Bottom Line:
Equipment Cost Analysis
By Karlen McLean, ABOC, NCLC
Think you’re finished on in-office finishing? Think again.This Bottom Line tells you how to plan, analyze, compare, shop, and purchase a system that makes sense for your practice
Gaining control of your finances and securing the customer-to-ECP relationship via exemplary service means looking at all of your practice’s practices. Upon consideration, in-house labs are frequently found to be a way to save money and time while building patient relationships. Doing some legwork prior to purchase helps you get a handle on whether an in-office lab will be a healthy investment for your practice.
COST ANALYSIS
To start, review your lab bills for the last quarter. Look not only at total cost, but also the cost for finishing different types of lenses. Premium lens finishing such as high-index, AR, and rimless drill mountings can cost more.
Compare lab cost to stock cost for all lens types. For example, your office may be able to purchase single-vision polycarbonate lenses for $10 a pair or less, while the lab cost for polycarbonate lenses and edging could run from $25 to $30 per job.
Determine your practice volume in three easy steps:
1. How many jobs per day:10
2. How many working days per month: 22
3. Job volume (jobs per day multiplied by working days per month): 10 x 22 = 220
Next, figure lab costs vs. in-house lab costs, for example:
1. Single vision wholesale lab: Cost = $20 Single vision in-office lab: Cost = $12 Your total savings = $8
2. Multifocal wholesale lab: Cost = $40 Multifocal in-office lab: Cost = $20 Your total savings = $20
3. PAL wholesale lab: Cost = $75 PAL in-office lab: Cost = $45 Your total savings = $30
Finally, calculate monthly comparative lens and job types and totals, for example:
1. Of practice job volume of 220: 100 are single vision 45 are multifocal 75 are PALs
2. Single vision wholesale lab: Cost = $20 x 100 = $2,000 Single vision in-house lab: Cost = $12 x 100 = $1,200 Your total savings = $800
3. Multifocal wholesale lab: Cost = $40 x 45 = $1,800 Multifocal in-house lab: Cost = $20 x 45 = $900 Your total savings = $900
4. PAL wholesale lab: Cost = $75 x 75 = 5,625 PAL in-house lab: Cost = $45 x 75 = $3,375 Your total savings = $3,375
Above: many in-office lab systems are compact. Image courtesy of SuperSystems. Below: pushbutton operation makes in-office lab equipment user-friendly. Image courtesy of Gerber Coburn
Equipment companies estimate that ECPs can save around one-third or more on their lab bills by having an in-office finishing system. For an estimate specific to your practice, most equipment companies offer a free practice profit analysis and return on investment review based on actual lab bills. Some equipment company websites offer this service online using the numbers
| Why should I have in-office surfacing? Consider not just the cost of the surfacing set-up and space, but also ease of operation, equipment service and repairs, and timeliness: how fast and accurately can you output jobs? ECPs and retailers that have inoffice surfacing cite the following points—in order of importance—as to why they offer surfacing: 1. Helps take better care of customers 2. Noticeable cost savings 3. Control (process, service, and financial) 4. Faster turnaround 5. Convenience 6. Offering stronger warranty policies 7. Less spoilage, redos, and remakes 8. More direct contact and clout with lens manufacturers |
Making the Jump While most ECPs with in-office labs focus on finishing (edging) only, some ECPs and optical retailers’ in-office lab layouts also include surfacing. Small to medium operations may question why surfacing should be part of their lab plan, while medium to large practices and retailers typically have been surfacing successfully for years. In-office surfacing offers more options to serve your patients well in an increasingly superior, service-oriented marketplace. You just have to make sure that it’s cost effective for your practice. To decide whether in-office surfacing makes sense for you, apply the cost analysis strategies listed in this article, but compare the surfacing lab cost to un-surfaced lens costs (not stock lens costs). Remember that setting up surfacing can run the equipment gamut, from used equipment to traditional hands-on systems or new integrated surfacing systems. |
that you plug in. Either way, a cost analysis report will provide a comparison so you can determine whether in-office finishing will be a wise financial move or not.
ADDING TO THE POT
With savings like those outlined above, the profits would more than likely cover any equipment lease payment. If choosing to lease, be sure to file a Section 179 tax deduction, which allows businesses to deduct over $100,000 for equipment placed in service during the tax year.
Leasing can also provide other tax deductions that can lower taxable gross income.
CHECK POINT: Check with your accountant for the best options, including lowering the cost of equipment installation. In addition to providing cost analysis and return on investment analysis, some equipment companies also offer services like start-up lens inventory and replenishment, online ordering, customized lab design, customized signage, and even press releases to local newspapers announcing your in-house lab.
CHECK POINT: Check with equipment companies to learn what ancillary and support services are currently available.
Consider that by offering in-house lab services with more efficient job turnaround you’ll retain more customers. Those walkout patients who don’t want to wait for their finished eyewear will be pleased with the speedy timeframe and your practice will keep their patronage.
Some practices have reported an upswing in the sales of premium lens materials and designs, rimless, polished edges, and AR after the practice adopted an in-house lab format.
In addition to a quicker job turnaround, staff and patients also reported more peace of mind from having a lab on the premises.
Another bonus: selling premium lens materials, designs, treatments, and even frames became the practice focus once concerns about longer timeframes and possible fabrication problems were solved.
The goals of an in-house lab should be increasing profits, providing better service, increasing customer satisfaction, and growing the business. Because today’s newest edgers take less time, finish all lens types, and offer built-in accuracy along with ease of use, these goals can be met without sacrificing quality finished products.
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