3 Inventory Buying Tips to Grow Your Practice

Article by Andy Tabrizipour / Gazal Eyewear


Tip #2  - Balancing the Inventory Ratio for Your Practice

In the last article we learned how to setup our new inventory by carefully selecting the right eyewear brands.  If you missed that article you can see it by clicking here.  Today, we will dig a little deeper and discover what is grow patient awareness that we have the best boutique in town to buy eyeglasses from.  Through the 3 steps below we will reveal our most popular eyewear brand and make sure that brand is helping us attract more customers and generate top revenue.


3 Basic Math Tips

Because every boutique is different and caters to different clients it’s vital to understand what our patients truly want, like, and actually buy from us.  Your demographics change often, cities grow, and tastes can change.  We should all adapt a little to that changing environment each day.

Now as crazy as our lives are it’s easy for us to think that “I am way too busy with day to day activities to add a new task to my day.”  However, this could not be further from the truth.  Success comes from careful planning, setting obtainable goals and a clear way to reach them.  We can actually reduce headache and financial strain by understanding all of the strong and weak points in our everyday practice.  We will keep the examples short and concise and we can always expand on them later.  Let’s get started and take a look at 3 simple ways to analyze frame sales.

Turn Ratio – How popular a brand is in OUR practice and how quickly it sells.

Capture Rate – How many patients that come in are actually making a glasses purchase.

ROI – How much profit are we actually making here?


Turn Ratio: 

The Turn Ratio formula helps us identify which brands are most popular amongst customers in our demographics.  For every pair of glasses we have on the board how many did we actually sell?


Example - Let’s say we carry 3 brands;

Brand X, Brand Y (Our personal favorite), & Brand Z

We decide to buy 50 frames to have on the board for each brand at the beginning of the year and by the end of the year we sum up all the sales and see how we did.  We have 10 frames left from Brand X, 20 frames from Brand Y, and 30 frames from Brand Z.   Assuming that we did not replenish any frames, then Brand X was our most popular brand.


Turn Ratio = Total Sales / AVG Frames in Stock.


Brand Avg Frames In Stock Total Sales Ratio
X 50 40 0.80
Y 50 30 0.60
Z 50 20 0.40
AVG 50 30 0.60

Brand X’s Ratio tells us that for every pair of glasses we have on the board 0.80 are purchased by customers.  This calculation will change depending on how much and how often we replenish the inventory.  If we sell frames right off the board it complicates the formula further as well as lowers the capture rate.  It is recommended to keep our most popular styles & colors the board at all times.


Capture Rate:

This calculation shows us, what percentage of patients that visit you buy glasses. There are many reasons why someone chooses to buy. Whether it is because they only wear contact lenses, they did not see the color or style they want, they want to shop around, etc.  However, this calculation lets you know how well you are currently doing at capturing patients that come in.

The Math:   The Total Number of Patients that Buy Glasses Divided by the Total Number of Patients that come through the door.


For Example:

Let’s say in 2019 of May 500 patients enter your boutique.  There are 500 opportunities to capture an eyewear sale.  If 100 of those 500 people purchase glasses.  Then your capture rate would be calculated as

100 / 500 = 0.20 or 20%


Return on Investment (ROI)

This calculation tells us how much profit we are making from each frame sale and lets us know the earning potential we could have.  This is calculated by taking the initial cost the frame from the final sales price of a frame.  I cannot tell you how many times I spoke with a practice owner that had absolutely no idea how much or even if they are making any profit off the glasses sales.  I am not saying that making money should be your #1 goal, but it should at least be on the list.


ROI Examples: 

Brand X AVG Cost is $15 and retail is $30.  $30 – 15 = $15 profit

Brand Y AVG Cost is $9 and retail is $19  $19 – 9 = $10 profit

Brand Z AVG Cost is $25 and retail is $45.  $45 – 25 = $20 profit

The example above shows that the Brand Z is the most profitable per transaction.  This example does not include factors such as insurance discounts, buying groups, sales, promotions, or marketing discounts.


Putting it together:

All these formulas tell just a portion of a bigger picture, when you put them altogether you can really see what brand is generating the most income for you and saving you tons of headache.  For example we now can figure out the total profit each brand has driven based on the sales for the year.

Brand X Sold 40 frames at $15 profit each = $600

Brand Y Sold 30 frames at $10 profit each = $300

Brand Z Sold 20 frames at $20 profit each = $400

This example shows that Brand X generated the most profit. It also shows us that even though we sold less of Brand Z than Brand Y, Brand Z was still a more profitable Brand.  This is the true power of familiarizing yourself with these formulas because of the bigger picture.

Another way to now analyze the data is to project for next year’s sales.  This can help us calculate the need for additional hires, calculate how much we can afford in pay raises, and other sections like marketing budgets.


The Frame Wrap Up

In this article we discovered 3 simple math formulas to help us identify which brand move quickly and generate profit.  The next and final article in this series will show us how to drive numbers and improve marketing.  Thank you for taking the time out to read this article and feel free to reach out with any questions!



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