By Kara Ramsey-Foster, OD
April 19, 2023
The pricing of the products you sell affects both your cost of goods sold (COGS) and your per-patient revenue. In our practice, we found an approach that enables our patients to get all the eyewear we prescribed for them while also keeping our inventory and lab costs down. Here is how we did it.
All-Inclusive, Package-Pricing Recommendations
Our pricing strategy is aimed at offering quality services and products to patients with all-inclusive recommendations. Doing it this way allows me to offer the best to my patients without feeling like I’m nickel-and-diming them on every upgrade. When we combine it all together, we can offer lower prices.
That means that when I prescribe eyewear for patients, I include all lens treatments I feel could be beneficial to them. For example, I might prescribe a pair of glasses with anti-reflective treatment, Transitions and a blue-light blocker.
In addition to benefiting patients, when I can include these additional lens treatments and products in more of our eyewear sales, I can receive better pricing from our lens vendors and labs. I can then pass those savings onto our patients. They receive the glasses that are best for their lifestyle and eye health needs at a competitive price, and our practice is able to save money on the wholesale cost of the lenses and lab services.
Our three eyewear packages:
All these packages come with polycarbonate lenses, a standard hard-coat, non-glare, UV coating, scratch coating and two-year warranty. We then give the patient an overall price quote that is inclusive of the charges for any extras I recommend like Transitions and blue-light protection.
Reduced Impact of Managed Care on Our Pricing
We previously billed everything in-network with insurance companies, so it pushed us into a tunnel of having to bill every item separately. We wanted to find a way that felt consistent with the doctor’s recommendations for services and eyewear to make a more seamless approach to the purchasing process.
We are taking what is sometimes referred to as a “direct care” approach. We have eliminated managed care from our practice, and as a result, have significantly increased our revenue-per-exam.
Before going to a direct-care system, we were averaging about $300 in revenue per patient exam, but in our first full year of direct care we had an increase of 50 percent ($450 revenue-per-patient) and we’ve steadily risen over the years. We are currently averaging $564 in revenue per patient exam.
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Our cost of goods has improved and the quality of the lenses and products that we’re offering to our patients is better, which means improved patient satisfaction, less chair time and fewer remakes. Currently, our costs of goods is 33 percent. It used to be in the upper 30s percent to low 40s percent while using insurance company labs.
Our lab offers us better discounts that we were able to get through insurance companies, and we don’t have to worry about charge-backs.
All-inclusive pricing is a simpler, easier-to-understand approach for the patient. If we can explain it well, they want to take our recommendations. No one wants to feel like they are being up-sold on doctor recommendations.
We Trained Staff to Explain Our Approach to Pricing
While our pricing system is a much simpler approach than paying for all lens treatments separately, our team members still need to understand how to emphasize the value of our services and products when explaining it to patients.
We teach our staff to say something like this:
“We offer package specials that are pretty comparable to ______’s selection. With pricing being similar to ______, your out of pocket is the same, however we can file your insurance and you will get a reimbursement.”
We Focus on Marketing Independent Frame Lines
We display and focus on independent lines and spend time explaining to patients that smaller companies and good customer service is part of what allows us to stand behind our products and have better success with our lenses and frames. It’s important for us to work with vendors who will support us–and, by extension, our patients.