When it comes to optimizing your practice’s profitability, an immediate solution that may come to mind is increasing frame board costs. However, this can actually be detrimental to your growth in the future. The good news is that there are numerous other options for increasing optical profits. Keep reading to continue learning about some of the practical and clever ways to boost profitability in your optical without raising board prices.
Frame profit overview
Frame income has two primary sources: the patient either pays frame overage out of pocket during the sale, or the insurance pays the wholesale allowance at the time of the transaction. Opticals will often choose to increase their frame prices due to this fixed insurance reimbursement, but this is not the only way to increase profits when it comes to frame sales.
Frame expenses also have two primary sources: the first is what your business actually paid for the frame, and the second is the cost of frames that don’t get sold and are leftover. By employing practices that reduce untouched inventory and the actual costs of your frames, you can still satisfy patients without sacrificing profit growth.
One of the most commonly used profit models in optometric practices also happens to be one of the least productive and profitable models to employ. It is usually known as the “big brand model,” and it can do more harm than good. Frame dealers will often require specific buy-in and purchase intervals to remain working with them. In addition, the wholesale prices they are charging are usually on par with the prices insurance companies pay you, and the discounts tend to be very small (no more than 20% of your wholesale order).
If you want to make money using this model, the only probable way is to massively overcharge your patients and sell at high markups, which, as discussed earlier, isn’t the best solution for increasing profits.
Other Ways to Increase Board Profitability and Lower Your Expenses
Inventory Mix
Profits do not necessarily rely on stocking a huge number of frames. For less than $24,000, optical retailers can stock around 275 frames, according to Dr. Courtney Dryer. Keeping your inventory mix interesting with a variety of styles, price points, and brands helps ensure that your customers don’t take their business somewhere else simply because you do not carry the frame they want.
If you’re trying to decide what your mix of frames should be, take into consideration whether you are simply remodeling your frame boards or if you are actually starting a new practice. Depending on the situation you’re in, your inventory mix may differ. For new endeavors, it’s probably best to start with a relatively small number of frames and an even ratio of men’s to women’s styles, with a few kids’ glasses in the mix.
If you’re looking to keep your inventory mix fresh and exciting, A&A Optical has hundreds of frame styles to choose from. Whether you’re looking to supply more styles for women, men, or children, A&A has a frame for every face. With collections from brands like Jimmy Crystal and Aeropostale, you can find the right pair for even the pickiest customer. Visit our website to sign up today.
Creative Installation
While it may be tempting to bring in an outside optical design company to help you set up your optical, it’s important to remember that it is more than possible to set up these boards on your own. For a typical 1,000-square-foot optical wall, designer costs can move into the range of $40,000 or more.
Focus on Strategic Visual Merchandising
When you’re coming up with your merchandising displays, be sure to keep customers’ sensory experience at the forefront of your mind. Factors like lighting, being able to try the frames on, and mirror placement can all play a significant part in a customer’s ultimate decision. Organizing your board space by brand, style, and other categories is another way to make your patients’ experience more convenient and increase your profits.
Take Lab Costs Into Consideration
Asking about lab costs can save your practice over 50% on yearly cost of goods without having to sacrifice customer satisfaction or profits in other areas. You can acquire discounted price sheets by asking about lab costs, allowing you to seek out the best possible pricing option.
Conclusion
By getting creative with your frame board management, you have the potential to cut costs and increase profits for your retail optical. Next time you’re trying to encourage growth in your practice, consider employing one of the practices discussed above to reach your goals.
