Have you accounted for shipping costs in your new practice? Do you have an already established practice and know how much you are spending on shipping costs every month? I bet the majority of you do not! If you do, then well done. You have your practices expenses down to a science. But if you have not factored in shipping costs into your budget, then you are in for a rude awakening!
Listen, shipping costs are a HUGE expense for the niche practice, especially if you use compounding pharmacies and send a large number of scripts to patient’s homes as discussed in the practice model of our courses. Even shipping costs of just supplies and medications to your practice can add up! You really need to know these numbers because what can be measured can be improved! If you have no idea how much you are spending on shipping, then you have no way to know if you can save money or not…
I am going to run some generalized numbers from my men’s health practice by you.
In a typical month, my men’s health practice spends approximately $15,000 on medications from compounding pharmacies. Yes, that sounds like A LOT, but remember, we are generating over $50,000 a month in revenue. So, it is not that big of a deal.
Can you guess how much of that is spent on shipping? Approximately $800-$900. That is right. $15,000 on compounded medication = 90ish patient specific orders. The average shipping cost per order is $10, therefore 90 orders x $10 shipping = $900. Obviously, these are averages and these numbers change month to month, but you get the idea.
Let’s go down the rabbit hole even further… If we assume an average $850 in monthly shipping costs, then I will spend, on average, about $10,000 a year in shipping. That is practically the cost of my offices LEASE for the year. That is one HELL of a CME vacation… Basically, $10,000 is a lot of money.
Now, unfortunately you cannot get away from shipping costs. You must pay to play, and shipping costs are an inevitable expense in your niche practice. Therefore, you need to try to lower your costs as much as possible.
How can you improve shipping costs? Three ways:
- Have the pharmacies send you large bulk orders of medications to your practice for patient distribution (This isn’t dispensing medication. This is distributing patient specific prescriptions to the patient that have already been filled by the pharmacy. You are just the “distribution” hub.). If you do this, you are typically only charged once for shipping. HUGE SAVINGS! I will place an order for 100 vials of patient specific HCG at a time and distribute them to each patient over a month.
- Negotiate prices and shop around. You would be amazed what just $1 off shipping on each order could save you!
- Go with the cheaper shipping option and just tell your patients to expect 10 days to receive their medication vs. 5 days.
So, I want each and every nurse practitioner entrepreneur reading this to take the following steps:
- Obtain your invoices over the past 3 months from all of your suppliers, including medical suppliers and compounding pharmacies.
- Go through these and add up your shipping costs.
- Figure out how much you are spending on a monthly basis and multiply that by 12 months.
- Look at that number and get angry at how much you are spending in shipping!
- Get off your butt and try to get those costs down by even just a dollar. Saving $1 on shipping costs could save your practice THOUSANDS of dollars a year. That is money in your pocket folks!
Now, go forth, crunch some numbers, and save yourself some money. This is how you OPTIMIZE a practice to MAXIMIZE your profits.