practice advisors

How to Profit from Package Pricing

Allan Barker, OD, and Greg Stockbridge, OD, MBA

Q Will it increase my optical sales if I utilize package pricing rather than sell each product separately?

The simple answer is yes. However, the concept of selling products as a package, bundle, or aggregate rather than individually can be somewhat complex.

Packaging products definitely increases sales. We see it in practice every day. Cable TV plans, new automobile accessories, and even airline seats all use package pricing principles to increase what the consumer spends.

So does optical. Several years ago, one major optical chain switched to an opt-out strategy for lens packages. The patient received the package of scratch coating and AR unless he opted out.

For most, the upgraded sale became almost automatic. And, it really helped turn around the previously struggling chain. Agg Yes. But it worked to dramatically increase sales.

VALUE TO CONSUMERS

So, if packaging products leads to increased sales, what is complex about it? The answer-and the potential problem-is that when various products are packaged together, the individual parts can lose their value to the consumer.

Harvard Business Review studies prove this. As reported in HBR, season tickets holders have a four-time higher no-show rate than do people who purchase individual game tickets.

The same holds true in other areas. For example, multi-day ski lift ticket holders are twice as likely not to ski on their last day as individual day purchasers. These are just two examples of how people sometimes tend to value individual products less when they are part of a package.

Why is this important to optical? Because perceived value increases patient retention. Most independent ECPs strive to keep patients for life as opposed to making a one-time sale. Simply put, patient retention is critical to success.

PACKAGING FOR PROFITABILITY

Package pricing works because when people are asked to make a decision about something they are unfamiliar with, they tend to lean toward making no decision. Thus, the overriding fear of a wrong decision leads them to take the package as presented.

Here are a few tips to help you profitably manage packaging and pricing in your practice. For starters, it’s important to understand that the first number the patient hears sets a reference point, so set the reference point of your transaction high rather than low. If the reference point is too low, then every add-on sounds high relative to the starting price of the lens.

For example, say you have a $300 package for highindex and premium AR coating. If you sell that first, you have a better chance of adding a $90 photochromic upgrade than if you present the $90 photochromic lens first and then the $300 package.

Second, fully explain the product features and, most important, how the patient will benefit. Make the product sound customized to the patient and always explain the warranty. Benefit explanation is so important that it needs to be accomplished not only when the product is first discussed, but again at dispensing.

SIMPLIFYING OPTIONS

It’s important to remember that when you package products, you give the patient fewer choices and, therefore, decrease the potential for confusion. And, the more confused a patient is, the greater the likelihood that he or she will walk out without making a purchase.

This applies to frame selection as well as to lenses. Discuss the quality of the product, and be sure not to let a patient wander aimlessly through the store looking at a 1,000 frames.

Instead, be sure to train you staff to help the patient quickly narrow down his or her selection to four frames or fewer. Selection trays can assist in this process.

Thus, the answer to your question is that packaging optical products increases sales, which is a positive. However, if you don’t educate the patient as to the value of each individual product benefit in that package, you are losing patient retention.

Benefits need to be explained and re-explained. There is no other way. When you accomplish this, along with good sales techniques, packaging products will achieve a double bonus for your practice: You will increase sales and increase patient retention. EB

Send Us Your Question

Drs. Barker and Stockbridge will answer your queries about practice growth, business management, as well as other issues. Please email your questions to eyecarebizeditor@pentavisionmedia.com