Package Pricing

[UFRich]

We are discussing changing to package pricing in our optical. Does anyone have any suggestions on what to include in the packages and mark up %'s on frame and lens packages?

Any help would be greatly appreciated.

[For-Life]

We are discussing changing to package pricing in our optical. Does anyone have any suggestions on what to include in the packages and mark up %'s on frame and lens packages?

Any help would be greatly appreciated.

We have been offering a package for years now on selected frames. We do SV for one price, FT for another, and a progressive (super no-line) for another. We offer SRC with all of these. I would like to get to a point in the future where the display price includes AR, but we are not there yet. We also include our warranties and stuff in that package.

[PAkev]

Packages have worked well for me also and has cut down my lens only sales. Most packages involve a discount as we make a price concession on both frames and lenses in order to sell both. Therefore folks often find they can get a complete package for a few more sheckles than what they would have paid for lenses only and walk out with a complete pair of glasses under warranty.

However, since I am making price concessions on the package, I do not allow insurance programs that require additional discounts to be used with packages. As always...we allow folks to use the alternative which affords them the greatest savings.

On the downside, packages can have a way of knocking your premium lens sales out of balance since options and upgrades are sometimes construed negatively as "The Catch" from wary consumers.

Kevin

[drk]

I would look at it this way:

Gross margin on optical services is roughly 60% after COGS. Net is usually half of that, or 30%. How much discount are you willing to offer to entice sales? Third-party plans routinely ask for at least "the standard discount" of 20%. Anything more than 25% off is working for free!

It's amazing, but we give away 2/3 of our take home pay to make a new patient. That's a pretty steep finder's fee for third party patients, despite the offsetting increase in utilization (volume).

The relevance of third party to this discussion? I think that's the most commonly used "promotion" in our industry. That's the baseline to compare to!

Obviously, the third party patients are getting a good deal at retail (even though they pay for their premiums up front, offsetting this "good deal", and the "third-party", the "third" entity in the transaction, is having a "party" because they're making $ off this transaction). They should not be allowed to "double-dip". (BTW, if your package deal beats the third party benefits, said third-party could come after you.)

The package pricing should be targeted to customers who are not likely to appreciate customized, top-quality eyewear, and are more likely to be convenience/price-sensitive patients that you are unwilling to lose. If your whole customer base is this demographic, go for it whole-hog. If it's a small percentage only, I'd reconsider the usefulness of the idea, since you may decrease sales for custom, quality eyewear.

If you do decide to go "package", you must reduce your professional component of the transaction to minimize loss of profitability: less time spent on maintaining the inventory, designing and servicing lenses and frames. Pick a line that is easy to maintain, appeals to your target, offer basic lenses only. Consider what type of reduced aftercare services you will need (warranties, repairs, handling non-adapts, etc.). Perversely, the lesser the quality and lesser professional care involved, the MORE LIKELY it is to have those problems, though!

Well, I've just talked myself out of package deals (and third-party, for that matter). Have I talked you out of it?

[UFRich]

We are considering the packages, not as a discounted way of creating sales, but rather keeping the fees reasonably the same while avoiding "nickel and diming to death" the patient. We feel if we say, "Your eyeglasses which include AR, top level progressive, UV, warranty, etc. cost $x" as opposed to "Your frame costs x, the lens is x, ar is x more, and so on." the customer will be more inclined to purchase high quality eyewear. Any ideas?

[drk]

Sorry, Gator, I misunderstood.

I think highly of packaging lens options to simplify the lens design process, although not many around this board do. In order to present useful, marketable packages, a lot of thought has to go into segmenting the market into meaningful categories of visual need, in order to design these packages.

It's essentially creating a "lens design formulary", much like a contact lens formulary or a drug formulary. Some people hate formularies, feeling it dumbs down the creative process, but I've always felt that formulas are "pre-designed" and "pre-created" to allow an easier presentation to the patient (and staff!). The key is creating packages that mean something to your population.

As an incentive to purchase the package and to create a real value that the staff can be excited about, I prefer to offer the package price at a nominal percentage off the "a la carte" price. That's not critical, though. The main advantage is presenting the right lens at a good price without having to get the patient to say yes several times to additional features.

How much customization does each person need, in your opinion? I don't need all the options on my minivan, but the overall package was attractive.

[April_01]

I agree strongly with lens packaging system since it simplifies the overwhelming decision of eyewear purchasing; it is not being lazy unless you don't explain how it will benefit them. You can't just point to a package and say this one is our best. I recommend coming up with a package system and simplifing the names of each package (notechno babble) and don't put a price on it where the patient can prejudge. This way, you can explain to the patient your professional opinion as to what package would best suit there lifestyle and why, giving them a sense that you really do care about their overall well being and not just their pocketbooks. Plus they If they can't afford the package then take off a few items to fit their financial budget. The only difference with this package system and no package system, is that instead of adding on and explaining each individual feature/benefit in your presentation; you tell them all at once. It helps them really get what you are saying both verbal and nonverbal(package sheet/presentations)The only flaw with this is it takes a little extra time to idividualize each person's package/price. Just my opinion, it works for me. However you will never please everyone. This is why there are so many disagreements on the subject. GOOD LUCK :) !!!!!!