When it comes to pricing in your pharmacy, you have a number of decisions to make. Managing pricing properly is arguably one of the most important tasks a pharmacy owner or manager has to tackle. Margins too high mean a risk of losing customers to the competition. Too low and you don’t cover your pharmacy operating costs. Then add in potential for error, changes in cost, and a slew of other factors and you’ve got something that’s impossible to manage without a good plan and the right tools.
Not sure how to get started? Here are 5 steps to create a pricing strategy built for success.
Start with the basics – You can’t get anywhere without having correct information in your pharmacy POS system, so you have to start with data integrity. Every product you sell in your pharmacy should have a profile filled with as much information as you can, including fields like your cost, retail, description, vendor, and vendor item number. Without this information, you have nothing to base your pricing strategy off of.
Set your target margins – Many of your products have recommended retail values, but it’s important that you set a target margin for those products nonetheless. This target may be different by product or department. (For example, private label products generally offer a higher margin). You’ll need to consider competitor pricing as well as your operating costs. It may be a tall order to start, but having your target margin set will help you to better identify any problems with your pricing strategy and know if you’re hitting your goals.
Manage price updates – All of the work you do to set up product records and create target margins doesn’t do much if you don’t maintain those records. If your costs change, you need to know so that product pricing can be updated accordingly. Staying current is important, both to maintain margins when costs go up, and remain competitive when costs go down. Don’t worry, you don’t have to manually update items every time they change. RMS is all set to automatically receive price updates from many different wholesalers.
Use shelf labels – We know that using shelf labels instead of individually stickering products saves time and reduces errors at the point-of-sale. But studies have also shown that stores who practice regular shelf label management also benefit up to a 3% margin increase. When you actively manage your price updates, and print new labels from your POS system to reflect price changes, you benefit because you still have product on your
shelf that you bought at a lower cost, but the price on the shelf now reflects an increased retail price due to the cost change. That automatically increases your margin on existing products! Ideally, once you receive a price update, your POS system should automatically queue labels for any products your pharmacy carries that have been updated.
Use reporting and monitoring tools – It should be easy for you to monitor key indicators related to your pricing. Are you selling a product below cost, or below your target margin? Are there items that are missing key fields like cost? Even a small number of discrepancies can have a major impact on your bottom line if left unchecked. Set your POS system to monitor for the anomalies so you can catch them quickly with minimal impact.
A solid pricing strategy does require constant management, but with RMS, a complicated process becomes a simple, automated system of checks and balances.