When do you give discounts??

[aaron]

I am confronted with the fact that many people come into the optical and request a discount. This is not altogether a problem but it has gone to epic perportions. It may be more prevalent due to the holiday season upon us.

Our prices at this office are very very competative, and for Newport Beach we are almost to low. The optician that was here a previous 11 years before me was always discounting everything to the patients she liked to an almost ridiculous extent. This is part of the reason this person is no longer here. But now these people all expect the deal of the century everytime they come in. I mean I have investment bankers arguing with me over 20$.

So sorry for the vent but when does everybody give a 15% or (gulp) 20% discount. Is there any way to stop the tide without being the jerk. What are all you guys doing?


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[jon 22]

I've never been much for doing discounts. I think it stems from all the coupon and buy on get one free promotions that the chain opticals do. I think discounting gives patients the impression that your services are overpriced to begin with, which they are inclined to think anyway since glasses are usually a "grudge purchase", similar to car repair, insurance, and other necessities of life. They probably don't ask for a discount at the nice restaurant that your investment banker frequents and regularly drops 100 bucks. Heck, I bet he leaves a tip. Your investment bankers wife probably don't ask for or get a discount at her hair stylist, at $50 or more per visit (6-10 times a year!) and probably a tip also. I'm not saying you should expect to get tips, but pointing out that for most people, eyeglasses and exams are "have to" not "want to" purchases, and that your patients generally can afford it, even if it has to come out of their poodle grooming budget.
Think of all the great discounts that you get from your car's mechanic, your car insurance company, your dentist, and your other "have to" purchases and figure yours accordingly. It seems to be a shell game we all play where we wonder if someone else is getting a better deal. The discounters mark prices higher so that they can scream "40 percent off until Friday", and make you wonder when the next sale will happen. Figure out what you need for your expenses and profit, then stick to your guns. In the end, most people will respect you more and appreciate the "No Haggling" atmosphere. The world doesn't need more used car salesmen.

[chip anderson]

I suppose the only pat answer is: When it makes the difference in making or not making a sale. Or when it improves the chances of a larger (extra pair discount for instance) sale.

As a practical matter we give 100% discount to practicing ophthalmogists and thier immeadiate families, 15% to physicians, 20% to members of my church who donate blood to the blood drive which I chair, 10% to church members who don't donate, 30% to the state dept of vocational rehabilitation, variable amouts to friends, etc. You just have to play it by ear and always try to make sure that you are taking in more for the stuff than you are paying for it.

I have been known to tack on an extra 10 to 20% to patients who are real pushy and a pain in the ***.

Chip

[harry888]

I got tired of everyone asking for a discount, so I just raised my prices.

I've a coupon on the back of the local supermarket checkout for $40 off a complete set of glasses. If someone phone shops, we mention the coupon, if they come in without it we say "you have it as home, right?".

And the coupon can't be combined with other offers or insurance, it's a great way to have the patient file the insurance claims themselves.

My first three years I refused to discount and was frustrated by the public. Now I yearly raise prices and increase my discount, and customers seem happier.

Shopping for glasses is like shopping for jewelry, noone expects to pay the marked price.

Harry

[CME4SPECS]

Consumers today are being taught not to pay full price for anything.
I'm sure you've all seen the articles out there, that's geared towards saving shoppers a few bucks. If an item is not on sale...ask if it is going on sale and if you can get the sale price. Ask if there's a discount for paying cash? I'm a senior can I have a discount, the sun is shining can I have a discount? You've heard them all I'm sure! I don't know about the rest of you but, I don't like paying the full retail price.
If you are haggling over 20 bucks on an order for glasses (the price of a 2 minute tint) you'd be out of your mind not to throw it in! Everyone loves a deal and it will cost you next to nothing to give it to them.
Oh, I know some think this is absurd, that you think that you are cheapening your product! Wrong...everyone loves a deal! You all discount to selective groups, like seniors. Right? What about the rest of them?
I do not offer a discount to anyone unless they ask! If they ask they either need it or expect it...and I'm game for that! At the margins that we enjoy, like few other industries, you better believe I'll play the game! If you are marking product up correctly a 10%discount on a $300 pair of glasses will cost you $9...think about it!
You are not cheapening anyting! Just making someone feel a little better...just like all those free adjustments and nosepads you give away!

[LENNY]

We do give discounts to our patients!
But what bothers me the most is when workers and owners from local stores and bussineses come in for glasses and expect huge discounts because they are our neighbors!
When i come to the check cashing place or food take out or Mcdonalds or cleaners or copy center and others i dont get discount!
Ok! Maybe we work on much higher mark ups than others but our overhead is much more too.
So why the clerk in the bank across the street from me has to get a discount more than the regular customer? I dont even bank with that bank!!!

[jediron]

jon 22 said:
I've never been much for doing discounts. I think it stems from all the coupon and buy on get one free promotions that the chain opticals do.

