By Massimo Gramanzini, OD
March 11, 2015
Easy-to-use tools help you manage your CL inventory and pricing for efficiency and profitability.
HAVE IT IN STOCK. Keeping a strong inventory gives access to better discounts, and, therefore, reduces your per-box cost.
REGULARLY EVALUATE PRICING. Set fees at the beginning of the year, then use tools like ABB OPTICAL GROUP Price Monitor to evaluate quarterly and adjust.
USE FRIENDLY TERMS. Speak of “annual supply” rather than “boxes,” emphasizing the value of annual purchases, especially withrebates.
Tracking your contact lens revenue, as well as contact lens fits and annual supplies sold, is crucial to practice profitability and growth. Monitoring what the market dictates in pricing is also important in order to be competitive. My practice evaluates this information on a regular basis to effectively plan, stock and turn over the contact lenses we invest in.
The page on Dr. Gramanzini’s practice web site that is devoted to contact lens services. Dr. Gramanzini says his patients appreciate the service they receive at his practice, and usually do not question or balk at the pricing of the contact lenses he sells in his office. Powered by yourlens.com, ABB OPTICAL GROUP’s free contact lens reordering website, Dr. Gramanzini’s patients can order contact lenses 24/7.
We keep a strong inventory of our top two contact lens brands in the office. We do this to lower our cost of goods by buying in bulk, and to provide the patient with the convenience of walking out with their contacts the same day as they purchased them. By doing this, we competitively price our top two contact lens brands that we dispense from our office. Our patients can leave our office happy with their supply in hand and our contact lens revenue for that patient just increased because we lowered our cost of goods by capitalizing on bulk promotions offered by our distributor.
What we noticed is that more inventory promotions now bundle pricing discounts for specialty products. By inventorying my top two contact lens brands, that also qualifies my practice to receive discounted pricing on same-family specialty products. By maintaining those inventory levels, I can make sure the practice is keeping the very best price, and therefore, profitability on the family of products we fit the most. Check with your distributor to see if the products you fit have either inventory programs or bank programs that best fit your practice’s needs.
Regularly Evaluate Pricing
Pricing for contact lenses is set at the beginning of the year, but evaluated every quarter and adjusted if the market changes or if our costs go up or down. Our profit margins vary based on the design of the lens (spherical, toric, multifocal, etc.) with specialty lenses offering higher profit margins.
The ABB OPTICAL GROUP Price Monitor, a printed document that is mailed to top ABB OPTICAL GROUP accounts on a quarterly basis, plays a big role in our evaluation process. All of our competitor pricing is in one place, which saves our staff valuable time they would otherwise have to spend researching this information. Our practice is located in a densely populated area in south Florida with many competing independent opticals and big box retailers within a few miles.
“As a result of our efforts, 60 percent of our contact lens patients end up purchasing a year supply of contacts” —Massimo Gramanzini, OD
Develop Pricing Strategy
It’s helpful for us to have the information of our competitors’ contact lens pricing, however, we do not strive to be the least expensive. We have found that our patients are willing to pay a slightly higher amount for contacts through our office knowing that we offer the education, customer service, convenience and care they deserve. We also utilize all rebates for our patients to help bring the net cost down.
Every year we schedule a business review with our ABB OPTICAL GROUP account manager to evaluate our purchasing habits and to discuss areas where we can make changes to our retail pricing strategy. With manufacturer price changes usually occurring at the start of every year, it’s important that we look at those changes and adjust appropriately. To not do so, would mean losing profit margin on our contact lens sales.
In addition to competition from other opticals and eyecare providers in our community, online pricing also impacts our pricing strategy. There are some fringe online retailers that sell contacts for less than what we can purchase them for. We don’t worry about those companies too much because they usually don’t have consistent inventory and are not very well known. Reputable online retailers like 1-800 Contacts, however, are easier to be in line with in terms of pricing. The ABB OPTICAL GROUP Price Monitor does a good job monitoring those prices.
Whenever confronted with the statement, “ I can get this online for cheaper,” our practice has the discussion with the patient about the value and services we provide. We make sure every patient knows they can order contact lenses from our web site, as well. However, if a patient is persistent about checking online, we will just pull up the 1-800 Contacts web site and show them the pricing–and we are usually very close or the same.
Talk to Patients About Being “Approved” for Annual Supply
Our opticians present contact pricing in terms of “supply,” not “boxes.” We always strive to give our patients their “year supply of contacts” when they check out. We usually have our patients’ annual supplies in the office ready to go after their exam. Patients are more inclined to purchase their supply when they see that it’s all ready for them at the front desk. We also present any rebates available and give them their net pricing (with rebates). When a patient is handed off from the doctor to the optician, there is a short conversation between doctor, patient and optician explaining that he or she is “approved” for a year supply of contacts. Our opticians are trained to explain the benefits and convenience of obtaining a year supply.
As a result of our efforts, 60 percent of our contact lens patients end up purchasing a year supply of contacts. We monitor this number on a weekly basis and always try to improve on it. We truly believe that when a patient has their year supply of contacts it will keep them more compliant with lenses, and ultimately, allow for healthier eyes long term.
With the amount of education and convenience our patients receive from our office, pricing becomes less important to them. It’s important that your entire staff is trained on the benefits of annual supplies and are comfortable with presenting those benefits to the patient. Reinforcing that message at staff meetings, and continually offering training to help with script development or handling objections, will make it easier for your staff. ABB OPTICAL GROUP’s Annual Supply Tutorial is one tool that has resonated well with our team.