# Optical Forums > General Optics and Eyecare Discussion Forum >  Egads! Costco can't be serious!

## drk

We just got a Costco in the neighborhood.  Check out these prices :drop: 

Ovation CR39: $89.99/ pair
Ovation poly: $99.99/pair
AR coating: $29.99


What the #$%% is going on here!?  That's below my acquisition cost!

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## Fezz

*WELCOME TO THE JUNGLE!!*


Very Scarry!!!!

You can thank Essilor for that wonderful price situation.

I guess all the Essilor lovers will be glad to be "partners" with such a great company that stabs them!



PS. I would also blame Zeiss, Hoya, Younger, etc if they had advertised prices as low for there brands. I am not only hating on Essilor.

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## drk

They have to be taking the same "dispensing fee" on these as they do SV lenses!

I don't see how you can measure and troubleshoot progressives for that little (maybe they don't...)

I guess with "one progressive for all", there's very little to think about, though.

Essilor is trying to have it both ways: 
1.) Physio family for independents
2.) Accolade, Ovation, et. al., for the commercial chains.

I don't appreciate it, quite frankly.

As to Costco, holy smokes, what are they trying to do?  I mean, I understand underselling the market, but this is an obscene precedent.

If this catches on, we are going to be Mc'Ticians for sure.  How can you cut that many costs?

We'll see if they survive this concept.  I hope they burn. :Mad:

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## cocoisland58

Looks like they've got us on lenses for sure.  What do we have that they don't have, hmmmm.  Service?  Experienced Opticians?  Insurance acceptance? Range of products and information?  Better frame selection?  Yes, to all of those.  Oh, and don't forget "atmosphere".  Not everyone is so price conscious that they prefer to buy their eyewear in a pole barn.

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## HarryChiling

> Ovation CR39: $89.99/ pair
> Ovation poly: $99.99/pair
> AR coating: $29.99
> 
> 
> What the #$%% is going on here!? That's below my acquisition cost!


Now might be a great time to sell better product and to call in your lab rep and see if they are really giving you the best price.

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## Chris Ryser

> *What the #$%% is going on here!? That's below my acquisition cost!*


*drk.........................when Costco opens up next door the local optical retailer suddenly wakes up.*

For the last 4 1/2 years I been saying that the manufacturers do sell to the big ones for a real value price while the independent retailer pays a highly inflated price. They also repackage common products call them another name and sell them for even less here, and in other countries.

Ask your manufacturers rep for a price list as for example in the Congo and you might see even Costco looking in awe.

I have said for years that molding  a PAL in CR39 cost's peanuts and one in poly is a fraction of the peanuts. But all of you guy's had it made easy by the advertising hype on these *lenses for which you actually have been paying dearly and now with the economy taking a major dip and people are looking for bargains you might become the looser.*

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## Fezz

> Looks like they've got us on lenses for sure. What do we have that they don't have, hmmmm. Service? Experienced Opticians?


 
Be careful here. I believe that most, if not all, Costco opticians must have a ABO certificate. And actually, some of there opticians have a huge amount of experience and knowledge. Check Optiboard for a member: William Walker. He may be a diamond in the rough, but the likes of him are growing!

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## LKahn

My suggestion is to select a product assortment that is not in Costco, *if they are your real competition.* If you drive your business on the basis of low selling price you will not pass the test of time. Your product assortment must be different from others, because there will always be some guy out there willing to sell his goods for a ridiculous price.

A wise fellow taught me something very important a long time ago. 

*Retail is the art of buying, not the art of selling.* If you buy something correctly you can afford to reduce the price when times get difficult.

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## Grubendol

> If this catches on, we are going to be Mc'Ticians for sure.  How can you cut that many costs?


This is the way of our modern "free market" society.  Free trade is dangerous to the workers and great to the "shareholders"

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## drk

> A wise fellow taught me something very important a long time ago. 
> 
> *Retail is the art of buying, not the art of selling.* If you buy something correctly you can afford to reduce the price when times get difficult.


That is going to need to soak into my head for awhile, but I like it...

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## ziggy

> I don't see how you can measure and troubleshoot progressives for that little (maybe they don't...)


Just a couple of points. I seen a report(60 minuets?) and it said that fewer than 5&#37; of people will ever return anything. They were talking about crap sold on TV with a money-back guarantee. So if no one ever comes back you dint have a problem. If, with your progressive, you shoot for the lens that will fit the most people, such as ovation, you to could offer lower prices. Lastly, put in your own full service lab. That way you can select the lens that will get you the best profit margin and take care of the needs of your patient at the same time.

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## Darryl Meister

> For the last 4 1/2 years I been saying that the manufacturers do sell to the big ones for a real value price while the independent retailer pays a highly inflated price.


Chris, I realize that this is the start of another one of your tirades against lens manufacturers, but volume pricing is a standard business practice in any industry. And, often, it involves contractual obligations on the part of the buyer, as well. For that matter, the cost of _production_ also goes down with volume. I suggest you compare the prices of other, _non-optical_ products in Costco to comparable products from small retail establishments to see this for yourself.




> I have said for years that molding a PAL in CR39


And, as I have said for years, this is an ill-informed opinion.

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## CME4SPECS

I recently read that Costco nets around 2-4% on their products. Whether it be a pair of glasses or 3 bottles of ketchup.
 The profit on their memberships, alone is in the millions!

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## k12311997

> I suggest you compare the prices of other, _non-optical_ products in Costco to comparable products from small retail establishments to see this for yourself.


Most other things in Costco are not half to a third of other retailers.  To the consumer you buy in bulk a 5lb tub of mayo but not 5 pairs of glasses to recieve the benefits.

Essilor is having a dinner meeting at Morton's of Chicago in Pittsburgh to convince me and other local opticians to sell Physio .  I'm going for the free meal.  If I recommend something it is because I've seen it work or, I've read posts on Optiboard and the product is well recieved. The more a product is marketed to me the less likely I'm to use it, if it is so good why the hard sell.

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## CME4SPECS

> Most other things in Costco are not half to a third of other retailers.  To the consumer you buy in bulk a 5lb tub of mayo but not 5 pairs of glasses to recieve the benefits.
> 
> Essilor is having a dinner meeting at Morton's of Chicago in Pittsburgh to convince me and other local opticians to sell Physio .  I'm going for the free meal.  If I recommend something it is because I've seen it work or, I've read posts on Optiboard and the product is well recieved. The more a product is marketed to me the less likely I'm to use it, if it is so good why the hard sell.


Actually you can save big, on just one bottle of wine, one chocolate cake one set of tires, or one pair of pants. Optical is not the only dept. that you only need to buy one to save big.

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## Darryl Meister

> Most other things in Costco are not half to a third of other retailers. To the consumer you buy in bulk a 5lb tub of mayo but not 5 pairs of glasses to recieve the benefits.


Costco buys in bulk, and generally sells in bulk at very low profit margins, "making it up in volume" as they say. While they may or may not have negotiated an unusually favorable price with Essilor, they have a completely different business model than independent eyecare professionals, and have the buying leverage of a mass-market retailer. Although a typical customer may buy only one pair of lenses, the company is still selling them to _a lot_ of customers. And, as far as we know, they could be selling products like eyeglasses at a loss (that is, a "loss leader") simply to get people buy mayo while they're in the store.

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## Refractingoptician.com

[quote=drk;173710]We just got a Costco in the neighborhood. Check out these prices  

Ovation CR39: $89.99/ pair
Ovation poly: $99.99/pair
AR coating: $29.99

quote]

Your acquisition cost is tooo high ! Costco is still making money and you can too , renegotiate . They are paying less than they sell for .They are making a gooood  profit . :cheers:

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## Audiyoda

> Chris, I realize that this is the start of another one of your tirades against lens manufacturers, but volume pricing is a standard business practice in any industry. And, often, it involves contractual obligations on the part of the buyer, as well. For that matter, the cost of _production_ also goes down with volume. I suggest you compare the prices of other, _non-optical_ products in Costco to comparable products from small retail establishments to see this for yourself.


Couldn't have said it better myself.  Costco is a membership club.  You pay a fee ($45 or $100) for the ability to make purchases at their facility.  Paying that membership fee gurantees members a 'near' wholesale price.  My wife and I shop there weekly - their optical has a decent selection although fairly basic.  Their opticians are knowledgeable and the work I've seen from Costco looks good.

Here's a good comparison - I picked up a Vizio 43" plasma HDTV from Costco for $1100.  The best retail I found locally was $1400.  Now I remember from my holiday gig at Best Buy that margin on HD products was around 12-15%.  If you figure 15% on that $1400, you've got %1190.  I know prices have gone down since I had my holiday gig at Best Buy and margin I'm sure has gone up a bit, but I'd be willing to bet that $1100 I paid is within 3-5% of actual cost.

For what it's worth - I don't consider Costco competition - I actually refer our most price conscious patients to them over Wally-mart, LensCrafters, Pearle, and/or DOC.

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## CME4SPECS

Also remember that Costco sells thousands of pairs of glasses everyday. They have their own labs and are able to produce lenses at a much lesser cost to their retail outlets than what any of us pay. Let's say they have $50 into a pair of lenses by the time it leaves their lab. They'll wholesale it to their retail for $60. We probably have to pay $100 for that same lens. They'll retail it for $75 and you and I want...well...you know what you want.

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## OptiRook

Really, why are we so surprised? Is it because we believe that optical should be insulated against big business/mass merchandisers?

Our industry is not immune to the advance of big retail, just 50 years behind the times. Remember the Mom & Pop grocery stores? (some of us "ancient ones" do). They have been usurped by supermarkets and replaced by 7-11/Circle K convenience stores.

I agree with others on the board. Buy right/sell right. Mass merchandisers today buy progressives for the value of their design and material range and don't pay a penny extra for marketing hype (about 80% of the cost of basic progressives/maybe 98% of the cost of "fr**form"). They also have highly efficient labs, uniformity in their systems/processes/sales methods and, of course, volume.

Oh, and don't underestimate the consumer's interest in what's "fair" or a "good value." There's a reason why a consumer would want to pay $99 per pair instead of the $300 per pair for the same thing from their local ECP. Do they trust Costco? Consumer reports thinks so. See:

http://www.consumerreports.org/cro/p...erm=eyeglasses

What should you do about it? Don't pay for marketing hype or depend upon "spiffs" to drive your progressive lens business. Find the best lens designs that will suit your customers and negotiate with your labs to get the best prices. Many of the "bargain" or "house brand" progressives from labs out there are as good or better than the "name brand" progressives with all the hype. Generate volume through marketing, and don't chase your customers away with overinflated prices.

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## LKahn

If you want to buy a similar number of pieces to Costco, the lens vendor will give you that similar price. The solution is easy, change your assortment away from the Costco assortment. The customer can not price compare if your products are different. For that matter why would you want to sell what everybody else sells? The most successful merchants are uniquely different. 

Costco use its size to its advantage. But, programs are slow to change. Use your small size and change rapidly focusing on the most current styles for example. Change assortments often.

To compete one maintains a few units based on price point and everything else is sold on fashion, trend and style.

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## catchthevision

Very interesting!! I told my essilor rep about some products I had seen optical warehouses offer and he blantenly told me that Essilor only sales to private individual optical offices. Hmmm...something doesn't sound write?!  :Confused:   I think I might need to have a one on one chat with my Essilor sales rep.

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## Darryl Meister

> I told my essilor rep about some products I had seen optical warehouses offer and he blantenly told me that Essilor only sales to private individual optical offices.


Are you sure you're not referring to the "Varilux" brand? Essilor has been selling to retailers for decades, so I would find it surprising that one of their reps was unaware of that fact.

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## drk

That's a lot o' mayo:finger:

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## CME4SPECS

> We just got a Costco in the neighborhood.  Check out these prices :drop: 
> 
> Ovation CR39: $89.99/ pair
> Ovation poly: $99.99/pair
> AR coating: $29.99
> 
> 
> What the #$%% is going on here!?  That's below my acquisition cost!


DRK, Just keep doing what you're doing, You'll be fine. I freaked out when Wally went in down the street 8 years ago. My numbers did not take a dip. I have 2 Costcos with 20 miles.

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## HarryChiling

> That's a lot o' mayo:finger:


Have you seen the obesity in this country, mayo is white gold! :D

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## Barry Santini

Glasses ARE NOT a volume product...They are a customized item. Done "onsey-twosey". 
The cost of _production_ may go down, but the _delivery and distribution_ of Rx eyewear DOES NOT! 

The only reason that Costco gets these Essilor prices is because (as the fly-on-the-wall heard during an Essilor sales meeting): 

"If we (Essilor) doesn't sell Costco (et al) a product at an attractive price...someone else (our competition., Sola, Zeiss, Hoya, Kodak, etc.) will."

But because it IS Essilor who does the bulk of this practice, it's the reason I've found to put their name into slang:

"HASSEL-*****"! (because they're both a hassel, and a *****)

My two cents, what's yours?

Barry

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## Darryl Meister

> That's a lot o' mayo


I bet the average eyeglass wearer spends more on groceries in one month than on glasses in two years...

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## a1vo

I'm not a big fan of Costco Optical, but I did work there for one year. You have to give them the credit of creating/adapting the business model. They are as follows:

margin - single digit (don't know exact)

frames - brand names at close out price
outside frames - $15 (?) extra charge. won't take drill mount, safety, sunglasses, high wrap, "worn" or high $$ frames
sunglasses - brand names (include Maui Jim) at close out price
frame selection assistance - limited, only when opticians are not busy closing sales
lens - limit brand selection but adequate for a good &#37; of consumer
C/L - most major brands with good pricing
return policy - fairly good (not different from other merchandise sold)
sample lost leader - $1 for plano polarized lens with new frame purchase
coupon promotion - on color and non-color C/L, 2nd pr, transition...
insurance - only take Spectera
receipt - itemlized, given without asking
lab - regional lab, no farm out

OD - independent

optician - ABO required for all new hire. Others need to pass ABO very soon.
optician turn around rate - vary. most depend on how good/nice the optical manager is (it could be from 100+% turn around rate less than 12 months, to 0% with warehouses few miles apart)
optician experience - vary, some are really good
optician knowledge - most limited (unless learnt from previous jobs)
optician salary/benefit- could be good if you stay there long enough (multiple years)
optician's future - limited promotion channel


Hope this give optical shop owners some idea on how to compete with Costco Optical (if you choose to).

(ps. All of above are public information or my personal opiinion. no trade secret)

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## Chris Ryser

> *What should you do about it? Don't pay for marketing hype or depend upon "spiffs" to drive your progressive lens business. Find the best lens designs that will suit your customers and negotiate with your labs to get the best prices. Many of the "bargain" or "house brand" progressives from labs out there are as good or better than the "name brand" progressives with all the hype. Generate volume through marketing, and don't chase your customers away with overinflated prices.*


Very well said......................................





> *Costco buys in bulk, and generally sells in bulk at very low profit margins, "making it up in volume" as they say. While they may or may not have negotiated an unusually favorable price with Essilor,................................*


Costco might be buying in bulk..............but for sure they are not selling in bulk, as I have never seen line ups in any of many costco opticals I have seen. They just capture the market with lower prices which the independent retailer does not want to adopt. 

Nobody on this board so far has reacted when economy was mentioned, but I am reading every day in the news that some company is reducing staff by the thousands. If you are an employed individual working for a large company you must be thinking from time to time if it could be your turn in the near future.

