PRACTICE ADVISORS

Winning the Discount Game

Our research finds that some programs stimulate sales, while others cause profits to plummet

Q: WHAT EYEGLASS DISCOUNT IS MOST EFFECTIVE, YET HAS A MINIMAL EFFECT ON MY BOTTOM LINE?

A: For many practices, finding the offer that is best regarded by your patients and least damaging to your bottom can be confusing.

To help, let’s look at some popular eyeglass discount offers and analyze their effect on profitability. We will use numbers from our study of $28 million in eyeglass sales. Based on that research, we will assume an average eyeglass transaction to produce $350 of collected revenue, with 42 percent ($147) from frames and 58 percent ($203) from lenses.

In the chart below, we look at eight offers and how each affects the percentage of full price that the ECP would actually collect. As you can see, the best discount for the ECP would seem to be half off frames at an effective discount of 21 percent. The buy one, get the second pair at half price, however, has the added benefit of stimulating second-pair sales, which increases incremental sales revenues with a relatively reduced fixed cost overhead.

This particular offer is seen frequently, especially in pharmacies. It encourages an impulse buy. Customers stop in for one bottle of contact lens solution, they’re already there, so why not purchase another for half off?

ECPs can use the same approach to engage patients to purchase multiple pairs of glasses. This offer works well as an ongoing, year-round program.

A half-price frame sale works effectively in driving patients in the door. It also works as a periodic offer during slow times. Patients seem to respond to this, and it doesn’t require ECPs to give up their profitability the way offers 5 to 8 below do.

There’s no need to produce a draconian effect on your bottom line to drive patients to purchase. However, a perceived discount does help produce meaningful sales results.

There are variables to consider, such as cost of sales differentials between frames and lenses, aggressive frame markups by some professionals utilizing low-cost products, and other strategies. However, we hope this simplified look at the various discount transactions is helpful.

— Allan Barker, O.D., and Greg Stockbridge, O.D., M.B.A.

SEND US YOUR QUESTIONS

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