Can In-the-Store-Edging be a Strategy to Grow Profits?
Preserving profits for Optical Dispensaries right now is a new and rather daunting challenge. There is a need to take a look at all aspects of one's optical practice to determine where opportunities exist to enhance profitability while delivering the-same-or-higher level of quality patient service. Since about 60% of a full-service optical practice’s profits can be traced to the eyewear dispensary on average, it is clear that this is a good place to start.
Preserving profits for Optical Dispensaries right now is a new and rather daunting challenge. There is a need to take a look at all aspects of one's optical practice to determine where opportunities exist to enhance profitability while delivering the-same-or-higher level of quality patient service. Since about 60% of a full-service optical practice’s profits can be traced to the eyewear dispensary on average, it is clear that this is a good place to start.
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One can consider the option of increasing dispensary profits by raising prices. One can consider of going through a 'right-sizing' exercise that has a view to decreasing costs by cutting back staffing.
Price hikes aren’t attractive in the current economy, so cutting costs and generating more volume become the most viable profit-enhancing-tools available in the toolbox. One of the best ways to do both is to go back to basic to operate an In-house Lab with one's own Frame Tracer and Edger housed on site.
One can consider the option of increasing dispensary profits by raising prices. One can consider of going through a 'right-sizing' exercise that has a view to decreasing costs by cutting back staffing.
Price hikes aren’t attractive in the current economy, so cutting costs and generating more volume become the most viable profit-enhancing-tools available in the toolbox. One of the best ways to do both is to go back to basic to operate an In-house Lab with one's own Frame Tracer and Edger housed on site.
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So let discuss the concept of generating profit by cutting Lab Costs. In general, lab bills decrease anywhere from 33% to 55% when you switch from purchasing finished lenses to buying uncut lenses and processing jobs in house. Today's edging systems, like the IOS E950 3D Patternless Frame Tracing and Edging system, allows an Optician to handle all of today’s wide variety of lens materials in-house.
So let discuss the concept of generating profit by cutting Lab Costs. In general, lab bills decrease anywhere from 33% to 55% when you switch from purchasing finished lenses to buying uncut lenses and processing jobs in house. Today's edging systems, like the IOS E950 3D Patternless Frame Tracing and Edging system, allows an Optician to handle all of today’s wide variety of lens materials in-house.
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To get a precise measure of your savings, track your lab costs for three months. On a simple spreadsheet, record the number of single vision, bifocal/trifocal, progressive and rimless jobs you sent out and the cost per finished job. Take careful note of the additional costs for finishing AR coated lenses, polishing, tinting and other value added services which today an In-house lab can do easily.
To get a precise measure of your savings, track your lab costs for three months. On a simple spreadsheet, record the number of single vision, bifocal/trifocal, progressive and rimless jobs you sent out and the cost per finished job. Take careful note of the additional costs for finishing AR coated lenses, polishing, tinting and other value added services which today an In-house lab can do easily.
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Once these costs are charted, compare the lab’s finished costs by job type with the cost of uncut lenses. The difference will vary by lens material and type. For example, the difference in cost for plastic SV finished vs. uncut may be $10 or 70% savings, and for high index it may be $20 or 40% savings. Take into consideration the challenges of the fuss and muss of cutting Trivex lenses as well.
Once these costs are charted, compare the lab’s finished costs by job type with the cost of uncut lenses. The difference will vary by lens material and type. For example, the difference in cost for plastic SV finished vs. uncut may be $10 or 70% savings, and for high index it may be $20 or 40% savings. Take into consideration the challenges of the fuss and muss of cutting Trivex lenses as well.
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Charted savings can add up quickly. If your average savings is about $15 per job, and you edge 10 jobs a day or 200 jobs a month, you can save $3,000 a month in lab fees by edging In-house. Such analysis is not only realistic but also quickly achievable.
