A practice has two ways to generate revenues:
1. Increase the number of new customers;
2. Sell more to the customers you already have;
Increasing Revenue Per Exam
This article will expound on the second way to generate revenue. In the practice of optometry, we measure this using revenue per exam or RPE. You can learn what your practice RPE is using EDGEPro analytics. It is one of the major performance indicators that are tracked in well managed offices. You can calculate the RPE by dividing the total revenue of any period of time by the number of exams performed during the same period.
For example, if your revenues for the month of October are $90,000 and you performed 280 exams during the month of October, your RPE for October is $321 ($90,000 divided by 280 = $321).
At the beginning of September, the network average RPE was $389. We set a goal of lifting this network average to $400. An additional growth of $25 to $30 per exam can generate a lot of additional revenue from the customers that are already coming to you for their exam.
In our example, by adding an additional $25 per exam total revenues for the month grow by $7,000. Without increasing the revenue per exam, it would require an additional 18 exams to match the increase in revenue. Improving your revenue per exam results in more money for the same exam transaction.
There are several ways to increase revenue per exam. This article will touch on three.
1. Increase prices of your frames, lenses, contact lenses and exams;
2. Increase the number of complete pairs of eyewear sold to customers;
3. Make it easier and more convenient for customers to purchase more.
This seems obvious, but you may be surprised at how many owners don’t review their pricing each year. If you haven’t noticed, inflation is 8.2% over the previous year. This impacts you and your office as much as it does the cost of groceries and gasoline. Each year you should conduct a pricing review. This includes evaluating your cost of goods and determining if they have gone up or down. It includes the cost of labor and how much more in payroll are you spending that you did the previous year. This review should also include the price your competitors are charging for the same or similar service. If you are undercharging for your eyecare products or services, increase your prices.
Increase the number of complete pairs of eyewear sold to customers
For years, offices and owners have been encouraged to discuss with customers the importance of having more than one pair of prescription eyewear. In Texas, everyone who is dependent on prescription eyewear needs a pair of prescription sunglasses. This is a minimum. In addition, if the customer works in an office where they are in front of a computer screen all day, they need a pair of glasses with computer lenses. Computer lenses are a big deal since they are designed so that the focal point is set at a specific distance and keeps the user’s vision sharp while using their computer. If they do not have a job where they are in front of a computer, they may need specialty, safety glasses or glasses for the particular hobby. There are a number of different reasons that the customer’s vision will be improved using multiple pairs of eyewear, each for a different use or application. Fashion is another reason people want more than one pair of glasses. Much like other items of apparel, different styles of frames fit best with different activities. The pair of sport frames preferred on the weekend may be different than what is worn at an office. The customer may want to coordinate style and color with their wardrobe.
Make it easier and more convenient for customers to purchase more
Today’s economy is impacting all purchase decisions. Many families are having to choose between spending to have their children in league sports or various school activities or getting a new pair of glasses. If a parent has to choose between spending $275 on their child’s sporting or club activities or getting a new pair of glasses, the child will win out each time.
Why not make it easy for them to have both? By presenting CareCredit to every customer at the time they arrive at the office, you are letting them know that they don’t need to choose between new eyewear and their children. For a nominal discount, CareCredit will agree to finance the customer’s purchase for up to 12 months, interest free. That makes fitting the cost of prescription eyewear into the family budget much easier than whether or not not to spend $200 to $400 out of the checking account at the time of purchase. According to CareCredit, presenting this option to each customer that comes into the office will increase the average revenue per exam by as much as 25%. That means the purchase that was $400, is now $500. Based on CareCredit data, most of this is used to purchase multiple pairs of eyewear as opposed to one, expensive purchase.
These are just three ideas on how you can increase your revenue per exam and increase revenues without increasing the number of exams that are seen. If you can do both, you have a winning strategy for significant practice growth.