Eyeglasses have been known forever to be expensive, so we can't blame people for looking at lower prices. Therefore the independent retailer has to adjust his way of thinking, like OptiRook said.




> *Chris, I realize that this is the start of another one of your tirades against lens manufacturers,*


Darryl, I knew that you would come out of the closet, the knight in full armour, on the attack............I guess it is your job to defend the imperialistic way of the major corporations, even if it is not the one that puts the bread on your table. :hammer:

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## Barry Santini

> Eyeglasses have been known forever to be expensive


That's only because people do not WANT eyewear, they perceive it as a medically-based need.

If we don't change this...we're all doomed.

For my money...Movie concession prices are way over priced!

barry

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## CME4SPECS

> That's only because people do not WANT eyewear, they perceive it as a medically-based need.
> 
> If we don't change this...we're all doomed.
> 
> For my money...Movie concession prices are way over priced!
> 
> barry


AMEN to that! I won't even go to the theatre! When a good movie comes out on DVD, I'd rather buy it than go pay those high theatre prices.

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## CME4SPECS

Costco has a great selection by the way!

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## OptiRook

It's the economy and it's smart shopping that is driving folks to the mass merchandisers. 

My suggestion . . . if you are not a boutique or in a trendy upscale neighborhood, don't buy into, "don't worry about the mass merchandisers, just do what you've been doing," especially if you have poor customer retention (after the exam) and depend upon astronomical prices to make up for your volume. That's exactly what the mass merchandisers want you to do.

Remember the Mom & Pop corner grocery store example above? Here's another one that will hit closer to home - Camera stores.  Oh yeah, they used to dot the landscape of middle america and everybody took their film in for processing and bought their cameras there. Not for a long time. And what did camera stores rely upon to keep their prices high? "Individualized attention/service" and "expertise." Instead, what they got was consumers who  became better educated, shopped for value, and  purchased at the mass merchandiser, now the major outlet for film processing and cameras.

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## k12311997

> Actually you can save big, on just one bottle of wine, one chocolate cake one set of tires, or one pair of pants. Optical is not the only dept. that you only need to buy one to save big.


[quote=Audiyoda;173744]
Here's a good comparison - I picked up a Vizio 43" plasma HDTV from Costco for $1100. The best retail I found locally was $1400. 
quote]


I don't know what you guys are selling the above mentioned lenses for but the TV or any of the other items mentioned are not the same level of savings.

I doubt they have any loss leaders they just sell on volume and low margins.

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## Darryl Meister

> Darryl, I knew that you would come out of the closet, the knight in full armour, on the attack.


Chris, if by this you mean that I will respond to your posts when you inevitably decide to make disparaging and often unfounded remarks against lens manufacturers, with whom I work, then Yes, I will take offense to those remarks. That said, I think your understanding of the word "attack" is a little skewed. Since you use it often in these contexts, after hijacking threads with wild accusations concerning how lens manufacturers (I'm not exactly sure why it's always lens manufacturers, either) are taking advantage of the world, here's the definition of the word:




> to set upon in a forceful, violent, hostile, or aggressive way, with or without a weapon or begin fighting with; to begin hostilities against or start an offensive against; to blame or abuse violently or bitterly; to direct unfavorable criticism against

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## OptiRook

I disagree with the TV comparison. A 21&#37; difference in the price of TV's is not the same as a 66% difference between eyeglasses.

Here's a poll (and a truth test!)

How much does the average independent ECP charge for the average pair of eyeglasses with polycarbonate progressive lenses?

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## Bill West

.... great prices and even a better return policy. Best thing to do is you run your show and they will run theirs. They do hire only qualified opticians and pay them well while providing them with great benefits. I would reccomend them to any young optician over any doctor or any other chain. I really do know what I'm talking about. As someone has already suggested ask William Walker, he knows first hand. Costco offers a great future for young people looking for retirement benefits and insurance.
I now a person who works part time for them 3 days a week and has benefits and 401k. Last year he made over 40k part time. Eat your heart out all you low paying MD's and OD"s.:cheers: 








> We just got a Costco in the neighborhood. Check out these prices :drop: 
> 
> Ovation CR39: $89.99/ pair
> Ovation poly: $99.99/pair
> AR coating: $29.99
> 
> 
> What the #$%% is going on here!? That's below my acquisition cost!

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## CME4SPECS

Our opticals enjoy very nice margins. Obviously better than the tv dealers.

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## lensgrinder

> Costco might be buying in bulk..............but for sure they are not selling in bulk, as I have never seen line ups in any of many costco opticals I have seen.


Correct me if my understanding is wrong.  

1,000 Costco locations sell 5 pair of glasses in each location, that equals 5,000 pair of glasses sold that day.

1 Independent sells 5 pair of glasses in his/her location, that equals 5 pair of glasses sold that day.  

So Costco needs to order 10,000 lenses a day. The independent needs to order 10 lenses a day.
Sounds like bulk to me.

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## OptiRook

I want to defend Darryl and the lens manufacturers here. The product we sell (even progressives) to laboratories is most often only 10&#37; of the price that the consumer ultimately pays. Our contribution to the margin is miniscule compared to what is gleaned by wholesale and retail concerns.

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## CME4SPECS

> I want to defend Darryl and the lens manufacturers here. The product we sell (even progressives) to laboratories is most often only 10&#37; of the price that the consumer ultimately pays. Our contribution to the margin is miniscule compared to what is gleaned by wholesale and retail concerns.


And that folks...is how Costco is able to do it!
They are the distributor, wholesale lab, and retail discounter.

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## Bill West

....haven't sold one in 2 years. Best seller prog/transitions/titanium frames and yet we offer frames for $19.95 never sold one last year. The thing someone said about making money when you buy,how true, been saying that for 30 years, even more true today. I think todays market is the best I've ever seen and I been doing it almost 47 years.:cheers:

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## Barry Santini

> Correct me if my understanding is wrong. 
> 
> 1,000 Costco locations sell 5 pair of glasses in each location, that equals 5,000 pair of glasses sold that day.
> 
> 1 Independent sells 5 pair of glasses in his/her location, that equals 5 pair of glasses sold that day. 
> 
> So Costco needs to order 10,000 lenses a day. The independent needs to order 10 lenses a day.
> Sounds like bulk to me.


But that is still, using your example, 5 pairs of glasses at ONE Location.  Store-to store, ECP's are sellin as many....


so why don't our labs (and manufacturers) give us the same break?  

A: "cause there's no consequence if they don't! 

But if a manufacturer doesn't sell a chain that way...

A: SOMEONE ELSE WILL (read: CONSEQUENCE!)

Barry

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## CME4SPECS

> But that is still, using your example, 5 pairs of glasses at ONE Location.  Store-to store, ECP's are sellin as many....
> 
> 
> so why don't our labs (and manufacturers) give us the same break?  
> 
> A: "cause there's no consequence if they don't! 
> 
> But if a manufacturer doesn't sell a chain that way...
> 
> ...


Those numbers were just as an example. I think when William Walker comes upon this thread he may have some insight. It's more like 5 pair per optician per day per store. 
Buying groups have tried to pool all the ecp together and get bulk discounts.

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## Darryl Meister

> so why don't our labs (and manufacturers) give us the same break?..so why don't our labs (and manufacturers) give us the same break? A: "cause there's no consequence if they don't! But if a manufacturer doesn't sell a chain that way... A: SOMEONE ELSE WILL (read: CONSEQUENCE!)


But your analogy would go either way if independents were truly a singular purchasing presence (that is, there would be just as much of a consequence to not selling to independents). Unfortunately, independent eye care professionals are _not_ a "single company" and, just as in _any other industry_, will not be entitled to the benefits associated with volume purchasing. But, as CME4SPECS noted, there are "buying groups" and such available for independent eye care professionals that _will_ allow you to benefit somewhat from volume pricing.

That said, if you managed to convince every other eye care professional in the US to buy _only_ "Brand X" lenses, I suspect Brand X would be willing to cut you a collective pricing break. Keep in mind that volume pricing is based on the expectation (if not contractual obligation) of the buyer to purchase a large quantity of the seller's product, not just to give a "big company" a "big discount." And there will always be considerably more logistical issues associated with selling to thousands of small, competing companies rather than to one, large company, even if the total quantities are the same.

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## Fezz

Look at the hornets nest he went and kicked! Darn guy barely posts anymore and he jumps in, kicks around a bit and gets us all rowled up!

Scoundrel!


*;^)*




;) :cheers: ;)

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## Barry Santini

I disagree with you on this Darryl.  Even if all the ECPs banded to together, they would'nt get a price break..

because their egos and preferences would prevent them on agreeing one what "one" lens type they would negogiate.  Thererfore...NO CONSEQUENCE!

The chains don't care what they sell...as long as they can look like a bargain.  

If Essilor or ZEISS or KODAK or SOLA or HOYA lends their name to this type of distribution..then shame on them...they're doin'it for the business...

at OUR expense!

If business is the be all end all, then why does CHANEL (try to) control their distribution so tightly?  

A: FOR LONGTERM BRAND BENEFIT!

barry

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## Darryl Meister

> I disagree with you on this Darryl. Even if all the ECPs banded to together, they would'nt get a price break..because their egos and preferences would prevent them on agreeing one what "one" lens type they would negogiate.


But that's kind of my point, Barry. That, and the fact that it would still "cost" a lot more to sell to thousands of businesses buying one product at a time than it would to sell to one business buying thousands of products at a time.

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## Barry Santini

> I want to defend Darryl and the lens manufacturers here. The product we sell (even progressives) to laboratories is most often only 10% of the price that the consumer ultimately pays. Our contribution to the margin is miniscule compared to what is gleaned by wholesale and retail concerns.


Then where oh where is all that profit goin?

When clients say my glasses are too expensive. I tell 'em:

"Last time I looked...it's your doctor that drivin the Mercedes...not me!"

Barry

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## Barry Santini

> But that's kind of my point, Barry. That, and the fact that it would still "cost" a lot more to sell to thousands of businesses buying one product at a time than it would to sell to one business buying thousands of products at a time.


I see your point, Darryl. But...it is still a situation where...if ecps DID NOT BUY the products that are carried in the chains....AT ALL....*that* would be of considerable consequence to the manufacturers. In the end, the 8&#37; Costco margin will not affect ECPs with large *skill sets*.

They're (COSTCO, et al) just the McDonalds of eyewear. Not that that is a bad thing...

As I state in all my LASIK/Refractive surgery presentations:

"If the general public were so discriminating, McDonald's wouldn't be so popular!"

ECP's should cultivate and grow *discriminating* clients. In this respect, I thank g** every day that Lencrafters is soooo successful with their "buy 'em-try 'em' - trade'em - return 'em" campaign. 

It *weeds* out those clients who are never happy with their eyewear from walk'in in my door!

Good dialogue!

Barry

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## Barry Santini

> It's the economy and it's smart shopping that is driving folks to the mass merchandisers. 
> 
>  And what did camera stores rely upon to keep their prices high? "Individualized attention/service" and "expertise." Instead, what they got was consumers who became better educated, shopped for value, and purchased at the mass merchandiser, now the major outlet for film processing and cameras.


 
But I was there (in that industry as a consultant).  The end of *fair trade* laws doomed the Indie camera store.  

Welcome to the land of opportunity...as long as some large corporation is the one makin' all the money!

Barry

----------


## OptiRook

It's called capitalism, and independents thrive on it. But being independent means being savvy about your business. Independents don't need to be swallowed up by big business, just know their niche and "capitalize" on it.

----------


## k12311997

> Most other things in Costco are not half to a third of other retailers. To the consumer you buy in bulk a 5lb tub of mayo but not 5 pairs of glasses to recieve the benefits.
> 
> Essilor is having a dinner meeting at Morton's of Chicago in Pittsburgh to convince me and other local opticians to sell Physio . I'm going for the free meal. If I recommend something it is because I've seen it work or, I've read posts on Optiboard and the product is well recieved. The more a product is marketed to me the less likely I'm to use it, if it is so good why the hard sell.


 
Pete thanks for dinner it was nice to meet you.  The physio comp I got is on one of my employee's mother right now If I wanted to use her as a guinea pig what are the comparable lenses out there??  Creation ?? what else ??  Digitally created but not digitally surfaced.

----------


## Nettie

I love working in my POLE BARN.
Costco is a great company and after 13 years in my career as an Optician(4 years at Costco) I wouldn't dream of working anywhere else.

----------


## Speedyspecs

There is a concept called "economies of scale". If you want to understand this concept (and every business owner should), check out Milton Friedman's series "Free to Choose".

In the book, he asks how much it costs to make a standard #2 wood pencil. The fact is that if you or I tried to make one pencil, the cost would be in the tens of thousands. We would have to cut the tree, mill the wood, hollow out the center, mine the lead, manufacture the rubber for the eraser, mine the tin for the eraser holder, etc. However, you can go to Wally World and buy a 12 pack for $1.50. Why?

Because somebody had an idea to mass-manufacture pencils. They invested millions in equipment, labor, and materials in order to make "economies of scale" work for them.

It is the same for our business. If Lenscrafters puts in a full surfacing lab in a mall and sells one pair of eyewear, how much did that pair cost them? Appx. $200,000. If they sell 25 pairs per day for ten years, it spreads the cost of the lab gear, the employees, the rent, etc. very thin. Thus "economies of scale". It is always more profitable to sell quantity.
That is why Essilor or Zeiss will sell 5,000 pair of 6 base 2.25 add poly Pal's to Costco for $6/pair, and then turn around and sell 5 pair to me at $30/pair. I then have two choices. I can fail and blame Essilor's price policies for my failure, or I can find my own niche in the market, find my own creative solutions to patient's needs, and make a good living. I choose the latter. Yes, buying groups help.

Oh, and before anybody claims that I live in an isolated market, my optician-owned independent retail store is located across the street from a Super Wal-Mart. The month their optical opened, my business doubled. Why? Service, selection, friendly knowledgeable service, decent competitive pricing, etc. We regularly get Rx's from the Wal-Mart O.D., and I consider their optical manager to be my friend.

BTW, I buy my boxers at WM. I have a little dig we say sometimes at my store. I wear WM underwear, but not WM eyewear. "WM belongs on your butt, not your face." Just kidding Wal-Mart employees.;) I used to work for Sam's.

----------


## drk

All this capitalism talk is well and good.

However, there are consequences to actions.  Lens manufacturers have to realize that they may put the independent out of business with these "sweeheart deals".  Nobody is putting a gun to their heads.  

Strategically, they can choose who to favor, and it will affect the future.  Choose wisely, Essilor and Carl Zeiss Vision.

----------


## Johns

> That's only because people do not WANT eyewear, they perceive it as a medically-based need.
> 
> If we don't change this...we're all doomed.
> 
> For my money...Movie concession prices are way over priced!
> 
> barry


You will alway make more $$ on "wants", rather than on needs.

Nobody "needs" progressives, designer frames, nor contact leneses.  Those are all wants.

Movie concessions are high for the same reason, they are WANTS, not needs.

----------


## NavyChief

FYI
Shoppers in optical and pharmacy don't have to have a membership, since they are state regulate entities. Applies to alcohol purchases, too.

----------


## Johns

> I disagree with you on this Darryl. Even if all the ECPs banded to together, they would'nt get a price break..
> 
> because their egos and preferences would prevent them on agreeing one what "one" lens type they would negogiate. Thererfore...NO CONSEQUENCE!
> barry


Truly "Banding together" would mean that the egos and preferences wouldn't be an issue.  

