Do you use a lab that offers you 50% off a customer’s second pair? If so, it’s obviously a good deal – compared to paying full price for both, that is. But how good of a deal is it really?
If the first pair and the second pair are the same price, you’ve gotten a 25% discount on the total purchase, allowing you to give the patient a second-pair discount, book some extra profit, or some combination of the two. But consider this: on average, only about 10% of patients buy a second pair at the same time as their primary pair. Even if your second pair rate capture rate is double that, the 50% discount on second pairs only amounts to 5% of your total lab bill, minus whatever second-pair discount you offer the patients. While a 50% discount always has a large perceived value, in this case the impact to your bottom line is much, much smaller.
Nonetheless, a discount is a discount. But at GSRx, we offer state-of-the-art lens and coating technology, and it’s always 40-50% off a typical lab bill. (We have lots of customers who will attest to those savings; look here if you want to read what they’ve said. Since our product are equivalent to (or better than0 any lab’s premium offering, this means that you’re getting up to a 50% discount on every pair. That gives you a lot more flexibility to make eyewear (including second pairs) more affordable for your patients, while maintaining or increasing your profitability.
We love the fact that we can offer you the best in optics for what it should cost. But we also love the fact that the perceived and actual value of our offering is the same. That kind of honesty helps our Marketing department sleep better at night. And saving $5,000 per month on your lab bill might help you sleep better, too.
CVS opened five optical locations in 2015 as a pilot program. They apparently liked what they saw, because they have announced that they plan to open 19 further opticals this year, with locations in Illinois, Maryland, New Jersey, New York and Pennsylvania. While VSP was involved in the pilot program, none of the new locations will be in the VSP network, according to a VSP spokesperson.
If there’s any good news here, it’s that there are a lot of people who believe in the long-term viability of brick-and-mortar optical. Like Walgreen’s, which is also experimenting with optical, CVS is run by very smart people. They think in terms of revenue per square foot, and they wouldn’t commit in-store real estate to an optical department if they weren’t pretty sure they’d get a good return.
The bad news is that everybody seems to want a slice of the optical pie. And there’s really no way to make that pie bigger except through population growth, so new optical customers for CVS have to come from somebody else’s optical.
We don’t talk about this stuff just to be gloomy – we talk about it because it’s important to be open about where the market’s going, because that’s the only to be prepared for what happens next. Ultimately, the only way you can keep patients from being lured away from your optical to offer an affordable alternative that meets the high performance standards you insist on for your patients’ vision.