How To Maximize Pharmacy Profit With These 6 Pillars

6 pharmacy profit pillars
6 pharmacy profit pillars

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The key to growing your pharmacy profit is implementing tactics within each of the 6 Pillars of Pharmacy Profitability. 

Over the years, I have talked to thousands of pharmacies about profitability. A particular pattern started to emerge when I would sit down and break open their entire business strategy.

There are six areas I notice pharmacy owners struggle with consistently, and I now call these the Six Pillars of Pharmacy Profitability. You can solve every problem in your pharmacy with this framework. 

Disengaged employees? 

Poor cash flow? 

New patients are non-existant?

Yep, EVERY pharmacy owner’s problem lives within the 6 Pillars of Pharmacy Profitability. 

Now, under each pillar is a multitude of tactics. Unfortunately, there is no magic bullet for fixing every pharmacy. Each pharmacy is unique, which makes you awesome, and it makes it difficult to make a blanket recommendation. You should evaluate the various tactics for each pillar and decide which is the best fit for your pharmacy based on your demographics, staff, passion, and goals. 

Here’s an overview of the 6 Pharmacy Profit Pillars:

  • Cash-Based Revenue
  • Non-PBM Revenue
  • PBM Optimization
  • Marketing
  • Team Development
  • KPI Optimization

Let’s dive into the details now to better understand the six pillars. 

Cash-Based Revenue

I define cash-based revenue as a transaction with no third party involved. No PBM, no billing of any kind, you hand a product to somebody, and they give you cash. You get to turn that inventory into revenue and profit immediately.

Cash-based revenue can come from products such as OTCs and supplements. It can also be generated through services such as consultations or point of care testing. As a marketing nerd, the cool thing about cash-based revenue is that you get to generate demand by educating patients and then directly fulfilling their needs. This revenue is profitable, but it is also fulfilling as you help patients. 

Many pharmacy owners overlook the power of cash-based revenue. They continue to focus their marketing and growth efforts on filling more prescriptions. It will be easier to increase your profits by selling valuable products and services to patients you already do business with. Often shopping in your backyard will yield more fruit. 

If you think you can benefit from more cash-based revenue, check out some of our favorite companies

Non-PBM Revenue

I often get asked, isn’t cash-based revenue non-PBM revenue? Yes, cash revenue is a subtype of non-PBM revenue. It is the same as saying all apples are fruit, but not all fruit is apples. It is imperative to separate cash (no billing) revenue from other types of revenue where you may still be billing; you just aren’t involving a PBM. So, my definition of non-PBM revenue means you are billing someone and waiting on payment and that someone is not a PBM. 

Many of the traditional clinical services pharmacies provide to patients will fall into this category. Because pharmacies often collaborate with physicians on these services, there is a delay in payment. You might bill the doctor’s office once or twice a month as an example. There are also other strategies such as worker’s compensation direct billing or personal injury cases that belong here too. 

To improve the financial health of your pharmacy, I would aim for your non-PBM revenue to be 20% or more of your total revenue. Many pharmacies are typically in the 5-10% range. Boosting your cash and non-PBM revenues to a minimum of 20% can drastically change your life. The most successful pharmacy owners I know have been able to get to over 40%, which is life-changing. 

PBM Optimization

The third pillar you need to focus on is PBM Optimization; even though we may not be fond of PBMs, most of a pharmacy’s revenue is through a PBM. More than 90 percent of your revenue comes from a PBM if you’re a typical pharmacy.

You cannot ignore that big of a bucket of revenue when you are trying to build your business and increase your profits. I’m all for decreasing reliance on PBMs by upping non-PBM revenue and cash-based revenue. Still, you have to tackle these strategies to improve the profitability of your PBM revenue.

We discuss many different strategies in our blogs, our newly launched Pharmacy Badass University, and many more areas to help you get the most pharmacy profit with your PBM revenue. These strategies range from contracting better to buying cheaper and improving your pricing tables. Even small percentages of improvement here can mean drastically increased profits. 


