December 08, 2021
Independent Pharmacy Profit Margins. One of the most common complaints of Owners.
"My margins are shrinking every year."
"I am making $2/prescription."
"I am getting nickel and dimed to death."
Year after year, conferences, webinars, and tradeshows all emphasize this one topic. But yet, here we are.
While complaining may be fun and helps to relieve some frustration, it will not solve the problem. If you want to work on solving the problem, we have a great solution for you (and will provide more in upcoming blogs – so subscribe and bookmark us to your browser).
Anyways.
Let’s clarify something first. Complaining about margins REALLY means that you are complaining about the cash left over in your bank account after all expenses are paid.
If your margins were less than they are now, but yet your bank account was growing month over month, you probably wouldn’t be complaining as much.
SO, let’s solve the true problem – effectively converting revenue to more profit and that profit to more CASH.
When running an Independent Pharmacy, you have three big “buckets” of expenses.
1. Labor
2. Inventory
3. Rent
Of the three, let’s focus on Labor (in my opinion the most overlooked).
Labor is a huge cost to your Pharmacy every month, but yet it is very difficult to proactively monitor.
Let me know if this sounds like you.
End of month accounting statements come in. Look at cashflow statement, income statement, and your balance sheet. No idea where to cut costs. Get frustrated. Do again next month.
Before you repeat that cycle again, use our tool.
To help protect your margins, you need to make sure that your labor is not more than it should be. Do this simple equation to find out where your Pharmacy sits currently.
What number do you get? $8.50/script? $10/script? $6.50/script?
Your benchmark should be $7 labor/script (assuming ~$70 in revenue/script (average) and ~20% margin).
What that means is that your gross profit/prescription would be $14 and after labor you would have $7 remaining.
Now if you think that your $8 labor/script is close enough, let me show you otherwise.
An Independent Pharmacy making $1 more per Rx will TAKE HOME an extra $60,493 ANNUALLY.
Double that number if your labor/script is $9…
You sure you want to miss out on that?
Much of your margin IS in your control. If you are serious about improving it, our Schedule Optimizer Tool is EXACTLY what you need to plan your labor/script, track your numbers, and make sure you have healthy margins.
Schedule a demoand we’ll show you how it can save you tens of thousands every year!
