Independent pharmacy retail pricing may seem like a moving target, but there are several tactics you can use to improve your accuracy when it comes to how to price your OTC products.
Fact-based decisions often go out the window when independent pharmacies establish retail pricing for OTC products. Dealing with multiple suppliers takes valuable time, leading many owners to default to putting goods on their shelves at vendors' suggested pricing
and if it sells, it sells.
Alternatively, you may do your research and find that a chain store is selling a 25-count bottle of Zyrtec liquid gels for $20. Since you’re selling the same product for $25, this may lead you to assume (incorrectly) that pricing for your front-end merchandise is too high by 20
So, how do you go about setting front-end prices in your pharmacy? Admittedly, there's no one-size-fits-all method. However, a best-practices approach to independent pharmacy retail pricing will point you toward increased profitability.
Take Action on Pricing
The following recommendations provide a variety of options on how to price your OTC products:
Don't sell the front end short.
Sure, you feel confident in the pricing of your prescription medications, and the vast majority of your business comes from behind the counter. However, that doesn't mean you should write off the front end as merely a collection of impulse buys. You pay for the space allocated to your front-end in terms of rent, payroll, marketing, and all the other expenses that go into running the department. It’s important that you have a plan to recoup those expenses
and even turn a profit
by taking advantage of the fact that OTC products generate immediate cash without having to deal with the hassles and time delays of insurance reimbursement.
Monitor the competition.
Designate a front-end captain.
Work with your wholesaler.
Get in sync with seasonality.
Pharmacies continue to face evolving challenges amidst the ongoing
coronavirus disease 2019 (
pandemic. Nonetheless, it's also been a period of great reflection, especially for independent pharmacy retail pricing. Reduced foot traffic in stores has caused many owners to realize how much profit they previously generated from their front end. In response, they've taken advantage of the opportunity to spruce up their OTC area, preparing to welcome back consumers to a more attractive shopping experience at the appropriate time.
Some are making the most of their physical layout by building private consultation rooms that can also double as space to administer tests and vaccines.
Your options are limited only by your creativity. Consider, for example, fielding a call for a prescription refill and offering the following: “We're happy to be your personal shopper for any OTC items you may need. We'll have your medication and other products ready for pickup in our drive-
or at curbside. Would you like to hear what items are included in our latest weekly sale?"
Until we return to a normal economy, think in terms of bringing your OTC products to the consumer instead of waiting for the consumer to come to you. Make it easy for patients to shop your website. If
necessary, consider partnering with third-party companies to bring your market-basket and delivery services up to speed.
Keep your front end humming with a thoughtful approach to managing prices, rather than trying to sell everything as cheaply as possible. Leverage the skills of your front-end captain and take advantage of wholesaler and vendor programs that can serve as a “second set of eyes" on pricing trends and promotional opportunities in your market. While there's no silver bullet to OTC pricing, you can hit your targets and stay ahead of your competitors by tapping the right resources and remaining vigilant.
Still unsure about setting front-end prices in your pharmacy?
If your independent pharmacy front-end pricing strategy feels overwhelming, it might be time to enlist the help of a
Good Neighbor Pharmacy
who can set you up with the right programs to ensure your pricing is always on point. Not only will you get personalized guidance on how to price your OTC products in the current environment, but you’ll also receive price file updates based on the latest trends in retail pricing for OTC products to keep your front end constantly up to date.