Next up is marketing. You have got to be a marketer these days, no matter what type of business you own. If no one knows what you offer, how can they walk in that door?

You can take many different approaches to market your pharmacy. Traditional marketing, doctor detailing, social media, SEO optimization, and email marketing are just a few ways to market your pharmacy to your community. 

When you own a pharmacy, you can no longer simply turn on the open sign and hope that customers will walk in and hand over their money.

You have to go after the business you want, and you have to attract those who will come in and help you become more profitable. Also, you have to keep these customers coming back. Being omnipresent with your marketing strategy is vital.

Because of this, marketing is a crucial pillar of your pharmacy’s profitability. Once you know what’s profitable or once you know the revenue strategy you want to go after, you need to create a marketing strategy to go with it to attract that specific target audience.

Developing a marketing strategy can be daunting, but we’ve got some resources to help you out. My number one suggestion is to get the book 1-Page Marketing Plan. If you are a Pharmacy Badass University member, you get the 1-PMP curriculum as a part of your membership. You can go through this book step-by-step on your own as well. It has always been my #1 book recommendation. We also have a ton of marketing blogs you can catch up on as well. 

Team Development

Owning a pharmacy is not a solo adventure. You need a high-performing team and a team that is passionate about what they do almost as much as you are.

Let’s face it; you’re never going to find somebody who has as much skin in the game as you do. However, you can get people that consider your pharmacy their own and love to work for your pharmacy because they’re passionate about what they do.

If you create an excellent environment for your employees and develop the best strategies to keep them happy and motivated for improvement, you will have a thriving workforce.

A strong team really can make or break your business. If you think about the thousands of decisions made every day in your business, if your employees make profitable decisions, it has a profound effect on your pharmacy profit.

On the opposite side, if they make unprofitable decisions every day, think of how that impacts your pharmacy. Your team is a multiplier, and the culture you create through the training and education you provide them will affect your overall pharmacy.

Remember that you are not the only one making decisions that can positively or negatively impact your business. Educating and training your team is one of the best investments you can make. 

KPI Optimization

You know that I’m a data nerd if you’ve been following me. I love KPIs.

KPI stands for Key Performance Indicator, which is just a fancy word for saying business metrics. There’s a whole host of business metrics and specific ones to focus on for pharmacies. Then for each KPI, there is a benchmark to compare yourself to. Sometimes, the benchmark is an industry-wide metric, other times, you aim for self-improvement from where you currently are. 

All pharmacies share the same core KPIs. However, a retail pharmacy will have a different benchmark for those KPIs than a compounding or LTC pharmacy would. Then as each type of pharmacy is unique, there are also specific KPIs that are important for the various types of pharmacies. 

While I have a master list of KPIs with over 100 on it (did I mention I love KPIs?), tracking that many is overwhelming even for me. I suggest starting with the 7 critical KPIs and going from there. You can download a copy from HERE.

If you are a pharmacy owner and you’re curious about how to go about improving your pharmacy, start thinking about it in terms of these six different pharmacy profit pillars.

Where can you focus, and where do you want to grow? 

Where do you need to optimize?

There are many strategies underneath each one of these pillars, and you need to make sure to learn more about the different techniques with our blogs and YouTube channel, as well as consider joining us in our Pharmacy Badass University to get a ton of knowledge and resources on how to make your pharmacy more profitable.

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    About DiversifyRx

    DiversifyRx is dedicated to helping pharmacy owners kick ass and create profitable, thriving pharmacies. We strongly believe the key to success is diversifying your revenue streams and maximizing each opportunity that is right for you. DiversifyRx was created by a pharmacy owner for pharmacy owners. We offer tons of free information and our Pharmacy Badass University membership. This site contains affiliate links to products or services. We may receive a commission for purchases made through these links.

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