You hit it right on the head Jon! Really you ever see those Sears
Optical ads? And have you ever seen what they sell as a $100
frame. Come on. Those they picked up(frames) I bet for about $X.XX each. You can't tell me Sears pay's full price when they buy there frames.

As one person already said it's just a game so people feel better
about what they buy.


:hammer:

[varmint]

I think $X.XX is way off. I would figure no more than half of that for their most expensive frame.

[hip chic]

I don't discount except to family members (of course) and close friends. It gets too confusing (I used to work in a Dr.'s office...the Dr. discounted A LOT). And I don't like playing the "mark it up to mark it down" game.

I think that people have a LOT of nerve walking in to a shop and asking things like "Is this the best you can do on the price" etc. I wouldn't dream of assuming that the price marked on a product is not the price I'm expected to pay. I had a guy a few months ago that really tried very hard to get me to discount a frame he liked (it was $450.). He said he'd never, ever paid that much for a frame. He said that most small business owners are willing to haggle a little on price..."especially with the economy the way it is". Oh...he tried so hard. I didn't budge. He bought the frame.

hip chic

[aaron]

I think that I am going to have to be firm on my prices as well. The only discounts will be those mandatory ones from insurance or maybe from second pairs. But I still have the problem of weening all of the old opticians "special" patients (everyone was special) that she would give things to at ridiculous prices. Any suggestions besides explaining the increased benefits yadda yadda?


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[aaron]

Oh and should I raise my 189$ PAL price to accomidate these percentages of discount I have to give? AAARRRRGGGHHH!


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[CME4SPECS]

Anyone who accepts insurance discounts! You know right up front that when someone comes in with an insurance that you accept, that you are going to discount heavily! Right? And not only are you going to discount, you are going to have to wait a month or more for your money! So you've taken a selected group (the insurance co.) who you have nothing more than a paper relationship with and gave them a discount, so that you can have some glasses to make. Joe Blow comes in and doesn't have insurance and asks for a discount and you say no.

Believe me, I hold my prices, unless I'm asked directly for a discount, I don't always give in it just depends on the situation. I'm not about to let them walk over a couple bucks!

Most seniors expect a discount of some sort. If I need to give 10% to get a sale I'm going to do it, it affects the profit just 3%

[hip chic]

Aaron~

I think the most important thing in business is to be unafraid. In other words, if you have strong conviction toward something...go forward....unafraid. In this case, you are convinced that the prior optician at your practice gave too many discounts. You are convinced that this wasn't right and not practical from a business standpoint. I think that you are right.

Now, know that some of those "special" patients are not going to be happy that you are taking their discounts away. They may even not want to do business with you anymore. But, honestly, if you are a good optician...a good person...and give great service, they will stay. And for those that may walk, the money you loose from them will be far less than the money you would give through discounts to keep them. Of this, I am sure.

I don't believe you owe these customers any long winded excuse for discontinuing the discounting practice. I would just write up their order, go over the fee and let it stand. If they question the lack of discount, simply state that you can no longer discount your product. I don't think any further explanation is needed, really.

I am curious to know your response.

Regarding discounts on second pairs, in general, I don't give discounts there either. I DO have some customers that have been so very faithful to me since I opened my shop 6 years ago. Some of these customers have purchased 3-4 pair of specs per year...spending thousands of dollars. For those customers, I will occassionally do an AR coating at no charge.

I am very big on service. I think it goes a long way to give good, thoughtful service with the patients best interest at heart.

hip chic

[hip chic]

CME4SPECS said:
If I need to give 10% to get a sale I'm going to do it, it affects the profit just 3%

CME4SPECS~
Can you explain this statement...and how you arrived at it. I am curious.

hip chic

[Eddie G's]

We give NO discounts because our prices are fairly low as it is!

If they ask for a discount I tell them to go elsewhere and that usually works 99.9% of the time. They know you're not going to budge. (People aren't stupid they know how much things cost.)

Then if they are still unsure or stunned I'll say well I guess we can find some cheaper quality lenses if you want to save some $ but I really don't like doing that! (People don't like poor quality.)

:cheers:

[Chris Ryser]

Proper Pricing Rule................

You can give as much discount as you want, but you have to build them into your basic selling price.

(If you don't your revenue will be reduced by the amount you discount}

[CME4SPECS]

Let's say you discount $300 by %10, you net $270.
Your mark-up is 3 times, cost is 33.33%. So you are into it for $100. Gross Profit is 66.66%

At $270 the $100 cost is 37%, reducing yourgross profit to 63% so the difference in profit is 3.67%.

I hope that is clear, the % will vary depending on your mark up.
If you do your own tinting and UV treating, your gross profit is virtually unaffected. Terry

[Chris Ryser]

CME4SPECS said:
If you do your own tinting and UV treating, your gross profit is virtually unaffected. Terry

I would even go as far and say that if you do any of the extra lens treatments that are available today your profit situation will drastically change for the better and you won't even feel a discount given, or you could throw in a tint, UV, or scat-resistant treatment for free instead of giving the discounts.