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Your monthly lease or loan installments on a $16,000 Edger system may be in the range of $450 to $500 a month (i.e., lease with a $10 buyout). Your savings can amount to over $2,500 a month after equipment costs, or $30,00 a year of pure bottom line profit. Some Edger manufacturers, like IOS (call Randall at 888.351.4467, Ext. 31) will do this cost analysis for your practice as a courtesy. A manufacturer can also help with financing and provide insight into the significant tax advantages associated with different ways of purchasing capital equipment.
Your monthly lease or loan installments on a $16,000 Edger system may be in the range of $450 to $500 a month (i.e., lease with a $10 buyout). Your savings can amount to over $2,500 a month after equipment costs, or $30,00 a year of pure bottom line profit. Some Edger manufacturers, like IOS (call Randall at 888.351.4467, Ext. 31) will do this cost analysis for your practice as a courtesy. A manufacturer can also help with financing and provide insight into the significant tax advantages associated with different ways of purchasing capital equipment.
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You can enhance Profit with new patients and jobs. Another way to analyze the benefits of an in house lab is to estimate the number of new patients/jobs you would add to your practice with a lab on premise. Industry studies show that 15% to 25% of patients walk out with their Rx’s in hand to get their eyeglasses elsewhere. With an on-site finishing, you should be able to capture at least 2 more patients/jobs a week due to promptness of turnaround and service to you clientele. At $250 per job, with a net profit of $100, your incremental profit would be $200 a week or $800 a month; which more than enough to offset your monthly financing payment. The remaining 6 jobs per month ($1,200) plus your lab savings would add to your revenues.
You can enhance Profit with new patients and jobs. Another way to analyze the benefits of an in house lab is to estimate the number of new patients/jobs you would add to your practice with a lab on premise. Industry studies show that 15% to 25% of patients walk out with their Rx’s in hand to get their eyeglasses elsewhere. With an on-site finishing, you should be able to capture at least 2 more patients/jobs a week due to promptness of turnaround and service to you clientele. At $250 per job, with a net profit of $100, your incremental profit would be $200 a week or $800 a month; which more than enough to offset your monthly financing payment. The remaining 6 jobs per month ($1,200) plus your lab savings would add to your revenues.
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There are even more opportunities to grow your revenue streams. In addition to lab savings, In-house labs can help you attract and retain patients by offering fast job turnaround and high quality products that you control. Promoting your In-house lab becomes an effective tool to grow your practice. Your telephone listing, web site banners and office signage can tout: "Eyeglasses made on site for fast, quality service."
There are even more opportunities to grow your revenue streams. In addition to lab savings, In-house labs can help you attract and retain patients by offering fast job turnaround and high quality products that you control. Promoting your In-house lab becomes an effective tool to grow your practice. Your telephone listing, web site banners and office signage can tout: "Eyeglasses made on site for fast, quality service."
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Train your staff to inform patients about your lab services before and after eye exams. Use in-office displays to educate them about the benefits of lens materials and features available from your dispensary. Reinforce the quality and fast delivery messages. Most patients don’t need one-hour service, but are impressed to know it’s available if necessary. Tell them you can replace lenses in existing frames without patients giving up their frames to send to a lab. Quickly your dispensary will moved into a position of having competitive advantage within your captured market.
Train your staff to inform patients about your lab services before and after eye exams. Use in-office displays to educate them about the benefits of lens materials and features available from your dispensary. Reinforce the quality and fast delivery messages. Most patients don’t need one-hour service, but are impressed to know it’s available if necessary. Tell them you can replace lenses in existing frames without patients giving up their frames to send to a lab. Quickly your dispensary will moved into a position of having competitive advantage within your captured market.
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The bottom line is simple. Many surveys are showing that Optical Dispensary practices that edge In-house can derive significant incremental profits from their labs, and grow their patient base with the services they can provide. Service and quality become part of their office "brand" and higher revenues follow.
The bottom line is simple. Many surveys are showing that Optical Dispensary practices that edge In-house can derive significant incremental profits from their labs, and grow their patient base with the services they can provide. Service and quality become part of their office "brand" and higher revenues follow.
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