That'll never happen...

Too many of the O's want to be like the diner I stopped at in Philly a few years ago.  Their menu was 14 pages long!!  You can't offer every product that every rep coming through the door offers you!  You'll have no power to negotiate at all.  You can't be everything to everyone.

Costco has chosen their lenses based on two issues: 1. Cost 2. Relative success of the fit base on that cost.

Sure, the lens doesn't work for everyone, but it probably works on a lot of them or they wouldn't be using it.

Find a lens with a good price, good optics and similar designs to what you're using now.  Go to your lab and ask "What if I were to use this lens almost exclusively, and you can keep the warranty ?  What kind of pricing can I get?"

The results will floor you! (It will also make your current lens reps cringe when they find out you're getting the same results from "inferior" (their words) products.

It's a new world out there, and it take a whole different approach to it to stay in the game.

----------


## Fezz

> It's a new world out there, and it take a whole different approach to it to stay in the game.


 
I think what Johns said here is* KEY*! The game is constantly changing, rules are made, broken, and rewriting at breakneck speeds. The only thing an independent has to stay in the game is the relative small scale that we do business. We can add new lines, get funky, go wrap, go rimless, tint every lens, change price, BOGO sales, etc.....at a drop of the hat! We do not have the clutter and chain of command and red tape to make changes like the Big Boys. Do something different, do it quickly and change!

----------


## Johns

> Pete thanks for dinner it was nice to meet you. The physio comp I got is on one of my employee's mother right now .


 
Hmm...I sure wish we could figure out why some products cost more than others...
 :Confused:  

I just can't figure this out! I'm sure that even though Costco pays less for the lenses, that Essilor takes all their opticians out to dinner, and gives them all comp physio lenses too... So, I'm sure THAT"S not the reason independents pay so much.

Maybe it's a conspiracy. Yeah! That's it ! 

I know why these companies do it; because we let them.

In earlier threads, (2002) I defended using Essilor because of the great support (co-op) and other incentives. I've since learned my lesson, and our store profits have risen enough that we can now afford to send our staff to Vegas, New York, and Florida for "training". That was more than we could ever afford before we weaned ourselves off of the big brands. Of course we don't get the "free" pupilometers, coffee mugs, or rugs with our names on them anymore.  And how about all those glossies in the trade mags?  How cheap do you think those are?

This is not intended to put Essilor, Zeiss, Lux, or any other brand names down, but practioners need to wake up and realize that they have choices beyond what the reps bring to them.

Oh, and I'm glad you enjoyed your dinner, but this time, I didn't contribute.;)

----------


## Fezz

Dearest Johns;

You are breaking our hearts. Don't do this to us.
Please do not spread these terrible truths,er ah ah er ah, I mean lies, anymore. You know that our company depends on fools like you to buy into the hype. We NEED private optical to purchase the higher cost "premium" lenses. How else do you think we can afford to provide these lavish dinners and still be able to cut costs to the Big Boy Opticals so they can undercut you? You have been tempted by those not so big name companies. We will forgive you. Think of us, we have needs. We miss you, please come back!


Fondly, 
BigLensCo



:D :cheers: :D

----------


## k12311997

Johns




> Essilor is having a dinner meeting at Morton's of Chicago in Pittsburgh to convince me and other local opticians to sell Physio . I'm going for the free meal. If I recommend something it is because I've seen it work or, I've read posts on Optiboard and the product is well recieved. The more a product is marketed to me the less likely I'm to use it, if it is so good why the hard sell.


I couldn't agree with you more about them spending on dinner,and I'm not the type to start using their lenses because they gave me a mug and pen but I think comping a new design is just a good way to get people to try something different rather than just sitting on if it ain't broke don't fix it. Unfortunately no one in our office is presbyopic yet for actuall first hand experience.  The funny thing about the dinner was that most of the people there were big Varilux boosters I almost felt like they packed the room.

----------


## Fezz

> The funny thing about the dinner was that most of the people there were big Varilux boosters I almost felt like they packed the room.


 
Preaching to the choir?

----------


## k12311997

most people were talking about why should they go from the comfort to the physio?  my comment "any lens properly fit will be successful."  you'd think if they were going to spend that money to schmooze us they'd try to get people who use other product, not just getting the supporters to upgrade

----------


## Johns

> you'd think if they were going to spend that money to schmooze us they'd try to get people who use other product, not just getting the supporters to upgrade


There just trying to squeeze a little more out of the loyalists.

----------


## drk

I think I may be the Pollyanna of the world, here, but whatever happened to the concept that lens manufacturers, wholesale labs, and eye care professionals are in the business of vision care?

Whatever happened to the concept that the lens manufacturers support professional dispensing...that is, no profit-first-patient-second behavior?  Does essilor or CZV give a rat's !!! that their "economically defendable" sweetheart deals propagate commercial opticals?  Aren't commercial opticals bad?  Aren't "McTicians" bad?  Isn't "dumbed-down" bad?

Where are the ethics, vision, and leadership?  Yeah, I know, "Who cares about that in this day and age?"  "Look at the market share of the chains.  Let's get a piece of that. The customers can't be wrong.  Give 'em what they want."

Well, if we were in the US Shoe business, I guess that philosophy would hold water.  BUT I'M HERE TO REMIND SOME that we are health care professionals, and the manufacturers make health care products.  NOT SHOES. 

Being a health care professional means TAKING RESPONSIBILITY, for the individual, for the profession, for the public health system in general.  

I think that the lens manufacturers ought to reexamine their mission statements, and realize that they are driving the eye care delivery system more than they want to take responsibility for.

No one can tell me that chain medicine, opticianry, dentistry, or optometry is good for the public health system.  Sure, maybe better access at 7 p.m. in the mall.  Sure, maybe better walk-in ability.  But the chains are no better than a "doc in the box" at an urgent care center or going to the ER when you have a cold.  

The bottom line is that if short sighted optical giants want to squash professional optical, then we're ALL going to suffer.  I'm sure Mr. CEO of CZV gets his eyecare from a professional, yet he'll cut his throat behind the scenes in the name of profit.  Irresponsible, I say.

Costco's 5% margin in optical concept can rot in !!!!.  You CANNOT independently maintain high quality at non-existent margins in a drastically service-heavy health care industry.  Shame on them for doing it "because they can".  That's not a good excuse.  Thanks for *******izing eye care, Costco.

And, while we're at it, shame on all of us.  Shame on us for not standing up for our professional ethics and letting "the dollar" rule our career choices.  Opticians and optometrists working in chains *******ize their own profession (and have 1,000,000 good excuses for doing so).  

Money trumps ethics in this society in this time.  Enjoy the fruits.

----------


## lensgrinder

> All this capitalism talk is well and good.
> 
> However, there are consequences to actions.  Lens manufacturers have to realize that they may put the independent out of business with these "sweeheart deals".  Nobody is putting a gun to their heads.


I do not think their intent is to put the independent out of business.  They want to make money, just like you.  
"Big Chain" knows how many 6.00 base 2.25 Add they will need from week to week so they can tell company x they will purchase 2,000 of those lenses per week.  Now company x knows they can maufacture those lenses without a loss, because "big chain" will buy them.   
I am sure if you purchased a certain amount of lenses from company x they would cut you the same "sweetheart deal".  It is simply about making money.  They have stockholders who demand a profit, so they do what they can to deliver.

----------


## Johns

> Preaching to the choir?


When they came out w/ Panamic, they had a big dinner for us, complete w/ a regionally known singer - Michael Stanley. I went for the free meal and to hear the entertainment. 

I brought along 5 friends of mine (Free dinner? OPen Bar? Free music? I suddenly had friends!) 3 of my friends were plumbers, 1 was a teacher, the other a general contractor. 3 of them ended up winning door prizes. None of them had a clue about glasses or anything to do with them. 

In this case, Essilor was not preaching to the choir...they were preaching to people that didn't even know what the sermon was about!

----------


## drk

> I do not think their intent is to put the independent out of business. They want to make money, just like you. 
> "Big Chain" knows how many 6.00 base 2.25 Add they will need from week to week so they can tell company x they will purchase 2,000 of those lenses per week. Now company x knows they can maufacture those lenses without a loss, because "big chain" will buy them. 
> I am sure if you purchased a certain amount of lenses from company x they would cut you the same "sweetheart deal". It is simply about making money. They have stockholders who demand a profit, so they do what they can to deliver.


I think you have precisely missed my point.

----------


## Eddie G's

COSTCO is the EVIL EMPIRE!!!

:angry:

----------


## Speedyspecs

The mix between professionalism and economics is difficult to balance.  But we cannot put our heads in the sand and pretend that economics does not exist.

Also, I know of several Wal-Mart, Lenscrafters, Eyemasters, and Costco employees who have more professional knowledge than myself, and they use their professionalism on the job.  To blaketly say that the big boxes decrease care is incorrect.

Take Lenscrafters.  Until they mass produced "in about an hour", most patients had to wait two weeks for their eyewear, even in emergencies.  Lenscrafters provided the huge professional service of providing eyewear quickly.  This is awesome for a kid who stepped on his -5.00s the day before finals.  I say that Lenscrafters produce a huge benefit.  That is why they make so much money.

----------


## Chris Ryser

> *The results will floor you! (It will also make your current lens reps cringe when they find out you're getting the same results from "inferior" (their words) products.*
> 
> *It's a new world out there, and it take a whole different approach to it to stay in the game.*


 
A few of years ago, this board was dominated by the " I love the big corporations and their products" posters. I have followed the trend as it is happening around the globe, and I can see they are narrowing the field at a faster pace. There seems to be a small shift of opinions.

It is not only about one of them selling for a lot cheaper to Costco, it is about the *C O N T R O L* of products in every way. And whoever controls the products also controls the customer.

The lenses you and Costco are buying and using are not made anymore in France, Germany or the USA. If you go on the corporative websites you will see that their manufacturing plants are spread over the far east.

Do you really believe that having moved production facilities to developing countries has increased or levelled out prices of these lens products?

Check you price list's of a few years back and you will see no down trend in pricing, I would even bet that prices are up while manufacturing cost has been reduced to a fraction of previous days.

----------


## drk

I say "wrong".  

Lenscrafters et. al. are constantly in trouble with state boards, if you have one.

A -5.00 kid should be responsible enough to have a back up pair.

Ask any LC employee how they feel about the company.

I was still in school in 1985 (?), but I doubt they improved cycle time by 50% industry-wide.

There is no mystery to balancing professionalism and business.  Here's how it works:
1.) Fair and responsible behavior towards your "customers" or patients.
2.) Business realities are done behind the scenes: saving $ on expenses.

----------


## Johns

> COSTCO is the EVIL EMPIRE!!!
> 
> :angry:


No, really they aren't...

There's in nothing evil about someone being smarter than you and figuring out a way to make a ton of money, unless they are doing something illegal.

It would be evil if they were fitting glasses on people, and everyone was driving off the road because they couldn't see.  Where's the uproar from the customers?  I don't see it.

DRK said "Shame on us all..."  I agree, but for different reasons.  Shame on us for being lazy and not changing with the times.  Shame on us for wanting the customers to keep coming through the front doors waving money -without investing in the future; whether it's marketing, technology, or other updates.  Shame on us for blaming the mega corporations that are doing what we would love to do.  

I often have evil thoughts about these big competitors, but I really don't see anything sinsister or evil about them.

And when it comes right down to it.  Even if they were evil, they wouldn't be REALLY evil until they moved into your neighborhood.  (They're already in mine...)

----------


## drk

Shame on us, yes, if you want, for not providing creative, forward-thinking vision care.  

Our goal cannot be money, primarily.  Our goal has to transcend that.  That's where greatness occurs, by almost any definition.

----------


## Johns

> Shame on us, yes, if you want, for not providing creative, forward-thinking vision care. 
> 
> Our goal cannot be money, primarily. Our goal has to transcend that. That's where greatness occurs, by almost any definition.


No, money cannot be our primary goal, but there's no way you'll be able to provide "creative, forward-thinking vision care" without it.

If your profits plummet because you can't compete w/ Costco or WM, and you cannot maintain an adequate staff and/or update your equipment, who does that help?

It is easier to achieve greatness when you have the proper resources.

----------


## Bill West

> I think I may be the Pollyanna of the world, here, but whatever happened to the concept that lens manufacturers, wholesale labs, and eye care professionals are in the business of vision care?
> VISION CARE IS PROVIDED BY FOLK WHO LIKE TO MAKE MONEY!
> 
> Whatever happened to the concept that the lens manufacturers support professional dispensing...that is, no profit-first-patient-second behavior? Does essilor or CZV give a rat's !!! that their "economically defendable" sweetheart deals propagate commercial opticals? Aren't commercial opticals bad? Aren't "McTicians" bad? Isn't "dumbed-down" bad?
> I MUST HAVE MISSED THIS CONCEPT SOMEHOW!
> 
> Where are the ethics, vision, and leadership? Yeah, I know, "Who cares about that in this day and age?" "Look at the market share of the chains. Let's get a piece of that. The customers can't be wrong. Give 'em what they want."
> ALL THREE ARE TIED UP IN MONEY, OD'S AND MD'S HAVE BEEN DOING IT THAT WAY AS A GROUP AS FAR BACK AS I GO, 47 YEARS. WHY DO YOU SELL EYEGLASSES AND NOT JUST PROVIDE A HEALTHY EYE EXAM!
> 
> ...


WE ALL,THE LUCKY ONES,DO.:cheers:

----------


## CME4SPECS

drk, sorry you've been in the dark for so long about Costco. They may be new to your neighborhood, but not mine. I've been in this location for almost 15 years, and I believe the nearest Costco had an optical at that time.
There are many different ways to make money in this business. High end, low end, and somewhere in the middle. Buy one get one. Insurance, no insurance. Discounts, no discounts. Mega store, solo store. We all make our choices about how we want to proceed in our businesses. Lens manufactures and frame manufacturers are in the business for one purpose, and one purpose only...to make money. That is why I'm in business. And If anyone that is in business for any other reason is full of crap. Otherwise, you'd go work as a volenteer for free in some 3rd world country.
Sure you want to provide the best care you can for your paitents, that's good business and will make you more money. That is a choice that you make. Discounters such as Costco simply take a different approach. They attract a certain clientle, and so do you. They are not going to run you out of business, if you are providing quality care to your patients.

----------


## Johns

> You may consider buying a little smarter if your margins are what you say they are. I would be embarrassed to report such a figure.


I don't believe DRK mentioned his profit margin.  You may want to read the posts from the start.  I think you may have confused it with what Wild Bill inserted into the quote.

;)

----------


## CME4SPECS

I do confuse easily!

----------


## Johns

> I do confuse easily!


 
Welcome to the club!:cheers:

----------


## Barry Santini

Well as far as I can tell:
Neither hospitals, pharmacies, or Drs are really makin' the money they expected.

Shouldn't we finnaly get rid of the "health/medical" connotation for eyewear?  maybe we'll all make more money!

Give it a try!

barry

----------


## Johns

> Well as far as I can tell:
> Neither hospitals, pharmacies, or Drs are really makin' the money they expected.
> 
> Shouldn't we finnaly get rid of the "health/medical" connotation for eyewear? maybe we'll all make more money!
> 
> Give it a try!
> 
> barry


I make it a point to DISassociate myself from the "medical" part of the eyewear.  We are a STORE, and I'm not embarrassed to say it.  Nobody shops at an eye doctors office.  Eye doctor's office are places you HAVE to go, stores are places you want to go!

