Data provided here comes from our team of experts who have been working on business plan for an optical store. Furthermore, an industry specialist has reviewed and approved the final article.
What is the profitability of an optical store, and what income can one expect from selling eyewear?Let's check together.
Revenue metrics of an optical store
How does an optical store makes money?
A optical store makes money by selling eyeglasses, sunglasses, contact lenses, and other optical products.
What types of eyewear are available in optical stores?
Optical stores offer a wide range of eyewear to cater to various vision needs and style preferences.
The primary types of eyewear available include prescription glasses, which correct nearsightedness, farsightedness, and astigmatism, and come in diverse frame styles such as full-rim, semi-rimless, and rimless. Sunglasses are another popular category, designed to protect the eyes from harmful UV rays and reduce glare.
They come in various tints and styles, including aviator, wayfarer, and sporty designs. For those who engage in specific activities, like sports, safety glasses provide impact protection and enhanced durability.
Computer glasses are designed to reduce eye strain caused by prolonged digital screen exposure.
Reading glasses are available for individuals who have difficulty focusing on close-up tasks.
Fashion or non-prescription glasses are also offered as a trendy accessory, often without corrective lenses. Additionally, optical stores might provide specialized eyewear for children, such as flexible frames and lenses that are more durable.
What about the prices?
An optical store offers a variety of products with different price ranges to cater to different needs and preferences.
Prescription eyeglasses typically range from $50 to $300, with basic frames and standard lenses falling at the lower end and designer frames and high-index lenses at the higher end.
Sunglasses, both prescription, and non-prescription, can range from $20 for budget options to $500 for premium brands. Contact lenses come in daily, bi-weekly, and monthly options, with prices ranging from $20 to $100 per box, depending on the brand and type.
Specialized lenses like multifocal or toric lenses may cost slightly more.
Additionally, the store may offer lens coatings and treatments such as anti-reflective coatings ($20-$150), photochromic lenses ($50-$300), and blue light-blocking coatings ($20-$100).
Comprehensive eye exams, a crucial service, typically range from $50 to $150.
| Product | Price Range ($) |
|---|---|
| Prescription Eyeglasses | $50 - $300 |
| Sunglasses | $20 - $500 |
| Contact Lenses | $20 - $100 (per box) |
| Specialized Lenses (e.g., multifocal, toric) | Varies |
| Lens Coatings and Treatments | Coating: $20 - $150 Photochromic: $50 - $300 Blue Light Blocking: $20 - $100 |
| Comprehensive Eye Exam | $50 - $150 |
What else can an optical store sell?
In addition to offering a wide range of eyewear products, optical stores can also enhance their revenue by:
- Hosting special eye care workshops or vision health seminars
- Allowing optometrists or eye care specialists to use their space for consultations
- Assisting customers in finding the perfect eyewear for their needs
- Organizing engaging vision challenges or eyewear style competitions
- Renting out space for private eyewear fitting sessions or filming
- Teaming up with local healthcare providers for exclusive eye care offers
- Offering online vision tips and virtual eyewear consultations
Who are the customers of an optical store?
Optical stores cater to a variety of customers, including those needing prescription eyewear, sunglasses, and contact lenses.
Which segments?
We've been working on many business plans for this sector. Here are the usual customer categories.
| Customer Segment | Description | Preferences | How to Find Them |
|---|---|---|---|
| Young Professionals | Age 25-35, working in professional fields | Trendy frames, blue light blocking lenses | Online advertising, social media targeting |
| Seniors | Age 60+, seeking vision correction | Premium quality, comfortable fit | Local community events, senior centers |
| Parents & Kids | Parents with children needing glasses | Durable frames, pediatric eye exams | School partnerships, pediatric clinics |
| Fashion Enthusiasts | All ages, fashion-forward individuals | Designer brands, unique styles | Fashion shows, lifestyle magazines |
| Athletes | Active individuals, sports enthusiasts | Sports-specific frames, prescription sports goggles | Local gyms, sports clubs |
How much they spend?
