I always say there’s more than one way to do anything. When we discuss profit, most folks will automatically think first about creating additional revenue. But, like everything else, there’s another side to the story: Product Mix.
Control Costs with the Right Product Mix
Profit isn’t just about how much money you bring in, it’s about the balance between what’s coming in and what’s going out. Your costs are just as important as your revenues. Carrying and selling the right products in every category can dramatically change the equation. I have a short checklist of easy wins that you can use for each of your product types that will help you spend LESS (and profit more).
Contact Lenses: Be Selective
The key for contact lenses is to maximize your discounts and your rebates. You’ll need to review the brands and variety of lenses you offer in your practice and make some judicious choices. Every doctor’s got their favorite go-to lenses, but what you really need is a practice go-to lens. That way you can work with your reps or your professional alliance to pursue the very best pricing, and get the best deal on your purchase rebates from the vendor.
Work with your doctors and come to a consensus about what contact lens products the practice will offer. Ask each of them what their go-to lens is and why. You may be surprised how many different options are being offered. Too many, and it will chew into your bottom line. Obviously, you want sufficiently diverse products that meet your patients’ needs and are excellent visual solutions, but you’ll need to come to an agreement on not only what is best for your patients, but what brands also serve your practice. All your prescribers need to be working from the same script. Their buy-in is critical, as they’re the ones who are recommending the products.
Make exceptions when necessary, but make sure they’re only exceptions. A regular review of your product invoices will help you keep a watchful eye on the contact lenses being purchased by your patients. If you find there are chronic deviations, speak to the providing doctor about why they’re making that choice regularly. You may need to either expand your standard options or find an equivalent product within the brand family you’re working with.
Frames: Less is More
My rule of thumb for frames is simple. “You don’t need more brands, you need more options within each brand.” You’ll find the best pricing available if you go “deep and narrow” in your frame product mix rather than “shallow and broad.” (More styles in fewer brands, rather than a few styles in many brands.) Talk to your frame reps and find out what they can offer you as an incentive for carrying more of their lines. They may have programs you’re not even aware of. Be a little choosy, of course, and make sure that your choices will match up to your patient demographic, but don’t be afraid to limit the number of brands you carry in favor of a major cost advantage for your practice.
Full Frame Boards
Your boards have to be full. After all, you can’t sell what you don’t have. I favor a static frame board – the frame stays in the practice, and we order in the unit we need for each sale. Some business or optical managers will balk at this, as it can potentially increase your shipping costs. However, if you build that extra cost into your pricing, the practice won’t feel the pinch. The upside is you’ll always have a full selection of beautiful frames for your patients to choose from. Some vendors may even offer free shipping direct to the lab, which could make a static frame board a major win for you.
Pre-order or Frequent Re-order
Rather than order your frames on a monthly(or even quarterly) basis, consider pre-orders or weekly re-orders. Nothing is worse than a giant frame bill at an unexpected moment. Regular, smaller orders will help you smooth out your cash flow, and prevent gaping holes in your merchandise.
Ophthalmic Lenses: More of the Same Product Mix Strategies
These same concepts apply to your ophthalmic lenses. Be selective, find the brands and lens designs that really work for your practice and your patients, and stick to them! Most practices can get along very well with 4-5 good progressive lens options. You don’t need to offer a lens for every single occasion. Find the ones that you like, and limit your purchasing and prescribing to those only, with rare exceptions.
Obviously, optics figure into these decisions. You must have good products, and your providers must be able to recommend them with confidence. But vendor benefits also come into play, and you don’t need to be shy about asking your suppliers what they can offer to win your business.
Those are my three rules easy rules for a great product mix – Standardization, Limited Options, and Maximization of Benefits. They will help you build your profit from the “other” side by cutting costs.