(When was the last time you went to a podiatrist's office for a pair of nice looking shoes ?)

----------


## cocoisland58

[quote=Fezz;173728]Be careful here. I believe that most, if not all, Costco opticians must have a ABO certificate.  quote]


An ABO cert means nothing without experience to back it up.  You can get an ABO without ever touching a lens.  But kudos to Costco for hiring certified opticians.  Their frame selection is a bit outdated and the place echoes.  It's bare bones, no fringe stuff.  I have never felt threatened by the big boys except for contacts and basically they can have them.

----------


## Audiyoda

> I think I may be the Pollyanna of the world, here, but whatever happened to the concept that lens manufacturers, wholesale labs, and eye care professionals are in the business of vision care?
> 
> *Whatever happened to the concept that the lens manufacturers support professional dispensing...that is, no profit-first-patient-second behavior?* Does essilor or CZV give a rat's !!! that their "economically defendable" sweetheart deals propagate commercial opticals? Aren't commercial opticals bad? Aren't "McTicians" bad? Isn't "dumbed-down" bad?
> 
> *Where are the ethics, vision, and leadership?* Yeah, I know, "Who cares about that in this day and age?" "Look at the market share of the chains. Let's get a piece of that. The customers can't be wrong. Give 'em what they want."
> 
> Well, if we were in the US Shoe business, I guess that philosophy would hold water. BUT I'M HERE TO REMIND SOME that we are health care professionals, and the manufacturers make health care products. NOT SHOES. 
> 
> *Being a health care professional means TAKING RESPONSIBILITY, for the individual, for the profession, for the public health system in general.* 
> ...


So let me ask you doctor - you said that Costco's prices were below your acquisition cost...I'm guessing by not much.  I checked my lab price list and my acquisition cost is about $10 below Costco's retail.  So my guess is your acquisition +/- $10 from their retail.  Are you selling those lenses to your patient's for $10 over your cost of goods?  You want the great deal from the manufacturers, are you willing to give the great deal to your patients?  In the name of responsible healthcare of course.  

I'm assuming you charge a fair price on your exams - maybe around $40?  $40 is well worth your 30 minutes I would guestimate.  And in the name of responsible healthcare I'm sure you sell your frames for 10-15% above acquisition cost - your patient's must love you!

Or do you want these great prices because you still want to charge $100 for that 30 minute exam, continue to mark up frames 2.5 times and have even more margin on your lenses?

----------


## HarryChiling

> And, while we're at it, shame on all of us. Shame on us for not standing up for our professional ethics and letting "the dollar" rule our career choices. Opticians and optometrists working in chains *******ize their own profession (and have 1,000,000 good excuses for doing so).


Drk, I am glad opticians are now professionals in your eyes.  Too bad it took a COSTCO moving into your neighborhood for you to realize that.  You may want to start treating your good staff as assets of the business and maybe help them to get certified.  I will give some figures that are crazy, in my state their are only 5-6 Certified Master Opticians.  They don't come cheap and they are dedicated to their profession.  Can you imagine the edge you would have by employing one in your business?  Differentiate yourself, stop selling ovations, start selling younger image for example (you can show your patients the Sheedy report and tell them that this is your offices exclusive lens choice because you will not consider comprimising optics) it also comes in a variety of materials and options.  Have one of your employees go to COSTCO and secret shop them find out prices and selection.  Certify all your employees in the areas that they are working.  Call your lab rep and sit them down to go over the prices of the neighboring opticals, explain to them that because all your staff is certified that you expect better prices due to lower remakes, tell them that you want a rock bottom price on one lens design (like the image) and that you want the deepest discount on this lens (ask for prices with warranty and without like previously mentioned you would be suprised).  Good luck and if you have any questions I could help with let me know.

----------


## Judy Canty

Slow down guys.  DRK has always regarded Opticians as eyecare professionals.  You need only go back through the many conversations in which he has participated to see that.  OD bashing won't increase anyone's respect on this board.

----------


## eyesonyou

Ovation CR39: $89.99/ pair
Ovation poly: $99.99/pair
AR coating: $29.99


What the #$%% is going on here!? That's below my acquisition cost![/quote]

----------


## rolandclaur

After reading this thread, I'm frankly a little scared to post,but I would like to offer some insight if I may.


In terms of the optical department of Costco, the optical department accounts for less than 1 percent of the total profit made by the company as a whole.  I've been privy to the margins that are made by Costco, and some of the items are insanely low. 

I firmly believe that Costco does not intend to run independents out of the ground,  The majority of Costco's clientele are in fact middle to upper class.  They appreciate designer brands, elegant styles, etc.  Our dispensary is kept as bare, simplistic, and minimal as possible.  We don't do any type of custom jobs like RXable sunglasses, goggles, tricky prescriptions, slab off's etc.  I also believe that the optical department is there mainly as a professional service to Costco's members.  

I believe that I have a lot to bring to the company as far as my optical background and experience goes.  And believe me, when I cannot help a member out with something they are  looking  for, the first thing I do is recommend them to an independent optical store where I know the opticians there can cater to their specific needs.  I myself have worked at over 10 different Costco locations, and each location  has business cards of independent optical stores all over San Diego that the opticians will hand out to members who are looking for something that we cannot offer.    And I have never gotten spoken to, reprimanded, or written up because i recommened a "competitor" to a member, which i am more than happy to do any time of day.  In fact, the only companies that we actually price shop and compare are against Wal-Mart and Sam's Club.

If you guys have any questions for me, I'll do my best to answer them.  And if William Walker is out there, just want to say hello from a fellow Costco optical employee

----------


## MarcE

Dr K,
I don't think you are being fair to the independent optometrists that work at chain stores.  They are independent business owners, like you.  And unlike most most Dr's that own their optical, they do not cap and steer.  It could become a law someday that it is illegal for an O.D. to own their optical for ethical reasons.  My own experience is that the independent Wal-Mart O.D. is ethical.  The other 2 "independents" that own their own optical in town are very much less so.

DrK, I have a solution to your Costco problem.  Just write "Phoenix lens by Hoya. No substitutions" on every Rx.  Costco can't get it.  That was a sarcastic remark.  I hope no one here would do that.  But the SOB "independent" O.D. across the street from me does it.  

Optical is so very fortunate to have been insulated from the price pressures of large chains.  The previous poster was right.  Small Grocery stores are gone. Camera stores are gone.  Local computer stores are gone.  Independent pharmacies are almost gone, so are the locally owned video stores.  It's not inconcievable that the local optical will be gone in the future.  Essilor will still be around, though, spending your money.

----------


## MarcE

I saw a couple of post quoting wholesale prices.

----------


## Bill West

you can call selling eyewear any thing you want, but we are.....

*RETAIL OPTICAL STORES*

----------


## drk

Thanks for the support, Judy and others.

I think you'd say I was a "good guy": have always had licensed professionals on staff, have industry standard pricing (not unfair to competition or patients), support opticianry when I can.

What I am learning on this thread is interesting. While I understand that I represent all the unethical things other ODs may have done past, present, and future, I'm trying to think about what's best.

You are a very practical bunch. I'm rather suprised at the particular balance between business ethics and professional ethics that the responses imply.

Granted, a million-dollar-a-year cataract surgeon can afford all the ethics he wants. And a six-figure-plus OD can afford a little ethics, as well. An only "decent wage-earning" optician may feel a little more economic pressure to test those ethics! Unfortunately, ethics gets a sliding scale depending on circumstances. That's called "situational ethics" or "consequentialism". 

But remember, my initial point was the business mentality and the lack of professional mentality of the well-heeled lens manufacturers. They want to prosper in a medical field, but they want to be able to do it with cut-throat business methods. Are they supporting their "customers", and the health care industry in general? I'm worrying that they don't.

I am by no means a paragon of virtue myself, but that doesn't mean I can't recognize that the virtue exists. Whatever happened to professionalism, i.e., the desire to put the patient's welfare first and foremost, and let the economics work themselves out? I'm not talking about charity, I'm talking about a fair deal.

I don't accuse anyone in particular, here, of putting profits before patients. I am dismayed at the practices of those in our industry (if, indeed, we can even loosely say that we are in the same industry). I would think that a bigger picture could be seen. 

I would think that all could agree that something as involved as vision care is unable to be dumbed down to the point of mass-merchandized, low-margin, low-skilled or no-skilled care. I'm suprised that some here respect Costco for finding a way to essentially sell medical devices with the same aplomb as catsup. 

I'm suprised at the suggestion that divorce from the medical aspects of eye care is the correct path for opticianry. I'm sure that state legislatures would be interested in that viewpoint from within your profession. 

As always, I support opticianry. But I only support a certain type of opticianry: a professional opticianry that has irreplaceable value and supports the big picture of the greater good, and isn't simply out for a buck. I hold my profession to that same standard.

Heck, I went into healthcare specifically to avoid having to "earn a buck" every day instead of "helping people". I'm doing just fine with that, thanks. I know many of you do the same. Let's "take the high road", but let's also have the courage to "call a spade a spade."

Don't get beat down!!

----------


## Chris Ryser

> *DrK, I have a solution to your Costco problem. Just write "Phoenix lens by Hoya. No substitutions" on every Rx. Costco can't get it. That was a sarcastic remark. I hope no one here would do that. But the SOB "independent" O.D. across the street from me does it.* 
> .


That is very comparable to what the ophthalmologist did to me last week by telling the license office to put me through a driving test because I did not want to spend $ 5,000 at his office.

----------


## drk

> In terms of the optical department of Costco, the optical department accounts for less than 1 percent of the total profit made by the company as a whole. I've been privy to the margins that are made by Costco, and some of the items are insanely low. 
> 
> I firmly believe that Costco does not intend to run independents out of the ground,


 
Thanks for posting, Roland.

If the optical is such a low profit endeavor, why does Costco bother? 

Yes, Costco is low margin all-around, and apparently the sum of the parts makes the "whole" work for them. They seem to be using optical services as a "member benefit" or "calling card". And, for that, I say that they are *******izing optical.

How the heck does opticianry and optometry allow, let alone participate in, a bunch of Costco non-professional execs creating a loss-leading, margin-dropping (read: professional service eliminating) cancer that goes against everything we stand for? 

The sad, disappointing fact is the pathetic weakness of the AOA and your professional organizations to lobby and make such stuff illegal.  

Who has the lower opinion of the value of optical care? The public, the legislatures, the mass-merchandizer executives, or those within the professions?

Maybe you all have been voted, in effect, retailers, by the marketplace. Shame.

----------


## Johns

> . 
> 
> I'm suprised at the suggestion that divorce from the medical aspects of eye care is the correct path for opticianry. I'm sure that state legislatures would be interested in that viewpoint from within your profession.


In regards to the seperation of the medical from opticianry, I was refering to that as a purely marketing stance. I don't believe that an optician in a lab coat has the automatic onfidence of the consumer just because he's trying to project a more medical image.

On the other hand, if they are attracted to my "store" because of it's funky look, cool styles, and great service, I then have more opportunities to show them the important part of our profession- our skills. People come for the "cool" but send others because of the quality and proffessionalism.

We've been beaten over the head by OD's and MDs with the mantra "you're not medical, you're not medical..." And really, except for those of us that fit CLs, it's not medical. It's really more mechanical (although I don't want to be know as a machinist either). 

Another reason for my wanting to distance myself from the medical image is that everyone has been brainwashed into thinking that if it's medical then...
1. It's my right to have it.
2. I shouln't have to pay for it, or at least not more than a cop-pay.

I have a lot of people come up and say that I'm succesfull because "sooner or later everyone needs glasses".  Well, they don't need all the bells and whistles on them, and they don't need to buy them from me.  Projecting a retail image is one way to make sure that many people do choose me to be their eyewear provider.  That's not to say that I don't try to get as much information as I can, as a means of making myself a better optician.  The state legislatures would be please to know that while the state requires 20 hours of CEUs  (8/12), last year I had over 65 hrs, and 20 of those hours were specifically for ODs & MDs. (I learned they complain just as much as opticians about taking CEUs)

It's not just opticians that are changing their images.  I don't think Snowmonster (Steve), another OD on the board, would mind telling you that I saw his office, and it looks like something out of SoHo.  Very classy, very trendy,very retail, and very hip.  I'm guessing that given the area you practice in,  your place (Drk) is similar to his.

I didn't respond to Judy's rush to your defense because my previous posts show that I consider you and many of the other ODs on this board "brothers in arms".  The only difference between us is that opticians are fortunate enough not to have to do exams!  I like to save my "bashing" for the companies that are "bashing" my ability to make a decent living.

----------


## Johns

On an even more basic level...

How many of you that are wringing you hands over WM and Costco but still shop there ?

I am constantly asking opticians and other small business owners, and they all say that while they don't really like the place, and they "hardly" ever shop there, they do on occasion "run in" for a few items. 

My motto is, "If that's the only place I can buy it, then I don't need it.

Well, you don't have to shop in their opticals to support them...

----------


## Nettie

> Thanks for posting, Roland.
> 
> If the optical is such a low profit endeavor, why does Costco bother? 
> 
> Yes, Costco is low margin all-around, and apparently the sum of the parts makes the "whole" work for them. They seem to be using optical services as a "member benefit" or "calling card". And, for that, I say that they are *******izing optical.
> 
> How the heck does opticianry and optometry allow, let alone participate in, a bunch of Costco non-professional execs creating a loss-leading, margin-dropping (read: professional service eliminating) cancer that goes against everything we stand for? 
> 
> The sad, disappointing fact is the pathetic weakness of the AOA and your professional organizations to lobby and make such stuff illegal. 
> ...


 
Professional service eliminating??? Drop in sometime and then judge. After 13 years in this business and working for several different independants, I will very happily retire with Costco. The service I provide is outstanding and very professional. I am sorry you are so bitter. And I am getting a little tired of all the Costco bashing.....thanks to those of you who did not participate in the name calling and insults.

----------


## k12311997

> Professional service eliminating??? Drop in sometime and then judge. After 13 years in this business and working for several different independants, I will very happily retire with Costco. The service I provide is outstanding and very professional. I am sorry you are so bitter. And I am getting a little tired of all the Costco bashing.....thanks to those of you who did not participate in the name calling and insults.


Nettie I'm very glad for you for your experience, but I've said it before and I'll say it again that is because of the individualls you work with and for and your personal attitude toward what you do.  The fact that you care and no one stops you from caring makes your job enjoyable.
Having not been brought to task for not selling every bell and whistle on +1.00 OU readers the patient even said probably wouldn't use, but the doctor recommended.  Saying the patient didn't want or need transitions is nothing more than an "excuse".  Having worked for LC many people I've talked to love their jobs because their managment was professional not just beating them about sales and numbers but genuinely consered for the consumer far more people have burned out of LC than have stayed.  And I truly mean burned out not just moved on to greener pastures

----------


## Bill West

*Before chains "eye doctors" would hire other "eye doctors" and opticians and pay them a meager wage so that they could enjoy the benefits of cheap labor and high profit. I know this for a fact as I have been around for over 46 years and have dealt with "eye doctors" all that time. I think Costco starts optical managers out at 52k yearly plus benefits and 401k. How many "eye doctors" do this even today, not many, if any.*



*How the heck does opticianry and optometry allow*, let alone participate in, a
bunch of Costco non-professionals execs creating a loss-leading, margin-dropping
(read: professional service eliminating) cancer that goes against everything we
stand for?

