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Understanding the hidden mechanics behind three common pay structures
By Andrawis Zada, OD
May 5, 2026
As an optometrist who has worked under various associate compensation models, I’ve learned that how you get paid matters just as much as how much you get paid. Early in my career, I didn’t fully understand the nuances of these contracts, and I’ve seen how easily doctors can misinterpret what looks like a simple percentage or daily rate.
In reality, most associate optometry pay structures fall into three categories:
- Production-based
- Salary
- Per diem (often blended into hybrid arrangements)
Each has advantages, drawbacks and important contract details that can significantly impact take-home pay.
PRODUCTION-BASED COMPENSATION: ALIGNMENT WITH COMPLEXITY
Production-based pay is one of the most common models in optometry. In this structure, associates earn a percentage of collections, typically ranging anywhere from about 15% to 18% or even 20% in certain practices, especially in rural or high-need areas. The key distinction is that this percentage is based on actual collections, not billed charges. In other words, it’s tied to what the practice receives in revenue.
On paper, this model creates strong alignment between the associate and the practice owner. When the practice does well, both parties benefit. When production increases through higher patient volume, efficiency or more complex services like specialty contact lenses or ocular disease management, income rises accordingly. It rewards efficiency and clinical breadth.
But that alignment also comes with variability. Income can fluctuate significantly month to month depending on patient flow, seasonality and even broader economic trends. Busy months can be excellent, while slower months can feel unpredictable. For associates with families or fixed financial obligations, that variability can create real financial pressure and may not feel worth the trade-off between higher earning potential and income stability.
THE HIDDEN DETAILS OF PRODUCTION-BASED PAY
Where production models often become more complex is in how “total compensation” is calculated. Some contracts define the percentage as encompassing the entire cost of employment, not just cash pay. That can include health insurance, PTO, licensure reimbursement, retirement contributions and even employer payroll taxes.
For example, if an associate generates $100,000 in monthly collections at a 15% rate, their theoretical earnings would be $15,000. However, if the contract assigns $2,000 of that as the value of benefits, that amount is deducted before the final paycheck is issued. The result is a lower take-home amount, even though the percentage on paper remains the same.
This structure is attractive to practice owners because it stabilizes labor costs as a predictable percentage of revenue. For associates, the challenge is ensuring they understand exactly what is being deducted and whether those benefits are worth their assigned value.
Paid time off can also complicate production models. In many cases, PTO is not truly “extra” pay. Instead, associates receive a per diem or guaranteed daily rate while out of the office, but that amount is still reconciled against their monthly production calculation. If an associate takes significant time off, their overall production decreases, and PTO payments may effectively reduce their production bonus at the end of the month.
In some cases, if the math results in a negative balance after deductions and PTO adjustments, that deficit may even carry over into the next pay period. While associates are not asked to repay money out of pocket, it can reduce future earnings until the balance is offset. This is one of the least understood aspects of production-based compensation and one of the most important to clarify in a contract.
SALARY: PREDICTABILITY OVER PERFORMANCE
Salary-based compensation is the most straightforward model. Associates receive a fixed income regardless of how many patients they see or how much revenue they generate. PTO, sick time and holidays typically do not impact pay, which creates financial stability and predictability.
For many doctors, this structure is appealing early in their careers or in situations where consistency is more important than the potential to increase earnings through higher productivity. It removes the stress of fluctuating income and simplifies budgeting.
From the practice owner’s perspective, salary provides cost predictability. They know exactly what their payroll expenses will be each month, regardless of patient volume or seasonal changes.
The downside is limited upside potential. Highly productive doctors may feel capped, as their compensation does not directly scale with performance. For practices, there is also less built-in incentive for increased efficiency or volume unless additional bonus structures are layered in.
PER DIEM AND HYBRID MODELS: SIMPLICITY WITH LIMITS
Per diem models pay associates a flat daily rate, such as $500 per day, regardless of patient volume or collections. In many cases, this structure is paired with benefits and sometimes a production bonus if certain thresholds are exceeded. PTO is typically paid at the same daily rate and does not affect the base structure.
On the surface, per diem compensation is simple and easy to understand. It provides clear expectations for both employer and associate. However, it can vary significantly by geographic market. In high-cost areas, per diem rates may be higher, while in other regions they may be more modest.
Some practices blend per diem with production bonuses, creating a hybrid model. For example, an associate may receive a guaranteed daily rate plus a percentage of collections once they exceed a certain productivity threshold. This allows practices to offer income stability while still incentivizing growth.
CHOOSING THE RIGHT STRUCTURE
There is no single “best” compensation model. The right fit really depends on the practice, the market and the associate’s priorities. Production-based pay rewards efficiency and clinical growth but introduces variability and complexity. Salary offers stability but limits upside. Per diem structures simplify compensation but may not fully reflect performance unless bonuses are included.
What I’ve learned is that the most important factor is not just the percentage or salary number, but how clearly the contract defines benefits, PTO and deductions. Associates should understand how every dollar is calculated, what is included in their compensation percentage and how time off impacts their earnings.
Too often, doctors focus on headline numbers without fully understanding the mechanics underneath. In reality, the structure of the contract can matter just as much as, if not more than, the stated pay rate.
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Andrawis Zada, OD, is an associate optometrist at Helmus Optometry in Davis, Calif. To contact him: drzada@helmusoptometry.com |