In the detailed business model we've analyzed, customers generally spend between $200 to $600 per visit to an optical store. This expenditure includes the cost of prescription lenses, frames, contact lenses, and possibly specialized eyewear accessories or treatments like anti-reflective and scratch-resistant coatings.
Research indicates that the frequency at which customers need optical services can vary greatly, but they typically visit an optical store every 2 to 3 years, considering updates in their prescription, wear and tear on glasses, or fashion changes.
The estimated lifetime value of an average customer at the optical store, assuming a span of 20 years (considering adult customers primarily), would be from $1,600 (8x200) to $6,000 (10x600), taking into account both changes in prescription strength and potential damages leading to replacements.
Given this, we can deduce that the average revenue an optical store can expect from a customer over this 20-year period would be around $3,800. This figure is based on the combination of essential eyewear purchases and occasional additional expenses related to eyewear.
(Disclaimer: the numbers provided above are approximations and may not accurately reflect your specific business circumstances. Various factors such as location, competitive pricing, and changes in technology or fashion trends can significantly influence consumer behavior and spending patterns.)
Which type(s) of customer(s) to target?
It's something to have in mind when you're writing the business plan for your optical store.
The profile that typically yields the most profitable customers for an optical store are individuals aged 40 and above, with disposable income, who require prescription eyewear for vision correction.
These customers tend to be the most profitable because they often need both reading glasses and prescription eyeglasses, resulting in higher average transaction values.
To target and attract them, the store can invest in targeted advertising in local publications and online platforms where this demographic is active, offering promotions such as bundled packages or discounts for purchasing multiple pairs of eyewear.
To retain them, exceptional customer service is key, providing personalized recommendations based on their vision needs and preferences, offering regular eye exams, and implementing loyalty programs with exclusive discounts and perks to incentivize repeat visits and referrals, ultimately fostering long-term relationships and maximizing profitability.
What is the average revenue of an optical store?
The average monthly revenue for an optical store can range significantly from $5,000 to $50,000. This variation depends on several factors, including location, client base, and the range of products and services offered. Let's delve into specifics with three hypothetical scenarios.
You can also estimate your potential business revenue by considering these factors in line with your business model, using a financial plan tailored for an optical store.
Case 1: A small optical store in a rural area
Average monthly revenue: $5,000
This store is perhaps the only one in a small town, providing basic eyewear and eye care services. The range of products is limited due to lower demand and purchasing power in rural settings. Typically, such a store might service around 40-50 customers per month.
Without add-on services like eye exams or a high-end eyewear collection, the store relies primarily on sales of basic prescription glasses and maybe contact lenses. If we consider an average sale value of $100 per customer, the store’s monthly revenue would be approximately $5,000.
Case 2: A well-established optical store in a suburban community
Average monthly revenue: $20,000
This type of optical store is in a suburban setting, likely in a shopping center or a community with several healthcare facilities. It offers a broader range of services, including eye exams, a diverse collection of eyeglasses and sunglasses, contact lenses, and maybe minor eyewear repairs.
The store is positioned to attract middle-income families and individuals attentive to both quality and cost, servicing around 200 customers a month. With additional services, the average revenue per customer might increase to $200, considering both product sales and service fees. This setup can bring in around $20,000 a month.
Case 3: A high-end optical boutique in an affluent urban area
Average monthly revenue: $50,000
This premium store is situated in an upscale neighborhood or a posh urban commercial area. It caters to higher-income individuals and eyewear enthusiasts, offering designer frames, personalized eyewear consultations, comprehensive eye care, and perhaps even innovative services like virtual try-ons and on-site lens crafting.
Such a boutique attracts customers willing to pay a premium for products and services, with an average spend of $500 per customer. If the store services around 100 customers per month—a conservative estimate given the location and client base—then it could generate $50,000 in monthly revenue.
It’s important to note that these scenarios are simplifications. Actual revenues could be impacted by many factors, including seasonal fluctuations, competitive pricing, marketing effectiveness, and changing consumer preferences in eyewear and eye care.