----------


## drk

> Professional service eliminating??? Drop in sometime and then judge. After 13 years in this business and working for several different independants, I will very happily retire with Costco. The service I provide is outstanding and very professional. I am sorry you are so bitter. And I am getting a little tired of all the Costco bashing.....thanks to those of you who did not participate in the name calling and insults.


Nettie, they're not paying your salary out of a 5% markup, you know.  What if they drove down industry standard profit levels to single digits?  What would be the first to go, in any other operation that is optical-only?  Professional service.  It's a dangerous precedent, literally.

Your career is helping people, yes, but the venue in which you work helps destroy your profession, whether you realize it or not.

----------


## Johns

> What if they drove down industry standard profit levels to single digits? What would be the first to go, in any other operation that is optical-only?


Nettie,

You might be good at what you do, but you're nothing but overhead.  You might have a warm and fuzzy feeling about what you do and how much you make, but if you go donw to the statehouses and talk to the lobbyists that are trying to get rid of certification, you'll find they work to mass merchants such as your employer.

Talk to all the Dell employees that are out of work.  They had high paying jobs, foozeball in the breakrooms, free daycare and anything else they wanted.  That is, until Dell found out that people in India would work for less.  Now they're using their Audi station wagons to deliver newspapers.

Drk is right, it's the indpendents that are making it necessary for Costco to give you the wage you're earning.  So long as they no there is somewhere else for you to go to, they'll keep the wage up.  Just like VSP dropping their reimbursements on certain prodcuts - when they can, they will.

I'm glad you like where you work, but we don't have to like it.

----------


## Barry Santini

> ... talk to the lobbyists that are trying to get rid of certification...


Hey, I'm been a proponent for eliminating licensure in NY for years....

Either they expand my scope of practice (refraction), or take away the license.  By doing so, even more boneheads will dispense...

...and I'll be lookin' better than ever!:D 

Barry

----------


## Audiyoda

> Your career is helping people, yes, but the venue in which you work helps destroy your profession, whether you realize it or not.


With all due respects doctor, _our_ profession has already been destroyed.  Doctors that show opticians little or no respect (not accusing you in particular) with low wages, little or no benefits, and no support system (training, cont. ed, upward mobility) have done more to destroy the opticiany profession than anything else.

Costco is little more than LensCrafters, PearleVision or any other chain retailer.  I'd venture that Costco's acquisition price for lenses is on the same plane as any other optical mass retailer.  Costco simply chooses to maintain low margin for the sake of their members.  Are you willing to do that for your members (ie...patients)?

----------


## drk

Johns, of course I agree: medical "image" is blah.  Professional ethics is what I mean.

----------


## drk

> Costco simply chooses to maintain low margin for the sake of their members. Are you willing to do that for your members (ie...patients)?


Heck no!  I'm going to give them professional service, instead.

----------


## Chris Ryser

> *And I am getting a little tired of all the Costco bashing.....thanks to those of you who did not participate in the name calling and insults.*


 
Costco treats their employees very well, pays decent salaries, sells good quality merchandise and is a very competitive market.

You can bash them as much as you want, they  will not make any changes because of it.

*If the suppliers would not sell them for rock bottom price, they could not undersell you.*

Now figure out yourself who is the guilty one and bash them or delete them from your supplier list and replace the products with equivalent from elsewhere.

----------


## Audiyoda

> Heck no! I'm going to give them professional service, instead.


And there's your biggest mistake - assuming they are not doing the same.  What's the difference between their staff and yours?  Board certified OD - a check for you and a check for them.  ABO certified opticians - I hope a check for you and according to those that are on this board that work there, a check for them.  So how do you otherwise define professional?...because they look as professional as you.

----------


## drk

Could Costco optical go "free standing", Audi?

No, they couldn't.  As such, they are not optical-only, and they can survive off of ketchup sales, memberships, etc.  They're like the $0.49 giant slurpees that are offered in the check out lines: member benefits, traffic drivers.  Ask Wally about their $13.99 Acuvues.  Same concept.

That's business, I guess.  

I think I'll raise my exam fee to include the normal profits my optical generates on a pair of glasses, and then advertise that I am offering my frames at wholesale club membership prices.  Membership is $100/yr, or get my exam for $184.  I think the local opticians will be real cool with that.

----------


## drk

> Now figure out yourself who is the guilty one and bash them or delete them from your supplier list and replace the products with equivalent from elsewhere.


...but what about the steak dinners?...
:shiner:

----------


## CME4SPECS

> Could Costco optical go "free standing"?


Of course not. Where are you going to find 300 sq feet for 50 cents a foot?

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## Chris Ryser

> *...but what about the steak dinners?...*


 
drk.........you will have to go vegetarian and eat tofu steaks.......

:D

----------


## Franko

> My suggestion is to select a product assortment that is not in Costco, *if they are your real competition.* If you drive your business on the basis of low selling price you will not pass the test of time. Your product assortment must be different from others, because there will always be some guy out there willing to sell his goods for a ridiculous price.
> 
> A wise fellow taught me something very important a long time ago. 
> 
> *Retail is the art of buying, not the art of selling.* If you buy something correctly you can afford to reduce the price when times get difficult.


Kudos to Larry. I could not have said it any better.

----------


## Nettie

Every ancillary dept. in Costco (bakery, tires, pharmacy, optical, etc.) is run like a separate business.  My sales pay my phone bill, the rent for the space, electric bills, the equipment fees, salaries, benefits, shipping fees, linen services....everything. Our losses (refunds, theft, and destroyed inventory) are also taken out of my sales.  Then when I have a profit of $15,000 (just an example) in a 4 week period it is Opticals profit only, then combined into what the warehouse sales are.  I maintain my profit by budgeting, being careful about the amounts of non-inventory products I am ordering, and the hours I am scheduling.  I do not just go into work and sell glasses and let someone else worry about all my bills. Maybe some other Independents couldn't make it on a $15-20 thousand dollar profit every month but I am sure some could.  

I am done now.  Carry on. :Rolleyes:

----------


## EyeFitWell

sounds to me like some folks can't stand the thought of them being both cheap and good.  I'll have to see it to believe it, personally, but it *could* happen I suppose.
I personally dislike working for places which only cary one or two progressive lens choices.  It makes me feel like saying, "would you like fries with that?"  It removes the possibility of the optician finding the perfect fit for each person.  A trained monkey can sell lenses all day long if there's only one choice.  It takes a professional to decipher which lens is best for who, and why.  This is the only thing I have against Costco, LC, WM, and all the others.

----------


## HarryChiling

The reality is that Costco treats their opticians better than most OD's (I am not saying all, or even you drk).




> Nettie, they're not paying your salary out of a 5% markup, you know. What if they drove down industry standard profit levels to single digits? What would be the first to go, in any other operation that is optical-only? Professional service. It's a dangerous precedent, literally.
> 
> Your career is helping people, yes, but the venue in which you work helps destroy your profession, whether you realize it or not.


If opticians were to leave Costco because it is destroying their profession where do they go?  Most OD's treat opticians worst than Costco and the optician does not enefit in the situation you just mentioned.  Drk, maybe you could talk to the AOA to see if they would promote licensure and push opticians into a more professional status and maybe help to get the opticians out of Costco.

----------


## drk

What about COGS, Audi?
I'm all for that, Harry.

----------


## Fezz

This thread is very interesting. I am in the middle of a situation that may fit into this discussion. I have a family member who has been in the business since he was 18, now 61. This fella has run wholesale optical labs, single and multi-store retail locations, has owned his own retail and wholesale. He is now looking for work. Within the last two weeks, I can not tell you how many "independent" opticals have shown an interest, only to say that he has too much experience. As of yesterday, his _highest_ job offer was.........hold on to your hats folks...........here it comes.........the whopping figure of...............*.$10.00 an hour!* What an outrage and a joke all in one. This is a man who would have never thought about turning to companies such as Costco. But, he may be much better off financially and emotionally if he seeks employment there! Love 'em or hate 'em...Costco is here to stay, at least for the foreseeable future. If private optical was so great, maybe he would be employed by now. Unfortunately its not.


:angry:  :cry:  :angry:  :cry:  :angry:

----------


## EyeFitWell

My hubby delt with a similar situation, but he's worked at LC.  Lab manager for five years, lowest breakages in the region!  
Couldn't find a job for six months, and when he did...11/hr.  That's roughly 60&#37; of his previous salary.
Luckily, his mental health is much better now, so I'd do it all again, but jeez!  Don't these OD's want someone who knows what the heck prism is??

----------


## drk

Which came first, the chicken or the egg?

If I can suck in 30% of the US optical market to my private practice, I'm going to be needing plenty of highly payed opticians.

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## T KNIGHTON

I heard they do glasses below cost because they will get customers to buy other products in their store. they use it as a draw.  I also heard from my A.R coating company last week that costco won the JD Power and  Associated award for eyeglass excellence.  I also lost one of my doctors (who was and is still a close friend.) to costco, who is paying him 3.5 times what I could.  So what the #$#@% is an understatement.

----------


## Chris Ryser

> *I also lost one of my doctors (who was and is still a close friend.) to costco, who is paying him 3.5 times what I could. So what the #$#@% is an understatement*.


In my area in Canada, Costco is paying over $ 40,000 p.year (40 H work week) salaries to employees working at the food counter serving hot dogs and pizza slices.

Obviously they want good employees and pay them well. The company makes profits and is well organized You can go and bash them as much as you want it will do no good.

Instead one should take them a a commercial teaching lesson and adopt similar systems
.
*Purchase from sources that will give you the price brake on lenses and frames, find labs that will do the same.*
*As independents you can still continue the high end stuff so you will definitely have an edge over costco.*

----------


## Barry Santini

> sounds to me like some folks can't stand the thought of them being both cheap and good.


You're right.  My practice exists because I'm *not* cheap....

just *excellent*!:D 

Barry

----------


## Johns

> In my area in Canada, Costco is paying over $ 40,000 p.year (40 H work week) salaries to employees working at the food counter serving hot dogs and pizza slices.


 

If taht is really the case, what I said to Cocisland has no validity whatsover.  I thought they were paying a high wage to opticians because they had to.  

$40k to concession workers?  You've got me stumpe!? :Confused:

----------


## SarahMP584

In my particular area of California, Costco pays better than ANYONE, and they dont just hire ANYONE either. 
The only way they will hire from the outside is if you have both licenses and enough experience.
I have been in the biz for 5 years now, and as much as i HATE retail and HATE working every weekend, They are paying me TWICE as much as the doctors office I worked at. TWICE AS MUCH!

I am sorry, but I have a california mortgage to pay!

----------


## jameselex

> We just got a Costco in the neighborhood. Check out these prices :drop: 
> 
> Ovation CR39: $89.99/ pair
> Ovation poly: $99.99/pair
> AR coating: $29.99
> 
> 
> What the #$%% is going on here!? That's below my acquisition cost!


your lab must be happy having you as customer paying more than these prices, I would at least, even better than these! prices in our area  are far better than what you are paying.

----------


## drk

Just a note:
It's slight hyperbole, but not much.

----------


## Chris Ryser

> *They are paying me TWICE as much as the doctors office I worked at. TWICE AS MUCH!*
> 
> *I am sorry, but I have a california mortgage to pay!*


 
*I believe we now have arrived at a turning point of this thread. I am now listing the findings of the resulting post's:*

1) Costco get the best reviews by Consumer Report

2) Costco hires only opticians that are certified and have experience

3) Costco pays their employees twice the rate the independents do.

4) Costco sell Essilor PAL's at prices, Optiboard members say, are below their purchasing cost.

5) Costco most propbably purchases all other items at much lesser cost or rock bottom.

6) Their optical labs have top notch equipment, and we can assume that their lab employees must be treated in a similar way the front store opticians are.

7) They are making money. We can assume with good conscience that the optical department is NOT a lost leader selling at or below cost.


Here is my apropriate posted "Wisdom To Start The Day" that fits very well into this theme and should make everybody think:

*The great virtue of free enterprise is that it forces existing businesses to meet the test of the market continuously, to produce products that meet consumer demands at lowest cost, or else be driven from the market.* 

*It is a profit-and-loss system. Naturally, existing businesses generally prefer to keep out competitors in other ways. That is why the business community, despite its rhetoric, has so often been a major enemy of truly free enterprise. 
*_Milton Friedman_

Opticians and business owners like ODs and MDs should look more into changing their business behaviour has a missing point somewhere.

In Germany 45 years ago an optician opened a second store somewhere on the second floor of an office building. Second floor stores were considered discounters and were blocked from purchasing brand name lenses and frames by strong associations. This optician suddenly got blocked by his regular suppliers.

*He fought them in his own way and used to offer lenses to his patients in the following manner: " Would you like to have a Zeiss lens or something better ? And then sold the other lenses.*

As he happened to be the president of the German Maste Opticians he also talked about at the optical congress. Zeiss and the others gave in and supplied him again.


It would be interesting to see some further comments and helpful hints instead of bashing the smart guy.   :finger: 
* 
*

----------


## m0002a

> 4) Costco sell Essilor PAL's at prices, Optiboard members say, are below their purchasing cost.
> 
> 5) Costco most propbably purchases all other items at much lesser cost or rock bottom.


Companies like Costco and Walmart are revolutionizing the entire retail industry because they are eliminating complete chunks of the product distribution network. They own their own labs. Their labs purchase in bulk directly from the manufacturer to get quantity discounts, bypassing even the manufacturer's sales and marketing departments and the associated overhead.

But purchasing in bulk requires them to limit product selection, for both lenses and frames. This leaves some opportunity for independent retailers to offer product niches that Costco does not offer.

----------


## drk

The problem for my type of business, is, dare I say it, that as manufacturer's products become better and better, "choice" is less and less of an important variable, so it's getting tougher to compete.

I understand that more efficient cost structures can be achieved in any "immature" industry, and that is the "beauty" of free economics. Hooray.

I will concede that if indeed Costco (other than overhead) could independently operate their opticals at a worthwhile profit as opposed to "loss-leading" or "membership clubbing*" I would have less of an axe to grind. We still don't have the COGS figure from the Costco manager. I would say if that's "off budget", she's going to do pretty well.

Overall, while I would prefer to judge everyone associated with the eye care industry by professional standards, I realize that the further away from the "end user" any layer of the industry is, the less likely they are going to recognize professionalism. That's why we have to flex our professional muscles to stop too much abuse, but the little guy's ethics and $2.50 will buy you a cup of Starbucks. The regulating authorites are tepid regarding heathcare consumer protection, at least for now.

Having said that, I do still draw a line in the sand when our services are being "pimped out" to generate foot traffic. Our acceptance of mass-merchandizers' pimping our services to make a buck is a line we all have unfortunately had to cross a while ago. This is a new line, though, however feeble resistance may prove: if your optical is "loss-leading" and you are selling at artifically-low prices, I think you are predatory and I think you may just have a problem with the FTC. 

Does that scare you, Costco, et al? Good. Class action, baby. A lot of damaged opticians want new gas grills...


*To be fair: are not prepaid vision plans a type of "membership club"? Hmm...

----------


## LKahn

drk

My experience with firms such as Costco is that *they do not sell below cost.* Most do not understand there huge buying power. They buy properly and sell aggressively. The format of a warehouse store is based on a very limited selection of products with a high volume of sales. In the early days of that industry they would work on cost plus 12% to 15%. They made money at that due to huge volume. 

