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I wrote in my last tip article about how discounts can be very bad for the bottom line, and that most eye
care practices would do well to simply eliminate the wide variety of discounts offered to patients. This
week I'll describe the one discount program I believe in. Try this strategy and you will increase your
net income.
If you have an optical dispensary in your practice, I would venture that you like to see patients purchase
two complete pairs of glasses at the same time. Three or four pairs would be even better. I will go out
on a limb and propose that you probably don't see all that many double pair sales. If your practice is
like mine used to be, you might even agree that a two pair sale is a rarity.
A radical idea
I'll admit that my practice was woefully poor at selling two pairs at once. It's not like we didn't try
the usual approaches. We provided training programs on optical sales techniques and my staff has always
been very good at lifestyle dispensing. We also offered the usual 20% off on the second pair, which has
become almost a standard in the optical marketplace. One day, while commiserating this history of mediocre
performance with members of my study group, a doctor from Georgia who has a brilliant mind for business said
"If I wanted to sell more second pairs, I'd make the second pair 50% off." It seemed a little extreme to me;
after all, there was no point in selling the second pair if there was no profit in it. But with a little
analysis, it turned out that the concept had merit.
I introduced the policy in my practice and multiple pair sales jumped dramatically. Instead of selling two
double pairs per month, we were selling two sets per day!
The rules
The second pair discount policy in my practice is simple, but strict.
- Each additional complete pair of glasses (frame and lenses) ordered receives 50% off the usual price.
- The discount is always applied to the less expensive pair(s).
- All pairs of glasses must be ordered at the same time.
- The second pair discount still applies even if the first pair is purchased through a vision plan.
- Note: At first glance, one might think there is really not enough profit in this situation, but I am
looking for incremental purchases. It makes no difference if the first pair is purchased privately or not,
the second pair must stand on it's own for profitability. I found vision plan patients rarely purchased two
complete pairs of glasses before the 50% policy, and now they do so more often.
- No other discounts may be applied.
Looking at the profit
Earning a smaller profit on many second pairs can be far better than earning a typical profit on very few
second pairs. But the best way to tell is to track the numbers in your practice. Monitor the number of
double pair sales over a few months before and after offering the 50% discount. Calculate the gross profit
both ways. Remember that you are probably already giving up a 20% discount on second pairs, so the real
cost of moving to this dramatic policy is 30% of the usual charges.
To obtain a rough overview of the concept, review the dollar profit on a pair of glasses sold in your practice
with a 50% discount. Don't forget that you likely received a 20% discount off the published wholesale frame
cost. Start with your usual charges for an average frame (let's say Frames book price of $45) and a pair of
progressive lenses and take half that amount off the top. Next, deduct your actual lab cost for the frame
and lenses. You should end up with a pretty good gross profit in spite of the very aggressive discount.
In my case, the profit after the discount would be $140. I have an in-office surfacing and finishing lab,
so I admit my costs are low which helps my profit margin. But that option is available to any practice.
If your profit is very low in this scenario, you might need to consider raising your optical prices.
Economy of scale
It is more efficient for my staff to process two pairs of glasses at once, which makes the reduced profit
on the second pair even more acceptable. Everything occurs in one transaction at the same time: orders are
written up, charges are entered and paid for, materials are gathered, lenses are fabricated, patient is
called, and glasses are dispensed. Patients rarely need a reason for a bargain, but if asked, this is how
I explain our second pair policy.
Why the program works
The increase in second pair sales in my practice occurs because it is a good financial deal for patients,
but there is another important factor at work. My staff feels a duty to inform every patient about the
policy. It is simply too good of a deal to not bring it up. This at least plants the seed of buying two
pairs, and given that, many people will. Even if the patient declines, the staff member does not feel
badly about mentioning it. When we offered a 20% discount on the second pair, it was often only brought
up if the patient asked about getting two pairs. The 50% discount avoids the fear of rejection that
prevented staff from discussing two pairs. Now, the second pair could be a pair of computer glasses,
Rx sunglasses, single vision TV glasses, dressy fashion glasses, or any other reason you come up with.
Three ways to make money
There are only three ways to increase your gross revenue.
- See more patients per day
- Raise fees
- Sell more goods and services to each patient you see
All three of these are important, but if numbers 1 and 2 are maxed out at the moment, don't forget number 3!
Best wishes for continued success,
Neil B. Gailmard, OD, MBA, FAAO
Editor, Optometric Management Tip of the Week
A Proud Supporter of
Send questions and comments to neil@gailmard.com.
Dr. Gailmard offers consulting services to eye care professionals through Prima Eye Group; information is available at www.primaeyegroup.com.
Please Note: The views expressed in Management Tip of the Week do not necessarily reflect those of the sponsor.
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