The profitability metrics of an optical store
What are the expenses of an optical store?
Operating an optical store involves expenses for eyeglass and contact lens inventory, rent or lease payments for the store, staff wages, and marketing.
| Category | Examples of Expenses | Average Monthly Cost (Range in $) | Tips to Reduce Expenses |
|---|---|---|---|
| Rent and Utilities | Store rent, electricity, water, heating/cooling | $2,500 - $8,000 | Consider a smaller location, negotiate rent, optimize energy use |
| Inventory | Frames, lenses, contact lenses, cleaning solutions | $3,000 - $10,000+ | Manage inventory efficiently, order in bulk, negotiate with suppliers |
| Employee Wages | Salaries for optometrists, opticians, and support staff | $3,000 - $7,000 | Cross-train employees, optimize staffing during peak hours |
| Equipment | Optical examination equipment, eyeglass fitting tools | $500 - $2,000 | Invest in quality, maintain equipment regularly |
| Marketing and Advertising | Local advertising, website maintenance, promotional materials | $300 - $800 | Focus on local marketing, use social media, word of mouth |
| Insurance | Liability insurance, business property insurance | $200 - $500 | Review insurance policies, consider bundling |
| Taxes and Permits | Business licenses, sales tax, property taxes | $200 - $500 | Stay compliant with tax regulations, explore tax deductions |
| Software and Technology | Point of sale software, electronic health record systems | $100 - $300 | Choose cost-effective software solutions |
| Maintenance and Repairs | Store upkeep, equipment maintenance | $200 - $600 | Regular maintenance to prevent costly repairs, DIY when possible |
| Miscellaneous | Office supplies, cleaning supplies, eyeglass accessories | $100 - $400 | Keep office supplies cost-effective |
When is a an optical store profitable?
The breakevenpoint
An optical store becomes profitable when its total revenue exceeds its total fixed costs.
In simpler terms, it starts making a profit when the money it earns from selling eyewear and related services becomes greater than the expenses it incurs for rent, equipment, salaries, inventory, and other operating costs.
This means that the optical store has reached a point where it covers all its fixed expenses and starts generating income, we call it the breakeven point.
Consider an example of an optical store where the monthly fixed costs typically amount to approximately $15,000.
A rough estimate for the breakeven point of an optical store, would then be around $15,000 (since it's the total fixed cost to cover), or selling between 150 to 300 pairs of glasses, assuming the average pair of glasses is priced between $50 to $100.
It's crucial to understand that this indicator can vary widely depending on factors such as location, size, pricing, operational costs, and competition. A large optical store located in a prime area would obviously have a higher breakeven point than a small one situated in a community with less foot traffic, as the larger store requires more revenue to cover its expenses.
Curious about the profitability of your optical store? Try out our user-friendly financial plan tailored for optical businesses. Simply input your own assumptions, and it will help you calculate the amount you need to earn in order to run a profitable business.
Biggest threats to profitability
The biggest threats to profitability for an optical store can include intense competition from online retailers offering lower prices and convenience, leading to a decline in in-store foot traffic and sales;
rising operational costs such as rent, utilities, and staff wages, which can eat into profit margins;
changing consumer trends and preferences, which may require costly updates to inventory and store design;
and healthcare policy changes that affect insurance reimbursement rates, potentially reducing revenue from vision care services.
Additionally, economic downturns can result in decreased consumer spending on eyewear, and counterfeit or low-quality eyeglasses from unregulated sources can erode the store's reputation and customer trust, ultimately impacting profitability.
To mitigate these threats, optical stores may need to adapt by offering unique, personalized services, enhancing their online presence, and closely monitoring costs while maintaining high-quality products and customer service.
These threats are often included in the SWOT analysis for an optical store.
What are the margins of an optical store?
Gross margins and net margins are crucial financial metrics used to assess the profitability of an optical store business.
The gross margin represents the difference between the revenue generated from selling optical goods and services (such as prescription glasses, sunglasses, contact lenses, and eye exams) and the direct costs associated with providing those products and services.