The warehouse store business has matured and they now have a spread of markups. The average warehouse store does more than 100 million dollars per location. Costco is known for have higher than average volume stores with some locations exceeding 250 million dollars in sales per location. The optical departments are not broken out. Vision Monday does include them in the top 10 largest retail optical.

----------


## tmorse

> *I believe we now have arrived at a turning point of this thread. I am now listing the findings of the resulting post's:*
> 
> ...
> 
> 2) Costco hires only opticians that are certified and have experience
> 
> 3) Costco pays their employees twice the rate the independents do.
> 
> ...


Here in British Columbia, Canada COSTCO is amoung the highest payer, but not to start. Most newly certified opticians start at $16-18.00/hr CAD (Canadian dollars) and eventually rise to maaximum $26.00ish/hr CAD after about 2-3 years of scheduled raises. They have an union-type of progression for hourly wages, and accept only the best candidates for employment. 

They do have their presence in our optical industry and customers like them. 

But they also have limited frame/lens selection and their opticians do work in a warehouse environment, so traditional opticals should be able to compete.;)

----------


## Chris Ryser

> *But they also have limited frame/lens selection and their opticians do work in a warehouse environment, so traditional optical should be able to compete*.


During the times opticians had to actually buy their frames, pay for it and eat them when they would not sell...........instead of getting consignment merchandise they can send back any time they want to. They could very probably buy the same frames for half the price or less and compete even better.

----------


## Barry Santini

> But they also have limited frame/lens selection and their opticians do work in a warehouse environment, so traditional opticals should be able to compete.;)


People don't need or want limitless selection...
what they really want/need is comprehensive guidance

Barry

----------


## Chris Ryser

> *People don't need or want limitless selection...*
> *what they really want/need is comprehensive guidance*


This now means we have completed the circle and established even the last fact that Costco has a limited selection which seems to be another positive point..

*They have now all the qualifications established for a successful optical business.*

----------


## sharon m./ aboc

I am a certified optician and contact lens fitter at Costco and they even paid for my ABOC and NCLE exams and re-certification fees. They pay for every employees exam 2 times...after that (if you don't pass) you have to pay yourself. 
 Everything in the above posts is true except Costco has a very good frame selection. I worked at Sam's previously and they have a very limited frame selection but more lens options and are alot more expensive. Even Walmart is more expensive when it comes to contact lenses or spectacle lenses.
If you've ever read anything about Jim Sinegal the C.E.O. of Costco.  He doesn't make an exorbinate amount of money like the C.E.O.'s of Wal Mart.  I've met him and he is a very down to earth man. 
One more thing...I only work part-time and my health insurance at Costco is so much less expensive(3 X less for a family) than my husband's (retired phone company) that we dropped his and picked up mine.  Costco is indeed good to their employees.  
DRK,  I am not afraid of a class action suit.

----------


## Chris Ryser

drk...............Maybe you want to make a comment on the outcome of the thread you started?

----------


## Fezz

> drk...............Maybe you want to make a comment on the outcome of the thread you started?


 
HA, HA, Ha....yeah,....what a trouble maker!:) 

This has to be one of the quickest-longest threads ever!

I'll buy the first round for dear ole drk!


:cheers:  :cheers:  :cheers:

----------


## Nettie

I'll buy him the second round.:bbg:

----------


## drk

Thanks. Maybe I need one or two.

Seriously, though, Nettie, do you have to figure in COGS for your store or not? That's critical to this discussion!!!

Chris, the outcome of the thread is this: either they have set a new world's record on making low profit margins work, or they are "nursing at the breast" of the wholesale club host.

I would like to know the answer, although the evidence is gathering for the former.

----------


## Chris Ryser

> *Chris, the outcome of the thread is this: either they have set a new world's record on making low profit margins work, or they are "nursing at the breast" of the wholesale club host.*
> 
> *I would like to know the answer, although the evidence is gathering for the former.*


I would believe that they have NO new world record....................I would rather believe that they concentrate on good and smart purchasing and without getting any consignment merchandise.

From the recent posts I would say that they purchase quantities of lenses which in general are big time overpriced since they are being made in the far east and cost the manufacturers a fraction of the cost when still produced on this continent. They can bring the price down to brass tags and Costco can still make a fair profit on them.

The same could probably apply for frames which they purchase instead of getting them on consignment with warranties and so forth.

----------


## sharon m./ aboc

And, did I mention they pay time and a 1/2 on Sundays and anything over 8 hrs. in one day? It's true........................... I'll stop now!!


Chris Ryser:
"Nursing at the breast of the wholesale club host."   I love that line and I think I'm going to use it.

----------


## Chris Ryser

> *And, did I mention they pay time and a 1/2 on Sundays and anything over 8 hrs. in one day? It's true........................... I'll stop now!!*


I wish you would not stop and give some more.
In Canada it's the law to pay time and a half for anything over the 40 hour work week. And it is double time if you have to work on your day off and official holidays.

*This thread has evolved from being a Costco bashing idea into a serious reminder of what wrong in the optical trade.*

Here we are getting postings from Costco opticians that declare they are making better salaries than the optical retailers in the regular retail stores that work at much higher selling prices. These Costco opticians all have optical certification and experience.

*I believe the basic wrongs in general in the retail are*:

1) OD's and MDs are using many untrained employees and train them themselves according to their own taste.

2) chains will do the same in all the open states.

3) salaries are kept to low for qualified employees,

*At the suppliers end:*

1) Heavy discrimination in pricing between larger and smaller accounts. In the old days it was an extra 5 - 10 - 15% and today it has to be anywhere between 50 and 80%.

*The major suppliers can afford to grant these figures because their manufactruing cost in the far east have tumbled to the bottom, but they never adjusted their pricing towards the retailer downwards.*

*This will allow Costco to make good profits while having  a higher labor cost  than the regular optical retailer.  :finger:*

----------


## Fezz

> *I believe the basic wrongs in general in the retail are*:
> 
> 1) OD's and MDs are using many untrained employees and train them themselves according to their own taste.
> 
> 2) chains will do the same in all the open states.
> 
> 3) salaries are kept to low for qualified employees,
> 
> *At the suppliers end:*
> ...



Very good points Chris.  



In Costco's defense= What they are doing is nothing new. They are a reflection of what is happening in business *TODAY*. We can pick on them because it hits home, but they are no different than many other types of businesses. As a business, you either adapt, differentiate, or die.

So..What are _YOU_ going to do?

----------


## Chris Ryser

> *So..What are YOU going to do?*


As a business we are all in the same boat but some of us are on the flying bridge and some are in the engine room or the galley and some even on the head (if you know the nautical term).

I have lately been following the business news more than I did over the last many years.

The forecasts are not funny while the media is telling us how good everything is. Today's news has been that Americans have no money in their savings account because they have NOT been saving but blowing away their earnings on big houses, SUV's and expensive glasses.

*Savings:*

As I am a supplier to the optical retail and lab trade, considering that people will stall and delay the purchase of glasses as long as they can, I will sell less of my products. At such a point I will have to start adapting by making purchases only when needed, do certain jobs ourselves instead of farming them out.

If an employee quits I will not replace him and burden the rest with a bit more work. 

*Widen the field of customers*

In my own field I can also sidestep the optical trade and look for an enlarged customer circle in other industries, as the electronic industry for example which does a lot of vacuum coatings and so forth. There are many possibilities to bridge over more difficult times when you can diversify.

*Savings in Retail Optical*

Do some of the above. Purchase frames right out, instead of using consignment systems which will allow for some heavy discounts. Push less expensive PAL's and let the patients know about it.

If you are not already doing it start tinting your own lenses, do your own add ons as UV, scratch resistant treatments and so forth. This allows you purchase untreated lenses at rock bottom price which you can sell at a lower price and still make a good profit margin with the add ons.

However it will take some learning and sales psychology if you cant rely on the mass advertising done today , as the large manufacturing corporations would like you to buy their finished products and them make the profits on it.

If the optical retail is not starting to adapt, ahead of whats coming our way..................the cheap readers available at the drugstores and other places will soon capture the market big time.

----------


## drk

Chris, you're in rare form.  

Serious points to consider.



Where's that COGS line item!?

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## Bill West

I doubt Costco sends a cost of goods report to their employees. You have a lot of brass asking her for it and putting her in danger of losing her good job at Costco. How's about you giving everyone your cog's sounds like you may be paying too much. I think you need to put your time and effort on YOUR OWN BUSINESS and while at it, mind yours.:finger: 







> Chris, you're in rare form. 
> 
> Serious points to consider.
> 
> 
> 
> Where's that COGS line item!?

----------


## drk

Shut up, Bill.

It goes to a point she makes: her optical is a profit center.  I'm not being nosy, and I don't want the numbers, just the concept.

Cool out.

----------


## m0002a

> Having said that, I do still draw a line in the sand when our services are being "pimped out" to generate foot traffic. Our acceptance of mass-merchandizers' pimping our services to make a buck is a line we all have unfortunately had to cross a while ago. This is a new line, though, however feeble resistance may prove: if your optical is "loss-leading" and you are selling at artifically-low prices, I think you are predatory and I think you may just have a problem with the FTC. 
> 
> Does that scare you, Costco, et al? Good. Class action, baby. A lot of damaged opticians want new gas grills...
> 
> 
> *To be fair: are not prepaid vision plans a type of "membership club"? Hmm...


I don't know for sure whether Costco sells optical goods below cost as a loss leader to generate foot traffic. But you have to pay for a membership to get in the store, so it would seem that the members already have an incentive to purchase other items there.

Walmart/Sams have introduced prices for the vast majority of generic prescription drugs that are $4.00 per month. Most other big retailers like Target and Costco are matching the price. Somewhere in another forum there are independent druggists who are complaining about the big retailers selling prescription drugs as a loss leader. Same for tire companies, etc. The big retailers have to be making money on something. The fact is they buy in bulk to get cheaper prices, and their economy of scale creates efficiencies in terms of overhead cost.

----------


## CME4SPECS

> I don't know for sure whether Costco sells optical goods below cost as a loss leader to generate foot traffic. But you have to pay for a membership to get in the store, so it would seem that the members already have an incentive to purchase other items there.
> 
> Walmart/Sams have introduced prices for the vast majority of generic prescription drugs that are $4.00 per month. Most other big retailers like Target and Costco are matching the price. Somewhere in another forum there are independent druggists who are complaining about the big retailers selling prescription drugs as a loss leader. Same for tire companies, etc. The big retailers have to be making money on something. The fact is they buy in bulk to get cheaper prices, and their economy of scale creates efficiencies in terms of overhead cost.


I just got some tires from a local dealer and they were $6 a tire less than Costco.

----------


## m0002a

> I just got some tires from a local dealer and they were $6 a tire less than Costco.


Did you include mounting and balancing costs? Are you sure it was the exact same tire and load rating? Did the dealer have their tires on sale?

----------


## CME4SPECS

> Did you include mounting and balancing costs? Are you sure it was the exact same tire and load rating? Did the dealer have their tires on sale?


Of course they were the exact same tire. I did not ask the dealer if they were on sale. I just asked him how much they were out the door.

----------


## Chris Ryser

> *I don't know for sure whether Costco sells optical goods below cost as a loss leader to generate foot traffic.*


Work yourself back on the post's and you will find out that we probably have established why and what on the subject. Costco pays the best salaries and does make money and their optical is no lost leader.

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## LKahn

Costco operates an optical department to make money just like any other department. They buy aggressively and sell aggressively. They limit the assortment and control the inventory. 

They do this for a living. Its not a surprise. Its just a well run company that strongly believes in taking good care of its staff members. It is frequently describes as one of the best companies to work for in the US.

----------


## m0002a

> Work yourself back on the post's and you will find out that we probably have established why and what on the subject. Costco pays the best salaries and does make money and their optical is no lost leader.


That was the same conclusion that I came to in my post. Did you read it?

----------


## William Walker

Hello all,

     I haven't been on the Optiboard in a little while (sorry).  I'm going to read through the entire thread later this afternoon, but just wanted to make a post before heading off to church (I did get to read the first few pages though).

     DRK, don't worry about a thing.  Just as in the examples of when there is a Walmart, or a Lenscrafters, or a company on the internet selling eyewear, each company is going to have it's pros and cons.  When I have someone who is used to going to a private optical come to me at Costco for the first time; they at times ask why we are so inexpensive.  I tell them that Costco builds it's success on efficiencies.  We stick to what we do, and we do it well.  However, there are a lot of things (products and services) that we don't do.  The examples came up of outside companies drill mounts, high wrap frames, frames that are designed as plano sunglasses, etc...  We don't tint old lenses...  I will never at a Costco sell an 18k gold frame (like I used to at a private OD's office)...  I will not be able to offer one day service...  
     The best advice I ever learned in relation to optical business was given at a CE class at Expo East one year.  The funny thing is that me being new to management, I had not heard it to that point.  The advice was, "You cannot be everything to everyone.  Pick what your niche should be, and stick to it at all costs.  You cannot compete with (insert big name store here) on scale, so don't try."  In our private optical setting, that meant going away from the name brands you'd find in the mall opticals 5 miles away, and going with the hipper, trendier frames.  It meant offering a handfull of progressives, and before selling one, showing the patient which ones had a wider distance area, wider intermediate area, or wider near area.  We'd explain that there is no one perfect lens, and that we'd consult with them to figure out what was best for their needs.  No other optical (major or independant) at that time was doing that in our area, and we thrived.  In the first 5 years after inception, we became a $1 million store, which is almost unheard of for startups.  
     Costco has been a great company to work for.  I go into a company that has all of it's processes figured out.  I go in, sell glasses for 8 hours, and I go home.  I don't have to work 60 hours in a week to catch up; I know that every 1040 hours, I'll receive a raise of around $1.20 or so.  I worked at the private optical getting a raise on average of once every 1.5 years.  Each time it was a dollar or so.  At Costco, I started in Aug 2005, and since then have gone up $3.00 in wage per hour, and will get another raise in a few months, for another $1.30.  I have 401k options where my OD refused them.  In the 6 years our Costco has been open, the optical has not lost a single employee, and we have grown to 5 licensed opticians.  Here, for our optical employees, we are only allowed to hire Florida Licensed Opticians.  If an applicant is ABO certified only, they will not be hired.
     I have to run, to head off to church, but I'll be back on later today.  Feel free to reply, or private message me with any questions you might have.

Thanks,
William

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## Chris Ryser

> *I have to run, to head off to church, but I'll be back on later today. Feel free to reply, or private message me with any questions you might have.*
> 
> Thanks,
> William


Hey William................its now 24 hours since you went off to church. We are all anxious and waiting for your continuation.    :hammer:

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## William Walker

I'm very religious? 

:p 

I'll be back on later tonight with more time.

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## Chris Ryser

William.........did you forget your friends ?????????

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## William Walker

> Hey, I'm been a proponent for eliminating licensure in NY for years....
> 
> Barry


Sorry Barry, I couldn't help but get a chuckle out of that.