[hip chic]

CME4SPECS said:
Let's say you discount $300 by %10, you net $270.
Your mark-up is 3 times, cost is 33.33%. So you are into it for $100. Gross Profit is 66.66%

At $270 the $100 cost is 37%, reducing yourgross profit to 63% so the difference in profit is 3.67%.

I hope that is clear, the % will vary depending on your mark up.
If you do your own tinting and UV treating, your gross profit is virtually unaffected. Terry

I understand your comment now. And when you look at the 3.67% difference in gross profit, I agree that it seems fairly negligible. However, taking in to consideration that the 3.67% will also be deducted from your net profit makes it seem a bit more of a hit...don't you agree? In other words, your staff salaries and benefits, occupancy costs, equipment, marketing and advertising, general office overhead and Dr.'s compensation (if you have a Dr.) are not going to change because a discount was given...only the net profit will change. So taking all of that in to consideration, if your net profit is...well, let's say 18% of your gross sale, suddenly that 3.67% is substantial.

And that's just on 10% off....the local HMO's here (of which, I , thankfully am not a part of) dictate that providers give a 20% discount.

Just my thoughts...
hip chic

[CME4SPECS]

Chris, that's where that PROPER PRICING RULE comes in.
From my point of view if you "throw it in" you are discounting.
Terry

[Texas Ranger]

After 27 years of my own shop, i'll reflect a bit; I worked for a fine family business for 7 years before opening my own shop, they were an established firm, and did not discount, had a 3 x mark-up. but most of the clientele complained about the high prices. when I asked about that, I was told, "if they don't like our prices, let them go somewhere else...", to me, I found it great becoming one of those "someplace elses.."..I have found that if everyone is complaining about your prices, they're probably right, and you need to look and ways to be more competitive; if no one's complaining, it's likely your prices are too low, and you should adjust accordingly. check out your competition, if you're doing fine work, carrying great product, giving clients quality products and service, you don';t have to be the hightest price, but surely don't need to be the lowest. we all like to haggle, on both sides of the sale, at least I do, but instead of just do a "free" tint, etc. I bill everything, so that there is a real monetary value, then discount off the total...package pricing also makes it a bit easier to deal with discounting...but I think I'll always need to be "flexible". my clients know that we don't mark up the normal mark up, but they like a little off, it's "good will"...

[CME4SPECS]

Texas Ranger
That's the way I see it!
Any time you let someone walk out that front door over a couple bucks, you just discounted...100%! Now that's what affects your bottom line!
I've matched prices of competitors (independents) taken their coupons,whatever! I spend a lot of money advertising and keeping the doors open, it's just another means of getting the sale to me. Not all customers are discount seekers, you just have to recognize when it will make or break the deal. I'm here to sell glasses not store them on the shelve! Terry

[Johns]

Texas Ranger:

I like your thinking.

I agree that even if you're giving something away, a value should be given to it first.

Even for family, I put the full price down, then discount the whole amount. They seem to take better care of them when they know they're worth $520.

[Robert Martellaro]

chip anderson said: I have been known to tack on an extra 10 to 20% to patients who are real pushy and a pain in the ***.

Ah, the "pita" surcharge. That's my favorite. Charge'em double if you can, then maybe they'll go away. :)

Robert

[aaron]

Hip Chic,

You and I definetly share a similar philosophy. We only use the best materials and provide excellant customer service. The questions for discounts etc.... are just unusually bold right now which prompted me to address this issue on the board. I have taken everyone's advise to heart and been much more stubborn lately. But if needed I will give a SMALL percentage discount off of either frames OR lenses. This will be a last resort. I stand by my low prices.

This guy came in a while ago and said that the last optician that did his glasses here screwed him up so he talked to the doctor and the doctor said he would do them again discounted to make up for it. I checked it out with the doc and it was fine. He wanted a PAL with premium A/R for his own frame, and then wanted a polarized PAL in his old gold plated aviator Ray-Ban. I advised him that this frame was not the best choice for a PAL but he wanted to go ahead. I gave him the total (20% off everything per the doctor), and he laughed while crossing out the number and proceeded to write 300$!!!!! I told him that we were not a car dealership and that we have already given him the best price we could. He went back to the doctor and complained, the doctor came to me and told me to do it!!??!! So being the good little employee that I am I followed instructions and sure enough we have done one Rx redo and he swears he can't see out of the polarized PAL as well as his old costco glasses and now he wants a refund!!!! Needless to say that is not going to happen but the lesson is here that bend over too far, you end up breaking your back!!

Thanks for letting me vent!

I do have one question...

CME4SPECS,

With your numbers you are assuming that everything is marked up 3x. But what about A/R , Transitions , PAL's and lots of other items that are almost never marked up 3x. Wouldn't that extend that percentage way beyond the 3.67 you spoke of?


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