Frames in an optical are often just “maintained” but rarely strategically thought about from a diversity and profitability standpoint. In a typical practice with both a doctor and an optical, appropriately 20% of gross sales are from frames. The simplest answer of increasing the retail price is not the best answer for the office or for the customer. This article will go over a variety of ways you can save on the cost of frame expenses and maximize your profit margin.
Frame board space
You should establish a quantity of displayed frames your optical will carry. Within that total, each line should have their own frame board space allotment determined by the sales of that line.
- High sales=more spaces
- Lower sales=less spaces
- Terrible sales=get rid of the line.
Keep your quantity in mind when you want to get something new and know that you’ll need to make room for it by getting rid of something else. This does not mean putting any unsold frames in a box in the back—get rid of them. Your reward for getting rid of them will be getting the new line. Have a discounted frame section or utilize a frame buy back program to keep the quantity you set on track.
Your practice’s location will somewhat be a guide for the type of buyers and thus the types of frames you need. Any optical should have a wide variety of styles and materials as well as a variety of price ranges within what you offer your customers.
Having a frame for everyone can increase capture rate, but balancing the investment, savings, and quantity per line is extremely important in ensuring you don’t end up with unsold frames.
Many offices select frames based on what’s easiest to “maintain,” but again, not the wisest decision for style or profit reasons. I put together a short list of a variety of frame style categories and what my personal favorite brand is that fits in those categories.
My Personal Favorite Frames
- Everything under one roof: Europa Eyewear
- Independent luxury: Laibach & York
- Commercial luxury: Tom Ford
- Flexibility/durability: 141 Eyewear
- Teen: Erker’s
- Kids: Dilli Dalli
- Sports & safety: WileyX
- Unique/UV color changing: Catch London
- Funky & Neon: Roger Eye Design
- Thin & light/titanium: Ørgreen Optics
- Alternative fit: TC Charton
- Bespoke: Tom Davies
- Modern vintage/retro classic: Dita
- Rimless: Pure
- Budget: Superflex
- Most requested: Ray Ban
Many of these brands offer ophthalmic and sunglass frames that have customizable lens options to whatever the patients needs/wants are. Sometimes the manufacturer gives different discounts off of wholesale for ophthalmic and sunglass frames, so don’t assume one brand will have the same discount.
What glasses frames to buy
Those who sell frames should also be the ones selecting the frames carried in the store. The sales people hear the good and back feedback while customers are looking for frames, deal with complaints about frames, and also handle all of the warranty replacement frames.
If your optical staffing allows, I would recommend having more than one frame buyer to ensure style diversity. Another factor to consider when choosing frame styles is what brands your nearby competition carries. You want to have a better variety than them and not sell the same thing. Carry and sell what is true to the customer demographic of your optical. Knowing about all of these aspects can aid in deciding what is purchased for your optical.
When you accept managed care plans your margin can become extremely tight. This is where all of the discount factors become incredibly important and can determine whether a frame is profitable or a loss. You must carefully consider and do the hard math on frames that managed care plans provide to you.
Far too often do I hear about practices that do not audit their explanation of payments resulting in them all the while they are actually losing money on frames that managed care plans provide.
Maximizing profit margin by saving costs on frames
There’s no way you can max out savings on all brands when you balance your board to keep the variety of frames that you should have. That is okay; some brands you’ll save more, some less, and some with no discounts—it is all about the totality of the health of your optical. The variety of savings will ultimately balance each other out.
The purpose of this article is to make you aware of all the options available. Some savings are continuous and some for a limited time. Be proactive in keeping good relationships with your frame reps so you can maintain communication about all offers and promotions.
Considerations: Both 10% and 20% wholesale discounts are somewhat typical. Buying group discount + rebate is most commonly seen as 10% wholesale discount + 2% quarterly rebate. $30 managed care kickback is a current offer at my office but is quite rare.
Considerations: Both 10% and 20% wholesale discounts are somewhat typical. Shipping costs differ here because orders are smaller but there are more of them. Free frame is $0 because most free frames are only issued when a minimum quantity is met. Buying group discount + rebate most commonly seen as 10% wholesale discount + 2% quarterly rebate. $15 managed care kickback is a more common offer.
Breaking down the types of eyeglass frame discounts
If the frame vendor does offer a discount many times this discount is negotiable. The vendor is more likely to give you a higher discount if you sell more of their frames. Discuss discount options and volume discounts with your rep.
Be aware that some brands just do not give discounts. This does not mean you should not carry the brand, as you can balance it out with your other brands that do get discounts.
Free shipping is sometimes offered as a promotion, but some frame vendors always offer it. Oftentimes there is a criteria to meet to qualify for the free shipping, such as: purchase three frames, online only purchases, or free shipping to your lab only. The cost of shipping depends on the vendor’s volume and rates negotiated with their shipping company.
These savings can definitely add up, especially if you place many small orders for patients or if you replenish stock frame inventory. Savings on shipping costs may add up to greater savings over time.
More and more frame vendors are starting to incentivize buying more frames with gift cards. For example if you purchase 20 frames you get a $20 gift card, 50 frames you get a $50 gift card, 100 frames you get $100. This does affect the bottom line of frame cost if the gift card is applied back into the business expenses, However; if you use the gift cards as employee perks it does not affect the profit margin and the profit is lost.
Many frame vendors offer a certain number of free frames for a set quantity that you purchase. For example if you purchase 30 frames you get 3 for free, if you purchase 40 frames you get 4 for free, and so on. This too affects your bottom line for frame costs, but one extremely important thing to remember is that you can never return this frame for credit. This means you somehow have to mark and track which frames you received for free so you don’t later return them just to get $0 credit for the frame.
Buying groups and partner alliances
There are multiple options within buying groups and partner alliances that can benefit a practice. Most buying groups offer fixed percentage discounts per frame line off of wholesale. Some also offer quarterly rebate programs on top of the wholesale discount. Not every practice can get into every buying group so do research and see which group would be the best fit for your office.
In addition to other discounts above, managed care plans often give you a kickback for sales of specific eyewear brands under their umbrella. They are typically paid when you are reimbursed for the hardware or in a monthly rebate payment. If you participate in any managed care networks, be sure to ask your frame rep or network account manager if and what is offered. Most often I see a flat $10 or $15 per frame, but have seen them as much as $30 per frame.
I realize this is a lot to take in and balancing all of your brands can quickly become overwhelming. If you have an established office, I would recommend slowly chipping away at reviewing each vendor, your sales, and whether you’re making a profit on the vendor. In the end, the profit margin will be worth the work you put into it!