What’s your pricing strategy?

Dispensing Solutions

What pricing strategy do you use?Click here to let us know.

In the optical dispensaries of many ophthalmology practices, there exists a problem: deciding the pricing strategy.

If you ask the average optician, he or she will say that customers are focused on price. In other words, price is what sells eyeglasses. The optician will attempt to set the everyday retail prices of frames, lenses, and lens accessories as low as possible. In his or her opinion, this is the easiest way to get customers to say “yes.” This lowest-price strategy poses a number of problems:

• Lowest-price claims. Watch, read, or listen to most merchants’ ads and you would think that they all offer the lowest price. Since only one competitor in any given market can have the lowest price on an item, consumers will conclude that most of those competitors are less than truthful. Guaranteeing the lowest price is obviously not a good way to position your dispensary’s brand. It does not instill confidence in gun-shy consumers who know from experience that you get what you pay for.

• Lack of service. When customers walk into a big-box retail store today, they will have two complaints: they cannot find someone to help them, and when they do find someone, the salesperson is not knowledgeable. This deliberate lack of service is how many retailers are staffing their stores these days. This staffing model is designed to lower prices, and unfortunately, it is also lowering service. Consumers often become angry or frustrated when attempting to make a purchase. In addition, consumers who do make a purchase are less likely to be convinced they made the right decision or purchased from the right company.

• Cheap goods. Another way to keep prices down and margins up is to offer lower-quality goods. That type of merchandise, however, is not designed or manufactured to provide the length of service or type of service for which many consumers are looking. Consumers will be disappointed with their purchase and generally with the retailer that sold it.

• Profits. Companies that specialize in offering low prices must earn a profit by selling a lot of items. Selling a lot of items makes up for the lack of profit from each item. Since dispensaries in ophthalmology practices do not sell a lot of pairs of glasses each day, a low-price strategy will only cause the practice not to earn enough profit to make the enterprise worthwhile.

Fair price for value received

When marketing, keep in mind that consumers are exposed to the ads of a lot of retailers who are less than truthful. They are also exposed to the lack of service and cheap goods of those merchants. You get to choose your own path, however. The pricing strategy I like is known as fair price for value received. The challenge of adopting such a strategy is to define convincingly what the value received will be for the consumer.

A value strategy should include at least the following components:

• Customer service. The value to a consumer of superior customer service seems to be unknown to many retail CEOs. It is my experience as a consultant that superior customer service allows dispensaries to increase prices. Dispensary customers respond to knowledgeable service delivered by opticians who not only offer what they want, but who also have learned to anticipate their needs. This type of service does not happen by accident. It is only available when a practice makes the decision to hire the right people, train them sufficiently, supervise them effectively, and pay them the types of wages that keep top talent.
• Selling benefits. Customers do not buy products; they buy the benefits of owning these products. The single most effective way to establish the value of a product is to explain truthfully what benefits the customer will obtain from purchasing it. To do this effectively, an optician needs to have a lot of product knowledge. That knowledge will allow the optician to educate the patient. When the patient feels the benefits are worth the price quoted, he or she will make the purchase.
• Quality. Opticians will work hard to assure that the products they dispense are made to exacting quality standards. They are so comfortable with the quality that they have forgotten that focusing a patient’s awareness on the quality of the product he or she will receive has a lot to do with establishing its value. Consequently, a robust quality assurance program that is also marketed to patients will build consumer confidence in the dispensary, the optician, and the practice overall. When a good quality assurance program is in place and communicated to patients, warranties then become effective value-added marketing tools.
• Exclusivity. Having one or more lines of products only available in your dispensary will also add value. Focusing the same brands as national chains will only encourage patients to compare prices. Finding exclusive products can be a challenge. Digitally produced progressive lenses are now available from some laboratories that will encourage you to develop your own brand name for them. Such progressive lenses can be priced below the brand-named lenses. This will make them a good value while protecting your margins.

So I ask, what is your pricing strategy?

Arthur De Gennaro is president of Arthur De Gennaro & Associates LLC, an ophthalmic practice management firm that specializes in optical dispensary issues. De Gennaro is the author of the book The Dispensing Ophthalmologist. He can be reached at 803/359-7887, arthur@adegennaro.com, or through the company’s Web site, www.adegennaro.com. He maintains a blog at www.adgablog.wordpress.com.

Subscribe to Ophthalmology Times to receive the latest clinical news and updates for ophthalmologists.