With
gas prices skyrocketing and the economy sputtering, many small business
owners are looking for ways to recession-proof their businesses. One
effective way to do this is to lower the cost of doing business and
boost net profits.
In the optical world, setting up a new
in-office finishing lab or upgrading an existing lab can help
accomplish both financial goals. An in-office lab can lower cost of
goods, enhance customer service and attract new patients – all adding
up to increased profits. While recessions come and go, a lab is an
investment that keeps on growing an optical business.
MORE DOLLARS TO PROFIT
Generally,
eyewear sales represent at least 60% of an OD practice’s gross revenue
and most of an optical shop’s gross sales. By reducing the costs
associated with producing eyeglasses, ECPs can improve their bottom
line.
The major cost benefit of operating an in-house lab is
a reduction in outside lab fees. A full-featured in-house finishing
system can produce virtually all of the popular lenses and frame styles
that consumers want, including high-margin jobs like rimless and
AR-coated lenses. Instead of paying labs for finished lenses, an edging
practice pays only the lower cost for uncut lenses. The savings
contribute to profits.
MARKETING TOOL
In
addition to reducing costs, an in-office lab can boost profits by
helping independent ECPs compete more effectively and grow their
customer base. An on-site lab is a marketing tool that helps to attract
and retain customers by offering the greater convenience of one-stop
shopping and fast job turnaround.
Advertising a “lab on
premise” prevents patients from walking away after their exam with a
prescription in hand – as many as 12% to 15% according to industry
surveys. The ability to make glasses quickly will help capture those
customers who might otherwise go to an optical chain down the street.
Practitioners with on site labs also maintain tighter quality control
over the end products. These customer benefits translate to more
business.
PAYOUT PROJECTION
To track your
potential lab savings, record the lab fees charged for finished jobs by
lens type over several months, and compare these charges with the cost
of uncut lenses. The difference is your savings before expenses. An
optical shop running 10 jobs a day in-house, 5 days a week, can net as
much as $3,000 a month in lab savings.
To determine net
profit, subtract the monthly lease or loan payments and allocated
operating expenses including staff from savings. Many offices train
current employees to do the in-house finishing with flex-scheduling
built around their sales and fitting responsibilities, so no new
employees are needed. Space requirements are minimal since today’s
integrated systems perform all functions in one or two machines with a
footprint of just 4 to 6 linear feet.
The leading edger
manufacturers will help you develop a cost analysis customized for your
practice at no obligation, so it may be worth your valuable time to
take advantage of this service. Totally automated finishing systems
range in cost from around $25,000 to $65,000 on the high end. A loan or
lease payment can vary anywhere from about $600 to $900 a month based
on term and purchase price. There are also tax advantages associated
with loans and leases that you’ll want to discuss with your tax
advisor.
Bottom line: An in-office lab can strengthen your
practice for the best and worst of business cycles, both in terms of
profit and better customer service.
— Compiled by the editors of 20/20 and Vision Monday