are, plan conversations with local physicians, check that your message sounds like care rather than a pitch, and leave with a 90-day plan.
This brief is not financial, legal, tax or accounting advice. Fee decisions should be made with qualified advisers who know your market, your costs and the rules that apply to your practice model.
Price is a result
Do the work patients notice. Then set the number.
Pick a lane
Lowest cost, clearly different, or focused. Not all three.
Lead without guilt
A sustainable fee keeps your door open for the patients who depend on you.
How this brief was built
This brief adapts two Editor-in-Chief articles published by Concierge Medicine Today in September and October 2026 and draws on CMT's books. CMT verified the business research (Harvard Business Review, 2000), a strategy textbook summary of Porter's generic strategies, the Lexus launch facts against the Lexus newsroom and a motoring publication, and the physician altruism study via the University of Cologne. Details about the Lexus program that CMT could not confirm from a named source, such as specific research visits and engineering targets reported in a video recap, were left out. Direct primary care data appear only in the walled-off box and are not concierge data.
CMT proprietary data
CMT patient and physician polls are open online polls of self-selected visitors to CMT web properties. CMT has not published sample sizes for these polls. They are labeled Industry Research and should be read as directional, not representative.
How to read the evidence types
Every key finding is labeled by evidence type. Labels describe the type of evidence, not its value. Each type answers different questions. Funding is disclosed on every source.
Randomized trials and systematic reviews.Best for cause and effect.
Large observational studies and government data.Best for trends at scale.
Surveys, smaller studies and expert consensus.Best for real-world experience.
Company-sponsored or company-reported data that is not peer-reviewed.Best for early signals and operating data.
Statutes, regulation and official guidance.Best for what is required.
What we don't know
- How concierge fee levels relate to retention and growth. No public, method-disclosed concierge fee benchmark exists (see Brief No. 29).
- Whether discounting a concierge membership changes how patients judge quality; the price-signal evidence cited here comes from other industries.
- Whether the altruism pattern in German medical students holds for U.S. physicians in practice.
How to cite this brief
External review: this brief has not yet been reviewed by an outside expert. When review is complete, the reviewer is credited by name above with any conflicts of interest, and the version number is updated. Reviewers check accuracy and fairness; CMT is responsible for the final content.
Corrections policy: when an error is identified, CMT corrects it in the open and updates the version number above. Send corrections to the editor through conciergemedicinetoday.net.
Related CMT Research Briefs
References
- Rao AR, Bergen ME, Davis S. How to fight a price war. Harvard Business Review. March-April 2000;78(2):107-116. Author-hosted copy via University of Minnesota Carlson School of Management. carlsonschool-d8.prd.umn.eduFunding: not stated
- Kennedy R. Strategic Management, section 6.7: Stuck in the middle (summarizing Porter's generic strategies). Virginia Tech open textbook; 2020. CC BY-NC-SA 4.0. pressbooks.lib.vt.eduFunding: not stated (open textbook)
- Lexus USA Newsroom. From origin to eminence: a Lexus retrospective. September 4, 2019. pressroom.lexus.comFunding: industry (Lexus company newsroom)
- Braithwaite-Smith G. How Lexus defeated "the best car in the world." Motoring Research. February 15, 2019; updated July 25, 2024. www.motoringresearch.comFunding: not stated (news report)
- Tetreault M. What a $35,000 Toyota taught the world about pricing, and what it should teach your practice. Concierge Medicine Today. October 1, 2026 (companion to "Why your medical school trained you to undercharge," September 15, 2026).Funding: Concierge Medicine Today (self-published; no outside funder) CMT original
- Wiesen D, et al. The formation of physician altruism. Journal of Health Economics. 2023;87. 733 medical students, University of Cologne, 2017 to 2020. Summary via University of Cologne Faculty of Management, Economics and Social Sciences. wiso.uni-koeln.deFunding: not stated
- Concierge Medicine Today, LLC. Patient poll: what matters most in choosing your ideal doctor (know, like and trust; convenience; cost; other), 2009 to 2025. Open online poll of visitors to CMT patient resources; self-selected; not scientific; sample size not published. Reported in Remark-ology (2025).Funding: Concierge Medicine Today (self-conducted; no outside funder) CMT original
- Tetreault M. Remark-ology: Creating a Remarkable Patient Experience Worth Remarking About to Others. Concierge Medicine Today, LLC; 2025.Funding: Concierge Medicine Today (self-published; no outside funder) CMT original
- Concierge Medicine Today, LLC. Physician poll, 2022 to 2025: do you offer services via a monthly subscription or an annual membership? Open online poll; self-selected; not scientific; sample size not published. Reported in Remark-ology (2025).Funding: Concierge Medicine Today (self-conducted; no outside funder) CMT original
- Direct Primary Care Alliance, Membership Insights Committee. State of Direct Primary Care 2026 report (465 responses from DPC physicians, October 8 to November 7, 2024). Report PDF; no publisher URL cited under CMT sourcing rules.Funding: not stated (conducted and published by the Direct Primary Care Alliance)
Educational and informational only. This CMT Research Brief does not constitute medical, legal, tax, financial, accounting or other professional advice, and it does not create a professional relationship of any kind. Statements about laws, regulations, tax rules and payer policies are general, may not reflect the rules in your state, and can change after publication. Consult a qualified attorney, accountant, tax adviser, compliance professional or licensed clinician before acting on anything here.
Independence. Concierge Medicine Today is an independent publication. It does not accept payment for favorable coverage, and it does not favor one practice model over another. Company names and products are mentioned for context only and are not endorsements. Funding is disclosed for every source in the reference list.
Accuracy. CMT verifies figures against their original or best available sources at the time of publication. Where a figure is an estimate, an inference or a company-reported number, the brief says so. This content is not without possible error or omission.
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