Looking to earn more than the average independent pharmacy profit?
For most independent pharmacy owners, this is the main goal. In addition to the independence, most pharmacists who choose to open their own business are looking to make more than the average pharmacist salary.
So what exactly is the average independent pharmacy profit?
Last year, the average pharmacist owning a single pharmacy earned about $200,000. By increasing your pharmacy sales and improving your pharmacy profit margins, you can definitely exceed this average and help grow your independent pharmacy.
Here are 4 key aspects of improving your independent pharmacy profits.
Increase Number of Prescriptions
The most obvious way to increase pharmacy profits is to do better than the average independent pharmacy sales. Last year the average annual prescription volume per pharmacy was 60,493 prescriptions. Increase the number of prescriptions you fill per year comes down to several tactics:
- Pharmacy Marketing and Advertising: Growing the number of customers your pharmacy services is crucial for increasing overall sales.
- Improving Pharmacy Processes: In order to increase the number of prescriptions you fill, your pharmacy needs to be able to handle the increased volume. This includes order fulfillment process and pharmacy inventory management.
- Manage Prescription Orders: Make sure prescriptions you fill are picked up and paid for. Follow up with any prescriptions still in your will-call bin.
- Encourage Prescription Refills: Follow up with customers to make sure they order any prescription refills they might have and continue to do business with your pharmacy.
Increase Profit Per Prescription
You don’t necessarily need more sales to increase your pharmacy gross profits. Improving your pharmacy profit margins and profit per prescription will also make a huge impact on your independent pharmacy profit.
The average independent pharmacy profit margin from prescription and non-prescription products is 22.3%. One of the best ways to improve your profit per prescription is to reduce costs by purchasing overstock and short-dated Rx.
Increase Generic Dispensing Rates
Dispensing generic drugs instead of branded drugs in a great way to offer your customers a similar product while improving your pharmacy profit margins. Surprisingly, independent pharmacies don’t take advantage of this strategy as much as the larger chains.
For independent pharmacies, the generic dispensing rate was 82%, compared to 83.4% for the overall pharmacy market. Purchasing generic pharmaceuticals in addition to your branded drug options can help you improve your overall margins and increase pharmacy profits.
Increase Front-End Sales
While the average independent pharmacy profit margin on all products was 22.3%, front-end products have a profit margin of 38%. Increasing the number of front-end products you sell is a great way to improve profit margins and increase your average order amount.
Attracting customers to your front-end products requires a good combination of physical displays and customer service:
- Your store layout should be completely optimized to draw customers towards high-margin items.
- You and your staff should always look for opportunities to make product suggestions based on prescription orders or other customer needs.
Looking for more ways to earn more than the average independent pharmacy profit? Check out our 2018 Buyer’s Guide for Pharmacy Owners.