Essentially, it's the profit remaining after deducting costs directly related to delivering the optical products and services, such as the cost of goods sold (e.g., eyewear frames, lenses), staff salaries for optometrists and sales personnel, and utilities for the store.
Net margin, conversely, incorporates all expenses encountered by the optical store, including indirect costs like administrative expenses, marketing, rent, and taxes.
Net margin offers a more comprehensive view of the optical store's profitability, reflecting both direct and indirect costs.
Gross margins
Optical stores generally have an average gross margin ranging from 60% to 80%.
This implies that if your optical store generates $15,000 per month, your gross profit will be approximately 70% x $15,000 = $10,500.
Let's illustrate this with an example.
Consider an optical store that sells 150 pairs of glasses in a month, with an average price of $100 per pair, resulting in total revenue of $15,000.
However, the store incurs costs such as purchasing frames and lenses, utilities, and employee wages.
Assuming these costs amount to $4,500, the store's gross profit would be $15,000 - $4,500 = $10,500.
Thus, the gross margin for the optical store would be $10,500 / $15,000 = 70%.
Net margins
Optical stores typically have an average net margin ranging from 15% to 30%.
In simpler terms, if your optical store earns $15,000 per month, your net profit might be around $3,000, equating to 20% of the total revenue.
We will use the same example for consistency.
Our optical store, with revenue calculated at $15,000 and direct costs of $4,500, also faces additional indirect expenses. These could include marketing, insurance, professional fees for services like accounting, taxes, and premise rent. Suppose these additional costs total $6,500.
After deducting both direct and indirect costs, the optical store's net profit would be $15,000 - $4,500 - $6,500 = $4,000.
In this scenario, the net margin for the optical store would be $4,000 divided by $15,000, resulting in a net margin of 26%.
As a business owner, it's imperative to recognize that the net margin (vs. gross margin) affords you a more accurate insight into how much money your optical store is genuinely earning, as it encompasses all costs and expenses involved.
At the end, how much can you make as an optical store owner?
Understanding that the net margin is your go-to indicator for determining the profitability of your optical store is essential. It essentially reveals what portion of your earnings remains after covering all operating costs.
The amount you end up making hinges significantly on the effectiveness of your business strategies and operational decisions.
Struggling optical store owner
Makes $1,000 per month
Starting an optical store and opting for decisions like investing in low-quality frames, limiting store operational hours, neglecting necessary tasks, and not diversifying your product range (sunglasses, contact lenses, eye exams) might restrict your total revenue to merely $5,000.
Furthermore, poor management of your overheads will likely cap your net margin at around 20%.
Putting it plainly, you would be drawing just around $1,000 each month (20% of $5,000). This scenario represents the lower end of the earning spectrum in the optical business.
Average optical store owner
Makes $6,000 per month
If you're running a standard optical store, stocking average-quality products, and offering basic eye care services, you're exerting some effort. Consequently, your total revenue might bump up to about $30,000.
By managing your expenses wisely, you could be looking at a net margin that hovers around 30%.
In such a case, you're looking at bringing home around $6,000 per month (30% of $20,000), positioning you in the mid-range of profitability.
Exceptional optical store owner
Makes $50,000 per month
As an owner who never compromises on quality, your store flourishes with an array of high-end eyewear collections, advanced eye care services, and a professional team that guarantees customer satisfaction and repeat business.
You understand the importance of variety, quality, and exceptional service, elevating your store's total revenue to a soaring $200,000.
With savvy expense management, shrewd negotiations with suppliers, and perhaps exclusive deals with certain high-end brands, you could achieve a net margin of about 25%.
Thus, in this ideal scenario, you're pocketing an impressive $50,000 monthly (25% of $200,000). This level of success is achievable with a meticulously devised and executed business strategy.
It's worth aspiring to reach this echelon as an optical store owner, and embarking on that journey requires a detailed and well-thought-out business plan for your optical venture.