Page 30 - 2015 Key Metrics-Assessing ECP Practice Performance

Frames Inventory Guidelines

Annual Gross Revenue
$500,000 $800,000 $1.1 million $1.4 millon $2 million+

Median annual frames 1.2-1.4 1.6-1.8 1.8-2.0 2.2-2.4 2.0-2.7
inventory turnover
Ideal frames inventory 700-800 750-850 900-1,050 950-1,050 1,250-1,400

Excessive inventory 1,000+ 1,100+ 1,400+ 1,600+ 2,000+

Insufficient inventory <600 <675 <800 <900 <1,100

Frames Sales Mix by Price Point
Independent optometric practices report that high end frames (above $300 retail) account for 12% of their unit sales mix, about the
same proportion of sales as accounted for by frames retailing under $100. MBA surveys show that the distribution of frames unit
inventory is virtually the same as unit sales mix, except that high end frames account for a slightly larger share of inventory than of
unit sales – 13% of inventory versus 11% of unit sales.

If your software system can generate your latest year frames sales mix by price point, compare it to the industry norms. Another method
of mix analysis by price point is to have your lead optician do a count of the frames you stock by the retail price point categories
shown here and do a comparison to industry norms.

If your goal is to have 15% of your unit sales in frames of $300 or more retail price, then your inventory will need to be 18-20% of
these high end frames. Even though the turnover of high end frames will likely be lower than your overall average, if you do not display
an array of high end frames, it’s unlikely you will sell as many. Similarly you may want to stock a somewhat higher ratio of frames in
the $200-$299 retail price category, if your goal is to trade-up people from frames in the $150-$199 range.

Frames Unit Sales Mix by Price Point

40%
Adds to 100%
31%
30%
23% 23%
20%

11%
10% 8%
4%
$99 or $100- $150- $200- $300- $400
less $149 $199 $299 $399 or more
Frames Retail Price

28 Key Metrics: Assessing Optometric Practice Performance 2015