Article Date: 6/1/2003

business advisor
Pricing Policies
Raise your fees for professional services, but try to stay competitive when it comes to disposable lenses. Find out why here.
By Jerry Hayes, O.D.

Although disposable contact lenses have been around for more than a decade, I think many O.D.s have it backwards when it comes to deciding how much to charge for them. Here's why:

Comparing fees

My firm routinely conducts price surveys for clients and I'm always amazed at how much fees for basic services can vary in a given market area. It's not unusual to see some O.D.s charge $50 for a new patient exam while others charge $80 to more than $100 in the same town. How can so much price elasticity for the same service in the same market exist?

Simple: The average consumer has no way to compare the quality of your exam to that of other doctors. They'll make a buying decision on the basis of peripheral things such as the décor of your office, the friendliness of your staff and your chairside manner. Because those things vary from one office to another, consumers aren't that price sensitive when it comes to fees for services -- as long as they think they're getting good care.

It works elsewhere too

The same situation applies for spectacle lenses. Who's to say how much a given patient's prescription should cost until you've selected the material, the coating and the frame? Spectacle lens fees are just plain hard to compare. As a result, the costs can vary widely.

All of those factors go out the window when we're talking about a name brand disposable lens. Now we're on uncomfortable turf, dealing with easily compared commodity products. (By commodity I mean it's a recognized brand name and readily available from a variety of sources.) Although disposable lenses do require a prescription, they're no different than a tube of toothpaste in terms of a patient's ability to shop the price.

Searching for a bargain

As a consumer, I'm confident that I won't sacrifice quality if I buy my eight-ounce tube of Crest for $2.99 at Target versus paying $4.19 at my local boutique grocery store. Many of your patients feel the same way about their disposable lenses. Why should they pay you more when they can get the exact same product somewhere else for less? It's not personal, it's just smart shopping.

At press time, 1-800 Contacts was charging $22.45 per box with free shipping if you bought four boxes of the leading brand of disposable lenses. I can't tell you how much to charge, but I can give you two things to think about:

1. If you choose to charge more than the advertised rate on any commodity item, you're going to lose sales and perhaps patients.

2. When you price a commodity product higher than the visible competition, you send a signal to your patients that your fees may be high on the products they can't easily compare, even if they aren't.

Old advice still applies

You have to be price competitive on commodity products in today's market. Therefore, the only way to stay profitable is to give your patients high-quality care and charge accordingly for your professional services. Those are the fees patients don't compare as much.

If the thought of raising your fees scares you, then remember my other survey. High-gross practices tend to charge the highest prices.

A frequent writer and speaker on practice management issues, Dr. Hayes is the founder and director of Hayes Consulting.  You can reach him at (800) 588-9636 or JHAYES@HAYESCONSULTING.NET.


Optometric Management, Issue: June 2003