----------


## William Walker

"The study finds 21 percent of customers who went to an independent eye doctor for their eye exam later bought
glasses or contact lenses at a retail store, almost uniformly because of cost."
http://www.jdpower.com/pdf/2005169.pdf 
I think too often we get a little too bent out of shape over price, both in our aquisition costs, and what we feel we can retail goods at. The above quote from the JDPower results I think is where most opticals (who aren't the least expensive) place their metric. I believe that this statement is incomplete. When browsing online (just google [or any other search engine] Costco Optical), I find that when patients praise Costco Optical, they are doing it for a few reasons. One is that their eyewear is satisfactory to them, i.e. - they can see well, they don't look too shabby in them as well. The second, and more important in my opinion, is that not only is our price lower than our competitors, it is CONSIDERABLY lower than our competitors.  
"I bought mine at Costco Optical. Cheaper than Walmart. 
At Walmart I paid over $300.00 for 2 pairs and the frames for 1 pair were free.
I got a cheap back up pair and a polarized nicer pair. 
3 years later- last year...
At Costco Optical, I bought Cynthia Rowley designer I guess, but I liked the style and not the name.
They are plastic frames but the ears are metal and have flexibility.
I also got the scratch protection and glare reducer and polarized too.
For the back up pair I bought some plastic cheap clear glasses.
I had a coupon for 60.00 off too.
My total came to 159.00 for 2 pairs. 
Costco is preety reasonable IMO!"
http://www.frugalvillage.com/forums/...ad.php?t=79231 

The main point to get across when figuring out why this patient bought glasses from Costco is not because they were $159.00; it is because we were almost 50% lower than Walmart. If independants focus on value, not simply end price being the metric to evaluate (and hopefully continue to reevaluate) themselves on, you cannot help but thrive. 
Being a very young optician, I get offended pretty quickly over being stereotyped, simply because it happens quite often to me, and I have to admit that I started to get a little peeved when assumptions were made as to the quality of an employee based on the end price a member paid for their glasses or contacts. I appreciate others coming in and sticking up for the idea of judging someone on their own merits. One fact that should have put an end to it (at least in my licensed state) is that Costco here will only hire already licensed opticians. That being the case, where do you think they started out at? By definition, some optical other than Costco, and by sheer percentages, a decent amount came from the private OD/MD sector. That being the case, would those opticians have more knowledge/ability/experience at Costco, or their former employers office? 
(Sorry, I hope I don't sound bitter) 
I really don't know what more to say. I'm much better at answering direct questions than just adding to the fire (whether it be fuel or suppresant). I 100% welcome any questions about either Costco Optical (keep them appropriate :finger: ) or the differences between them and the previous 5 years in managing a private OD's office. 
One thing I didn't want to leave alone was the comment about Costco's wages. Costco will establish a wage for an entry level employee, for example a cashier, or food court employee. Part of our contract with Costco is that, in exchange for doing the best darn job we can (at whatever we do), we get the best darn wage we can. My pay schedule shows me getting a guaranteed raise every 6 months until I have reached an established maximum, wherein I will receive a periodic raise to keep up with inflation, and then, once I hit my 5 year mark, receive a $2000.00 bonus every 6 months. This same formula works for every hourly employee at Costco. 
What makes me most proud of working for Costco is the exemplification of a idea I heard from Marcus Buckingham.  
"...there is nobility, prestige, and respect due for _any_ role done with excellence.'You dont pay a hotel housekeeper as much as you pay a CEO. But what if a housekeeper is so good that guests demand to stay in her section? If she is good enough to dramatically affect the customer experience, then she is the Michael Jordan of housekeepers. Thats brilliant and tremendously valuable. '"
http://www.managementconsultingnews...._interview.php

Okay, time for me to go to bed.

Thanks for listening (or reading, I guess)!

----------


## Judy Canty

Excellent response.  The next time I'm in FL, I'm looking you up.  Please PM me with your location.

Judy

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## Chris Ryser

> * Part of our contract with Costco is that, in exchange for doing the best darn job we can (at whatever we do), we get the best darn wage we can. .............................once I hit my 5 year mark, receive a $2000.00 bonus every 6 months.* 
> 
> *......................................there is nobility, prestige, and respect due for any role done with excellence.*


drk.............................we just came to a conclusion, and I think that was one hell of a thread that started out as a bashing thread *and then slowly narrowed down to the fact, that the to be bashed company turned out to be better in every aspect we touched,*

So now hoe are you going to run and change your office to beat this competitor or at least make your own business equivalent in quality, price and knowledgeable employees dealing with the customers, specially not forgetting the tougher economic times that have been announced.

People will or can not spend what they used to and will look for lower priced items. We might have to revert back to better service do a little more work in The back office instead of farming everything out.

Time for reflection.

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## drk

You're calling it quits, then, Chris? :cry:  Well, as usual I'd like the final word. 

You know, my point isn't what I'm going to do. I'm doing just fine. I will continue to press to keep the best products at the best prices (value). I do know some pretty fat ODs whose patients are overpaying. Costco is a good reason to concentrate on value. God Bless America.

My question is what Costco will do to the industry, in general, not my office in particular. Are they "predatory" like Walmart has been accused of? I guess Wally has paved the way and suffered the slings and arrows enough that the point is moot. Nothing we're going to do about it.

In a way, I am glad that the private sector can come up with cost-effective optical goods and services, vs. a government system. A citizen is free to be cheap as they like. And if Costco's general employee compensation structure is acceptable to employed opticians, and if Costco is concerned about licensure, I think it's great.

But I think it's a little scary. The next "Costco" may not be so magnanimous. 

In general, I don't like the "employee of the big machine" model for health care, and I don't like non-health care professionals running health care operations based on profit motive. The alternative of nationalized health care is just as scary. What's the "right way"?

I think it's simply this: let's promote the traditional model of health care being administered by health care professionals. Let's not have the health care system owned by the government, nor the for-profit corporate community. Let the professionals own the health care system!

Maybe this isn't as germane in opticianry as I would like it to be :(

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## k12311997

William  

first a restatement from above posts if my understanding is correct.

  Costco optical in no way relys on the sales or percentage markup from the rest of the store to stay open.

is that a factual statement?

The reason I ask is typicaly when someone asks why walmart, costco, etc is less expensive I brush against buying power but the main point of my argument is that there are different percentages at those type of stores on different merchandise and since we don't sell electronics and jewelery two Items that traditionaly have high mark up we can't lower our prices in optical in hopes that when you come in to our office you'll stay and buy something else.

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## allanon

> Ask your manufacturers rep for a price list as for example in the Congo and you might see even Costco looking in awe.


$45 Retail for a Panamic in Rio.  Been there, seen that :)  Coach frames are $600 though..

----------


## allanon

> People will or can not spend what they used to and will look for lower priced items. We might have to revert back to better service do a little more work in The back office instead of farming everything out.
> 
> Time for reflection.


 
My patients have more discretionary income now than any previous years. 94-97&#37; of people live pay check to pay check. That doesn't mean they're broke or poor. It means they are going to spend it. At nearly $800 for a Hoya ID, my patients are happy to spend it. I don't work in a rich neighborhood, but in the suburbs. I have 3 costcos within 10 miles of me. I have many folks that go there come straight back with service and product complaints.

** Edited for Troll-like overtones that'd I would rather be undertones **  Of note, in the time it took me to reread and edit, I sent a parent back to Sam's to get her kids lenses redone (+3.50 vs +2.75).

Nettie... One bad apple shouldn't spoil the rest.  My apologies.

----------


## Nettie

> My patients have more discretionary income now than any previous years. 94-97% of people live pay check to pay check. That doesn't mean they're broke or poor. It means they are going to spend it. At nearly $800 for a Hoya ID, my patients are happy to spend it. I don't work in a rich neighborhood, but in the suburbs. I have 3 costcos within 10 miles of me. Folks that go there come straight back because the service sucks, the product sucks, and I give them the time of day.


Bitter???

I think you are wrong to judge all Costco's on what one of your returning patients may have said. My service does NOT suck, nor the products I sell. The people that come in to us DO have money to spend, they would just rather get more for their money. Two of our local newscasters are on the news every night at 10 pm wearing glasses I sold them, and I am sure they could have afforded your $800 lenses.  I am sure you are able to offer many things I do not sell so why don't you focus on that rather than being so hateful??? I refer every patient out to another business that wants something I do not carry, rather than making them think that it would make no difference to go from an executive (I do not carry executives)to a progressive (for example).   I also do not bad mouth my competitors because they are trying to make a living just like I am.

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## drk

Nettie!  Nettie!

Is "Cost of Goods Sold" on those contribution reports that you mentioned way above?

I NEED YOU TO TELL ME!

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## Chris Ryser

> *94-97% of people live pay check to pay check. That doesn't mean they're broke or poor. It means they are going to spend it.*


That is exactly why these well to do ones are actually broke and that is the sad financial news in the USA.

85% off all newer cars on the road are leased, the houses are mortgaged up to the neck.

There are close to 20 trillion dollars in credit card debts.

People used to save for a rainy day, build themselves a nest egg on which they could rely on, when a family member lost a job. These days thousands of people give back the key to their overly expensive homes they thought they could afford. If they would have had some savings they could have saved that trip to the bank.

All these people will eventually need glasses and will have to take care of their teeth. Both the optical and dental care businesses go hand in hand when finances get tough. When new lenses are needed people will get only new lenses and most probably of the cheaper variety and will stall going to the dentist until the pain will force them to make the trip and they will spend a little as possible.

When that moment arrives the Costco's will hire the optometrist's and opticians that created themselves the reputation of being expensive and the people will make a wide circle around their stores until they have to close them.

Over the last close to 5 years I have been active on the Optiboard I have watched a great amounts of post's glorifying sales the most expensive lenses and frames and very little of how to repair a frame or saving some lenses that are slightly scratched, which by removing the hard coat would be like new.

The optical retail industry has blindly followed the advertising hype of the few large corporations because they supplied them the customers that were asking for certain brand products and have helped fill the coffers of those corporations who soon will become the dictators of the industry.

The optical retail is facing several  problems in the near future. The economy and the large corporations on the other side.

:finger:

----------


## allanon

1.  See apology and edit above.

2.  I really don't stress over Costco, Wally World, BJ's, Sams, etc.  I consider them to be in a niche that is different than mine.  They all largely cater to folks that perceive value being low price.  I cater to folks that place value on current, trendy product with trendy lines and service at a level that we hope rivals the Ritz.

Am I bitter?  Sure, in the sense that I want to have a monopoly and charge $2mil for your glasses.  In reality, I have better things to do with my time than fret over the neighbor.  In fact, I just raised my prices.

Thanks for playing.

----------


## Judy Canty

One question that comes to mind is "Can you afford to shop in your shop?"  Can your parents, friends, neighbors?  I couldn't pay $800 for a pair of PALs no matter how wonderful the manufacturer says they are.

----------


## Nettie

drk,
I do factor in my cost of goods sold, just like any other business.  What is left over at the end of the month is profit.  Any parts, frames, lenses, doctors equipment....all of it is factored into my budget.  I hope this answers your question.

----------


## drk

THANK YOU, NETTIE.

So, Nettie is saying that her Costco is independently profitable (and we can infer to the tune of some 200K/yr).  That's really good.

So, this is an example of what?

Obviously, the profit is respectable.  
The pay is very good.
But the prices are too low and the margin is too low.


So, they must be:
1.) Sharing overhead quite effectively
2.) Buying at exceptionally low prices

It comes back to buying low, selling low, and high volume.  

IMO, if a company is profitable on it's own, it's legit and unassailable.

Thank you for the education.

----------


## RCB1602

> Be careful here. I believe that most, if not all, Costco opticians must have a ABO certificate. And actually, some of there opticians have a huge amount of experience and knowledge. Check Optiboard for a member: William Walker. He may be a diamond in the rough, but the likes of him are growing!


Thank you Fezz and as a now certified optician who works @ Costco I must add that most of us have worked in previous dr office or even labs and/or have been mentored by such people.

----------


## William Walker

> Thank you Fezz and as a now certified optician who works @ Costco I must add that most of us have worked in previous dr office or even labs and/or have been mentored by such people.


Congrats RCB.  I don't work for Costco anymore, but feel free to shoot me a line anytime you have any questions.  I was with Costco for six years (four of them running a Costco Optical), and I would be happy to help.

----------


## Chris Ryser

> *I don't appreciate it, quite frankly.
> 
> As to Costco, holy smokes, what are they trying to do?  I mean, I understand underselling the market, but this is an obscene precedent.
> 
> If this catches on, we are going to be Mc'Ticians for sure.  How can you cut that many costs?
> 
> **We'll see if they survive this concept.  I hope they burn.    * * 
> *



drk..............................................you still believe in Santa ?  Check below statistics and decide if they are going to burn, or if you can try to change their way. We should start to think why they have gone this far.........................maybe they do something right.


*Costco Wholesale Industries, a division of the Company, operates manufacturing businesses, including special food packaging, optical laboratories, meat processing and jewelry distribution. These businesses have a common goal of providing members with high quality products at substantially lower prices.*


*Key Information* 
Number of warehouses:
598 (as of 12/10/11) 




Areas of operation:
433 locations in 40 U.S. States & Puerto Rico;
82 locations in nine Canadian provinces;
22 locations in the United Kingdom;
8 locations in Taiwan;
7 locations in Korea;
11 locations in Japan;
3 location in Australia;
32 locations in 18 Mexican states




Membership Data (as of 8/28/11):
64.0 million cardholders
35.2 million households
25.0 million Gold Star
6.3 million Business
3.8 million Business add ons




Warehouse sizes:
73,000 to 205,000 square feet
(average 145,000 square feet)




Annual revenues
(FY10 - Ended 8/28/11):
$88.9 billion




Fiscal year end:
Sunday closest to August 31




Number of U.S. employees:
107,200 full and part-time




Number of employees (worldwide):
161,000 full and part-time



http://phx.corporate-ir.net/phoenix....ol-homeprofile

http://www.costcoconnection.ca/conne...304?pg=97#pg97

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## Judy Canty

Are we that bored? Starved for news? Sick of primaries and debates? Why are we resurrecting a 5 year old thread??? Who ever you work for, who ever signs your check, who ever owns your business...YOU HAVE A JOB. Many others are not so fortunate.

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## Chris Ryser

Resurection of an old thread is like looking at History...........only here we can see how people thought then and how the subject developped. This one for sure developped fast.

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## AustinEyewear

> One question that comes to mind is "Can you afford to shop in your shop?"  Can your parents, friends, neighbors?  I couldn't pay $800 for a pair of PALs no matter how wonderful the manufacturer says they are.


Really?  Sorry, not picking on you but  we hear this from time to time.  Its a self defeating way to think about it. I see so many people shelling out 5-10/day for lunch its crazy.  That averages to about $1500 per year.  For what? Crap food that is not good for their body?  I'll gladly bring my lunch to work, eat healthier and cheaper and and save the money to purchase a nice pair of lenses and frames which I can actually see out of and they look great one me too. Some things in life are worth the price of admission, even if you have to give up a few dining out experiences.

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## Judy Canty

I believe my point, 5 years ago, was that there are more options out there in the lens world than the big boys would have you believe.  In a struggling economy, that is a factor that make a difference in every practice.  While you may be willing to sacrifice dining out, others may not. High price is not necessarily an indicator of quality.

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## AustinEyewear

> High price is not necessarily an indicator of quality.


Price is almost always a reflection of input costs.  Yes, you can have a high quality pair of frames, but that doesn't mean it uses good materials, is unique or any special handling was done.  You could put an iron frame on your face, it would never be destroyed and consider that high quality.  I wouldn't, but some might. I appreciate the engineering, the design work, selection of materials and craftsmenship that goes into a frame and a lense, and usually, the higher the cost, the more input costs it will have.  You almost always get what you pay for unless you are dealing with unsrupulous people.

