4 Factors That Impact Your Pharmacy Profit Margins

a young female pharmacist assisting an older female customer with a prescription bottle at the counter

Independent pharmacies are facing so many challenges in this day and age. You might be tirelessly sifting through your sales figures, trying to figure out what’s eating away at your pharmacy profit margins.

At NOVA, we’ve partnered with independent pharmacies across the country, and we’ve learned so much about the many factors that impact pharmacy profits. We’d like to share them with you so you can make informed decisions that will boost your profits.

The 4 biggest factors that impact your pharmacy profit margins are:

  1. Product Margins
  2. Customer Loyalty
  3. Competition
  4. Add-On Purchases

Let’s show you how these can impact your margins, in both negative and positive ways.

1. Product Margins

Prescription reimbursements are no longer profitable for independent pharmacies. Pharmacies now must focus on their front end store to generate revenue and profit margins.  The good news is that you can control and drive the strategy in your front end pharmacy to grow your sales and profits.  

The most profitable pharmacies sell products with higher profit yields. These products include:

  • Home medical equipment
  • Vitamins and supplements
  • Essential oils and CBD oils

Stocking these products will not only give your pharmacy higher profit margins, but also allow you to connect your customers with important wellness products that bring joy.

Related Blog: What Do People Buy at a Pharmacy?

2. Customer Loyalty

Customer loyalty can significantly impact your pharmacy profit margins.

Do customers return to your pharmacy repeatedly for continued wellness support, or is your average customer a one-time shopper?

Ideally, your customers will be so happy with their experience in your store that they’ll keep coming back for all their health needs and won’t be inclined to visit other stores that sell the same products.

So, what drives customer loyalty at a pharmacy?

From our experience working with independent pharmacies across the country, we have found that the stores with the strongest customer loyalty offer compassionate customer service.

For so many people, a pharmacy is like a doctor with whom you don’t need an appointment to visit; they’ll come to your store to get a remedy for a health problem they’re dealing with.

Having empathetic, knowledgeable staff that take the time to learn about your customers’ needs and preferences will make people think of your store not as a pharmacy, but a place where they can receive trustworthy wellness support whenever they need it.

Related Blog: How To Create a Great Pharmacy Experience

3. Competition

Nowadays, independent pharmacies face stiff competition from big box chains and online shopping. They also face competition from their own suppliers; it’s difficult to offer competitive prices when health product companies are selling their products directly to consumers at a lower price point.

There are three ways that independent pharmacies can prevent competition from impacting their profit margins:

  • Create an amazing in-store experience that’s more desirable than online shopping
  • Sell health products that customers prefer to try in-store, such as bathroom safety and mobility aids (canes and walkers)
  • Offer customer service and product expertise that big box chains can’t provide
  • Remember your customers and their preferences so they feel good about coming back to your pharmacy
  • Build a customer loyalty or rewards program
  • Buy your products from suppliers that aren’t selling directly to consumers (for example, NOVA does not sell products direct-to-consumer; we want people to visit their local pharmacy for intimate wellness support!)
  • Buy your products from suppliers who don’t undercut you on-line, but instead protect your margins.  (NOVA protects your margins against Amazon and all on-line stores)

Related Blog: Pharmacy Marketing Starts with Your In-Store Experience

4. Add-On Purchases

Many pharmacies rely on add-on purchases and impulse buys to boost sales figures.

These purchases should not be your main source of revenue but should only supplement your bigger revenue streams—like icing on the cake.

Snacks, beverages, and seasonal items are popular with pharmacy shoppers, but there are other types of add-on purchases that can give you high profit yields.

You could, for example, sell accessories for home medical equipment, such as seat coverings, mobility bags, or cane holders. These accessories improve the functionality of the mobility aids, but they also allow people to personalize their home medical equipment with their preferred styles and colors. This makes it so much more fun for people to shop for mobility aids.

When you’re searching for products to stock in your pharmacy, look for products that feature add-ons so you can provide more options for your customers and boost the number of products they bring to check-out. This can substantially improve your pharmacy profit margins.

Related Blog: Empowering Individuality: NOVA’s Inclusive Mobility Solutions

Get Started ReNOVAting Your Revenue

It’s so much easier than you think to improve your pharmacy profit margins. In fact, we created a program just for independent pharmacies like yours: ReNOVAte Your Revenue!  And if your not sure how HME products can look in your pharmacy… check out our 30 second Mission Makeover of Flintridge Pharmacy.  Since the makeover, the products are flying off the wall!  

We’ve fostered a growing network of caregivers who are looking for local pharmacies that have mobility aids in stock, expert staff members, and retail stores infused with joy. Your pharmacy can be exactly what the doctor ordered—so to speak!

Learn more about ReNOVAte Your Revenue and discover how easy it is to get started or uplevel your current retail business with Home Medical Equipment.

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