Starting a prescription delivery service offers multiple benefits for your business, such as building relationships with patients and helping your pharmacy compete with mail order. It also comes with challenges.
One challenge is setting a fee for delivery. It’s a decision that requires considering multiple complex factors that can trip up even the most experienced businessperson.
Here are several issues to consider as you determine a fair price for your pharmacy’s prescription delivery service.
1. Operational costs
When setting a fee for a delivery service, the first factor to consider is how much the service will cost you.
When determining how much your pharmacy will spend to deliver a prescription, be sure to include all of your expenses, such as the delivery vehicle, any insurance you purchase, fuel and the employee’s time to make the delivery.
Once you know how much a delivery costs your pharmacy, then you can set a price that ensures you won’t lose money.
2. Distance and density of deliveries
How far you travel and how many deliveries you can make on each delivery route influences your pharmacy’s rate of return on each delivery.
If your pharmacy’s delivery service operates in a densely populated urban area, and delivers to several patients during each trip, then your cost per delivery will be lower because it’s spread out among multiple patients. But, if your pharmacy delivers to a rural area, where it’s a longer trip to deliver prescriptions to one patient, the cost per delivery will be higher.
Take distance into consideration when setting a fee, and remind patients in rural areas that because they live far away, they might have to pay a little more for the delivery service. Also, consider standardizing this fee by charging a certain rate per mile.
3. Types of products
The prescription and over-the-counter (OTC) products you plan to deliver also influence what you should charge for the service.
For example, if you’re delivering an expensive specialty prescription, your profit on the prescription might be large enough to justify only a nominal fee for delivery. But, if you’re delivering low-cost generic prescriptions, your margins on the product might not be as substantial, making it necessary to charge a little more for delivery.
Consider creating order requirements, such as ordering a 90-day supply of cheaper generic drugs, or purchasing a certain amount of front-end products, in order to qualify for delivery. Setting these requirements can help you keep the fee minimal for patients, while also ensuring that you still turn a profit.
Also, if you’re delivering commonly abused medications, you may need to take security into consideration. Pharmacy delivery vans have become targets for theft and robbery for controlled substances, so you may have to weigh the risks and benefits of delivering certain types of prescriptions.
4. Delivery driver compensation
Deciding who makes the delivery can also greatly influence the cost and value of a delivery service.
Having a non-pharmacy employee who you trust to make deliveries can lower the cost of the service, but having delivery done by someone who is qualified to counsel patients, such as a pharmacy tech or a staff pharmacist, adds value to the delivery service. If you’re delivering that extra value to a patient’s doorstep, you can charge more.
5. Price tipping point
Every product and service has a tipping point, and a pharmacy delivery service is no exception.
Ask trusted patients what they’re comfortable paying for delivery to determine their price tipping point, or the price point at which a patient will decide that the service is not worth the extra cost.
Also, check out what your competition is charging, so you can make sure your price is competitive.
6. Goal of delivery
When setting a delivery price, ask yourself, “Why are you starting a delivery service?”
Are you offering delivery at the request of a few older patients who are having trouble getting to your pharmacy? Or, are you interested in starting to deliver because of its potential to become a revenue-generating service?
If the goal is to keep patients with mobility issues coming to your pharmacy, then you can charge a nominal fee that simply covers the cost of operating the program. But, if you want to generate revenue from your delivery service, then you’ll have to decide what kind of margins you expect to make for a delivery service to be viable for your business’s bottom line.
If you’re not ready to jump into a delivery service, consider offering patients convenient curbside pickup.
A Member-Owned Company Serving Independent Pharmacies
PBA Health is dedicated to helping independent pharmacies reach their full potential on the buy-side of their business. Founded and run by pharmacists, PBA Health serves independent pharmacies with group purchasing services, wholesaler contract negotiations, proprietary purchasing tools, and more.
An HDA member, PBA Health operates its own NABP-accredited warehouse with more than 6,000 SKUs, including brands, generics, narcotics CII-CV, cold-storage products, and over-the-counter (OTC) products — offering the lowest prices in the secondary market.
