A 30–40 minute conversation. I go through the task and say whether I can help and whether it is worth taking on now.
Pricing and assortment for a pharmacy chain
A flat markup across the whole range is convenient, but it leaves a pharmacy chain short of income. I set prices by product role, rebuild the assortment matrix and write front and back margin into rules the category manager then works by. The effect is measured on metrics we agree before the start.
Who this work is for
This work is for a pharmacy chain that has turnover but no profit. Markup is hemmed in by customer traffic, and the assortment matrix is bloated.
At a 20% gross margin, a 5% discount takes away a quarter of gross profit. To get back to the same money, the pharmacy has to sell a third more.
Customers judge a pharmacy's overall price level by a handful of items known as price anchors. A diabetic has their own anchors, a mother with an infant has hers, a hypertensive patient has theirs, so across a chain they add up to several hundred. A good share of the items chains keep on their anchor lists out of habit play no such role in the receipts. Nobody judges the pharmacy by them, and the chain leaves margin on the table.
What I bring
I split markup by product role. Some items hold customer traffic, others make the money. Price anchors I calculate from receipts: purchase frequency, position in the basket, how sales volume responds to price, and whether the item pulls a basket along with it.
I select the profitable items and rebuild the assortment matrix without the dead weight. Related products follow the anchor into the basket, and that is where the pharmacy earns: lancets and swabs go with test strips, wet wipes and cream go with nappies.
I tie front and back margin together. Marketing contracts with manufacturers are a pharmacy chain's second source of income after markup. Those contracts regularly hide money that has been accrued but never collected, terms below market and back margin that leaks into discounts at the till. You run the negotiations with manufacturers; I join them at your request.
I keep the work within regulation. Drugs on Russia's essential-drugs list (ZhNVLP) are capped at the manufacturer's registered price plus maximum mark-ups set by each region. Markup can be managed where the price is free: parapharmaceuticals, medical devices, cosmetics, hygiene. Prescription drugs, antibiotics and course-based anti-inflammatories are excluded from this work entirely.
How the work goes
Diagnosis by the numbers. I look at sales, markup, assortment, channels and manufacturer contracts and show exactly where the money is lost and how much.
Rules and roll-out. Together with your team we write the rules, procedures and specifications, train category managers and counter staff, and monitor execution.
Measurement and tuning. The effect is counted on the metrics fixed at the start and, where possible, against a control group of pharmacies still working at the old prices. Whatever did not work gets redone.
The control group is there to tell the effect of price apart from flu season. Usually a change goes into 10–20% of pharmacies and is measured over 2–4 weeks by sales volume, margin and average ticket.
What the chain keeps
Markup rules by product group that the category manager applies on their own.
A rebuilt assortment matrix without the dead weight.
Requirements for upgrading the accounting system, including pricing from the specific batch and tracking expiry dates.
A method that separates the effect of the changes from the season and market movement.
A report on the effect by the metrics agreed before the start.
Batch-level pricing matters because the same drug sits in the warehouse at different purchase prices. Expiry matters because an item that has gone up in price sells more slowly, and an expired drug gets written off.
Ways of working
Express diagnosis, 2–3 weeks, fixed fee. The output is a map of profitability losses with a money estimate and priorities.
Project for a specific task, 1–4 months, fixed fee by stage. The project's goal is a pricing system or an assortment rebuild.
Ongoing support, from 3 months, fixed monthly fee.
The fee depends on the scale of the business, the state of the data and the amount of work. I name the amount after the first conversation and fix it in the contract along with the scope and timeline.
Frequently asked questions
Essential-drug prices are regulated. Where is the room to grow profitability?
The room is outside the list and in operations. Maximum mark-ups apply only to drugs on the essential-drugs list; other medicines, parapharmaceuticals, medical devices and care products fall outside them. Beyond markup, profitability depends on the structure of the matrix, purchasing terms, back margin, inventory and write-offs.
Does dynamic pricing mean prices change every hour?
No. In retail, dynamic pricing means prices are recalculated regularly by rules built on demand behaviour, competitor prices and purchase cost, and every change is tested on a control group. A price calculated for an individual customer from their personal data has nothing to do with this work.
Do you renegotiate our contracts with manufacturers?
I always review them; you run the negotiations. I show where the terms are below market, where obligations are not being met and where back margin leaks into discounts at the till. I join the negotiations at your request.
How do you separate the effect from the season and market growth?
By comparing against a comparable period and a control group. Before the start we fix the counting rules: the same period last year, a separate calculation for like-for-like stores and, where possible, a group of pharmacies working the old way.
Do you quote the margin uplift in advance?
I do not name a growth percentage before I have seen your numbers. It depends on the market and on execution on your side.
Let's Discuss Your Case
To talk through your pharmacy chain's pricing and assortment, message me on Telegram.
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