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How In-Office Edging Maximizes Profits and Opportunities

Editors of 20/20 and Vision Monday

09-2009

Shoring up profits in the midst of an economic tsunami is a challenge. It requires close scrutiny of all aspects of the optical practice to determine where opportunities exist to enhance profitability while delivering outstanding patient service. Since about 60% of a full-service optical practice’s profits can be traced to the eyewear dispensary on average, this is a good place to start.

You can increase dispensary profits by raising prices, decreasing costs and growing volume. Price hikes aren’t attractive in the current economy, so cutting costs and generating more volume become the most viable profit-boosting options. One of the best ways to do both is to operate an in-house lab with the latest multifunctional edging technology.

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. The newest edging systems allow you to handle all of today’s popular lens materials and high end eye wear in-house so there are few jobs you need to send out.

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. Note the additional costs for finishing AR coated lenses, polishing, tinting and other value added services which your in-house lab can do easily.

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.

Savings 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. Your monthly lease or loan installments on a $40,000 edger may be in the range of $840.00 a month (i.e., lease with $1 buyout). Your savings amount to over $2,160 a month after equipment costs, or $25,920 a year. Some edger manufacturers will do this cost analysis for your practice. Talk to several and choose one whose equipment offers the features that fit your business goals. This will also give you an opportunity to get to know the sales rep and the company before making a purchase. A manufacturer can also help with financing and provide insight into the significant tax advantages associated with different ways of purchasing capital equipment.

Profit With New Patients/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. At $250 per job, with a net profit of $100, your incremental profit would be $200 a week or $800 a month – enough to offset your lease. The remaining 6 jobs per month ($1,200) plus your lab savings would add to your revenues.

Opportunities To Grow Your Revenue

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.”

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.

The bottom line is simple. Most surveys show that practices that edge in-house 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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