When’s the last time you did a price check on your optical’s plano sunwear merchandise? The average price of plano sunglasses sold in the US is $37.54, according to The Vision Council VisionWatch Q4 2013 Plano Sunglasses Sales report. That is up slightly from the same time period in 2012, when the average price of plano sunwear sold in the US was $36.72.
Would you like to have another $22,644 per doctor this year?
Has your practice kept pace with inflation? Inflation is the rise in price of goods and services over time. Another way to think of inflation is that it is a decrease in the purchasing power of your money. In other words, a dollar today cannot buy as many goods and services as a dollar last year, two years ago or 10 years ago.
The price of plano sunglasses was higher in 2013 than it was in 2012. The difference was only 82 cents. That’s less than a dollar. That doesn’t seem like very much … until you remember that inflation affects other things, as well.
“Inflation Rate in the United States is reported by the US.Bureau of Labor Statistics. Inflation Rate in the United States averaged 3.33 Percent from 1914 until 2014.” —http://www.tradingeconomics.com/united-states/inflation-cpi
Let’s use that average number to see what impact inflation has on a practice. If the median practice has a gross revenue of $680,000 per doctor, then a loss of 3.33 percent due to inflation for a one-doctor practice would be $22,644. If you did not raise your fees on things not covered by third parties, by at least 3.33 percent, then your purchasing power is at least $22,644 less this year than last.
What you would purchase for the practice if you had another $22,644? Equipment, software, staff member, new carpet … the options are many. But, if you did not raise your fees by at least the rate of inflation, then your purchasing power this year is reduced.
Your reduced purchasing power is just magnified if you have more than one full-time equivalent doctor in the practice. If you have two doctors in your practice, then take the reduced purchasing power times two. For even larger practices, take $22,644 times the number of full-time equivalent doctors in your practice to get a sense of the loss.
Here’s another way to come at this same problem of inflation. Did your vendors raise their prices last year? Did you raise your prices at the same time by at least the same amount?
Perhaps it’s time for a little reflection. What’s the number one rule when you are digging an unnecessary hole? Stop digging!
Do we have your attention yet? Hope so. Don’t let this problem continue. Fix this problem today by using the science of business to manage your practice.