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## Chris Ryser

> *I appreciate the engineering, the design work, selection of materials and craftsmenship that goes into a frame and a lense, and usually, the higher the cost, the more input costs it will have.  You almost always get what you pay for unless you are dealing with unsrupulous people.
> 
> *



Having been a frame distributor for 2 major European companies for 20 years immporting and successfully selling top quality brand name frames which gave me some expirience form back in the 1960s and 1970s. The frames we sold where top quality and sold at a higher price than many others to retailers.

Today similar top quality frames are on the market and they are selling at prices similar to the ones we did 25-30 years ago, and that does not make sense when high class car could be bought at $ 15,000 then and would be $ 40,000 these days. 

New technology machines allow the manufacturers to makes products faster and better or as good as the. However when looking at the websites from the far east these frames sell at fraction of what an importer/distributor paid in those days.
The distributor does sell to the retail at heavily inflated prices.....mostly due to the return and warranty factors. If the retailer would not insist on those goodies which are very costly to distributor the retailer could probably purchase those goods at way lower prices.

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## AustinEyewear

> Having been a frame distributor for 2 major European companies for 20 years immporting and successfully selling top quality brand name frames which gave me some expirience form back in the 1960s and 1970s. The frames we sold where top quality and sold at a higher price than many others to retailers.
> 
> Today similar top quality frames are on the market and they are selling at prices similar to the ones we did 25-30 years ago, and that does not make sense when high class car could be bought at $ 15,000 then and would be $ 40,000 these days. 
> 
> New technology machines allow the manufacturers to makes products faster and better or as good as the. However when looking at the websites from the far east these frames sell at fraction of what an importer/distributor paid in those days.
> The distributor does sell to the retail at heavily inflated prices.....mostly due to the return and warranty factors. If the retailer would not insist on those goodies which are very costly to distributor the retailer could probably purchase those goods at way lower prices.


Ya, its pretty amazing that some of these high quality hand built frames are as cheap as they are when you consider the amount of work that goes into them. The returns you speak of are part of the input costs I refer to - its a value added service which of course must be paid for, its not free, so they are passed on to everyone.  Its just giving the consumer what they demand.  It allows opticals to provide a great inventory selection and turn it over quite frequently, giving the end consumer greater choices and more selection than they might have otherwise.  It allows us to order frames for pts to try on, and if they don't like it, return it should we decide to eat the shipping charges.  I think people who say that the Costco frames are a good value, probably haven't spent much time analyzing exactly what it is they are selling and comparing them to better frames.  I'd say they are a fair value, but not necessarily a good value.  Actually, in general, higher priced frames are probably a better value.

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## ilanh

They've been eating my lunch for years. I don't think that a day goes by that I don't lose patients to costco. Also, in the So Cal market they carry some very impressive designer frames at rock bottom prices. My only advantage is that we offer one-on-one service which is far more detailed than theirs. Not sure if this counts for anything since most people are just looking for the best deal.

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## ilanh

> My suggestion is to select a product assortment that is not in Costco, *if they are your real competition.* If you drive your business on the basis of low selling price you will not pass the test of time. Your product assortment must be different from others, because there will always be some guy out there willing to sell his goods for a ridiculous price.
> 
> A wise fellow taught me something very important a long time ago. 
> 
> *Retail is the art of buying, not the art of selling.* If you buy something correctly you can afford to reduce the price when times get difficult.



Not sure that this works.  Most of my clients who opt for costco don't really care what my product is or if it's different than costco.  All they care about is that they can get a frame for $50 and an ovation progressive with AR for under $100.

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## ilanh

> After reading this thread, I'm frankly a little scared to post,but I would like to offer some insight if I may.
> 
> 
> I firmly believe that Costco does not intend to run independents out of the ground, The majority of Costco's clientele are in fact middle to upper class. They appreciate designer brands, elegant styles, etc. Our dispensary is kept as bare, simplistic, and minimal as possible. We don't do any type of custom jobs like RXable sunglasses, goggles, tricky prescriptions, slab off's etc. I also believe that the optical department is there mainly as a professional service to Costco's members. 
> 
> I believe that I have a lot to bring to the company as far as my optical background and experience goes. And believe me, when I cannot help a member out with something they are looking for, the first thing I do is recommend them to an independent optical store where I know the opticians there can cater to their specific needs. I myself have worked at over 10 different Costco locations, and each location has business cards of independent optical stores all over San Diego that the opticians will hand out to members who are looking for something that we cannot offer. And I have never gotten spoken to, reprimanded, or written up because i recommened a "competitor" to a member, which i am more than happy to do any time of day. In fact, the only companies that we actually price shop and compare are against Wal-Mart and Sam's Club.
> 
> If you guys have any questions for me, I'll do my best to answer them. And if William Walker is out there, just want to say hello from a fellow Costco optical employee


Thanks for your candor. I've often toyed with the idea of having a pamphlet available to our clients which explains the differrence between what we offer and what Costco and Walmart offer. Some salient points would be:

-We custom tailor our lenses precisely to what we feel the patient needs. This requires extensive counselling but we can eventually figure it out and make sure that they get exactly what they need. It's not a one progressive fits all kind of deal.
-We spend 20 mins to half an hour with each client. Costco can't possibly do that.
-We troubleshoot any adaptation issue with free chair-time with an M.D no matter what the problem is. Costco can only provide a refund but is not in the position to see if there is a problem with the prescription or to laboriously figure out the host of other issues which can cause problems.
-We spend far more time dispensing the finished product than costco does. 
-We go to bat for the client with freeform, rimless, drill mounts, unusual shapes and curves, specialty lenses,prisms etc. There is no level of complexity that we won't take on, no matter how much time it takes.
-We keep up with all the latest materials, options etc and are nimble enough to offer these as soon as they become available. Costco is a large ship and takes a while to gage the current.
-We offer a pleasant boutique atmosphere and not a frenzied warehouse.

Personally, I love a good bargain and shop often at Costco; however, I would not buy glasses at costco just as I would not go there for my medical care. I believe that glasses are a customized medical product and not a mere commodity. I wish I could make all of this known to patients but rarely have the opportunity to do so. Many of our clients take a perfunctory look at our optical shop and ask for their prescription to take "elsewhere". When I see them next for a medical visit I notice they're wearing the tell-tale Ovation which tells me that they went straight to Costco with my prescription.

At the risk of sounding ridiculous, I sometimes find this insulting. My practice does an almost ridiculously compulsive refractive exam which involves automated refraction, phorometry manifest and trial framing (on every single patient). I pride myself on being the best refractionist I know and am constantly experimenting with new techniques etc. If there is any problem with the glasses whatsoever I personally troubleshoot the issue immediately (no techs are allowed to do this for me). We will fix the problem to the patient's satisfaction regardless of the cost or how many times it takes us. After a discussion with me (on every patient) the optician labors patiently with every client to provide absolute customization. For all of us it's a labor of love and we take it very seriously. Therefore, to daily see our clients ask for their prescription to take to Costco is very upsetting. Many of them even have the nerve to bring us their costco glasses when they run into a problem thinking that it may be a "mistake" in our prescription (which it usually isn't). OK, now it's out of my system and I feel better.

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## Happylady

> Personally, I love a good bargain and shop often at Costco; however, I would not buy glasses at Costco just as I would not go there for my medical care. I believe that glasses are a customized medical product and not a mere commodity. I wish I could make all of this known to patients but rarely have the opportunity to do so. Many of our clients take a perfunctory look at our optical shop and ask for their prescription to take "elsewhere". When I see them next for a medical visit I notice they're wearing the tell-tale Ovation which tells me that they went straight to Costco with my prescription.


You see glasses as a customized product but your patients don't really understand that. Most people have no idea that there are well over a hundred different progressives. And the bottom line is price. Costco sells their progressives very cheap. Most people do okay with them. Those patients coming in with Ovations- are many having issues with them?

And really, 20 minutes to half an hour isn't all that long to spend with a patient.

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## Johns

> You see glasses as a customized product but your patients don't really understand that.


If they don't, it's your/our fault.

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## Barry Santini

Costco, Zenni, Coastal, Warby Parker, etc., have come to simply define or redefine what the average consumer will find adequate and acceptable in eyewear. Your job, as Johns has pointed out, is to redefine what you offer and communicate, and to groom a clientele that appreciates it and is willing to pay for it.

Yeah, its a big job. And it never ends.

B

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## RCB1602

> Congrats RCB. I don't work for Costco anymore, but feel free to shoot me a line anytime you have any questions. I was with Costco for six years (four of them running a Costco Optical), and I would be happy to help.


Thank you Mr. Walker...I haven't started yet, but once I begin studying for the ncle I will be sure to ask you  :Smile:

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## William Walker

I have to say that I have a little issue with the way you approach this.  I mean this 100% respectfully, but I wanted to touch on what you've written a little.  My point of perspective - I ran a high end private practice 3 miles away from a Costco for 5 years, worked for Costco for 6 years (managing for 4 of the 6), and now work for LC literally walking distance away from Costco.

I've often toyed with the idea of having a pamphlet available to our clients which explains the differrence between what we offer and what Costco andWalmart offer.  Knowing what separates you from your clientel is very important.  However, taking the time to make a pamphlet to hand to patients really looks like you're more interested in getting their sale then you are in what's best for the patient.  Your pamphlet is going to be interpreted as 'This is why we are best...', and it comes across as another sales tactic.  Be honest with your patients, and with yourself - I'm guessing you have options in your optical for a reason - each option has a pro and a con.  When you show the differences between you and another optical, respect your patient enough to show them both the pro and the con.  Let them make the educated decision, and if you truly have the better value, you will (I repeat you WILL) get the sale. Some salient points would be:

-We custom tailor our lenses precisely to what we feel the patient needs. This requires extensive counselling but we can eventually figure it out and make sure that they get exactly what they need. It's not a one progressive fits all kind of deal.  How exactly do you custom tailor a lens?  Would your Varilux be any different than another optical's Varilux?  It wouldn't, and at that point, you will have lost the patient's trust.  If instead you started out by saying that there are hundreds of lenses in the market, and they fall into a handful of categories.  Compared to some opticals that have only one option, we can choose from any lens to get the best type for how you use them.   (The biggest key point here is that you never had to bash another optical - you just showed that you have more options.  Maybe the best lens for the patient happens to be the same lens that the other optical carries?  You have to be open to that possibility.
-We spend 20 mins to half an hour with each client. Costco can't possibly do that.  They can, they have, and I'm pretty sure they still will.  
-We troubleshoot any adaptation issue with free chair-time with an M.D no matter what the problem is. Costco can only provide a refund but is not in the position to see if there is a problem with the prescription or to laboriously figure out the host of other issues which can cause problems.  You've basically just stated that your optical is the only one with qualified opticians, because of course no other optical can do what you do, and all it takes is a quick call to Costco to find that they will remake your lenses at no charge, even if it is a result of the RX needing to be changed.  
-We spend far more time dispensing the finished product than costco does.  That statement says that you take longer to do the same thing Costco does.  Not the best marketing statement.
-We go to bat for the client with freeform, rimless, drill mounts, unusual shapes and curves, specialty lenses,prisms etc. There is no level of complexity that we won't take on, no matter how much time it takes.  This is your best statement so far - there are things you can offer that the competition can't.  It can't be twisted, and it's not a salesman's statement - it's just an honest fact.  (With the exception of prism - Costco does prism, and they don't charge anything extra for it).  And please quit harping on the amount of time you take - taking a long time does not equal quality.  
-We keep up with all the latest materials, options etc and are nimble enough to offer these as soon as they become available. Costco is a large ship and takes a while to gage the current.  Being able to offer the latest and greatest is another good tool.  
-We offer a pleasant boutique atmosphere and not a frenzied warehouse. You might as well add that patients should also buy from you because you look better in purple - it really has nothing to do with optics (which should be your prime focus).

Personally, I love a good bargain and shop often at Costco; however, I would not buy glasses at costco just as I would not go there for my medical care. I believe that glasses are a customized medical product and not a mere commodity. I wish I could make all of this known to patients but rarely have the opportunity to do so. Many of our clients take a perfunctory look at our optical shop and ask for their prescription to take "elsewhere". When I see them next for a medical visit I notice they're wearing the tell-tale Ovation which tells me that they went straight to Costco with my prescription.Optically speaking, the Ovation is a great lens.  Is it the most perfect lens out there?  No, but it is by no means a bad lens.  It uses seven of the eight design patents created for the Varilux Panamic, and being the 'generic', if you will to the Panamic the only design difference is in the blend of the lower outer quadrant.  When I worked in private practice, the Ovation was one of my Go-To lenses when the patient needed a great all purpose lens at a mid level price.  It comes with a few compromises compared to the much more expensive ones, but has a great price for performance.

The biggest problem I see, and I see it in a lot of places, is this attitude of scarcity.  It's not a matter of me vs. you.  If you truly care about your patient, find what's honestly best for your patient.  If you find that more often than not, you are not what's best for your patients, you need to change something.  

William

P.S. - My one little anecdote.  Patient comes in and starts the conversation with me by asking, 'Tell me why I should buy glasses from you?'  The first words out of my mouth were, 'I don't know that you should yet.' and then I started to ask them about their RX, their previous eyewear, and what they needed now.  At that time, I worked at Costco, but I've said it many instances like that.  That patient came in a week later for dispense, and while there, he told me that the main reason he bought them from us at Costco was because we were open and honest to him - and that we were not acting like 'salesmen'.  (It's because we were being opticians).  :)

I'm sorry to pick apart your post.  If you really are interested in helping your staff differentiate yourselves from your competition, I would be more than happy to give you ideas and honest feedback.  Feel free to message me anytime.

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## William Walker

This is just for fun...

"My practice does an almost ridiculously compulsive refractive exam which involves automated refraction, phorometry manifest and trial framing (on every single patient). I pride myself on being the best refractionist I know and am constantly experimenting with new techniques etc."

Are you secretly a robot?  ;)

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## anthonyf1509

The more time you spend focusing on your competition the less time you are putting into your own office. 

Somebody help me here: looking for a quote, I believe it was John wooden: something along lines of being more concerned with what you can control etc...

Also, really it doesn't matter who thinks an ovation is a good lens, ok lens, bad lens whatever. All that matters is they're happy, I'm happy and can I afford surf n' turf twice a week :D

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## Johns

> Personally, I love a good bargain and shop often at Costco; however, I would not buy glasses at costco just as I would not go there for my medical care.


William...really?  You worked there for 6, managed for 4 and you didn't wear the glasses you sold? Or is it only since they are now your competition?  Don't get me wrong, I wouldn't buy glasses from them either, but I don't shop their either.

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## William Walker

> William...really?  You worked there for 6, managed for 4 and you didn't wear the glasses you sold? Or is it only since they are now your competition?  Don't get me wrong, I wouldn't buy glasses from them either, but I don't shop their either.


I was quoting someone else's post - My words are in red.  I have lots of glasses from Costco (get plenty of compliments daily on my Mikli regular glasses and my MODO sunglasses.  They are great glasses.

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## Johns

> I was quoting someone else's post - My words are in red.  I have lots of glasses from Costco (get plenty of compliments daily on my Mikli regular glasses and my MODO sunglasses.  They are great glasses.


Oh!  I thought I must be missing something!  (Quit tying to confuse us old guys!)

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## drk

Darn I used to be fiery.

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## Bill West

I have always used that method. Knowing how to buy is vital to surviving and making $$$$$$$$$$$$$$$$$$$.

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