Pricing is one of the most powerful and often underutilised levers in a pharmacy business. In today’s environment, it can be the difference between maintaining margins and quietly losing profitability.
Almost every SME out there knows a few things to be true: that being stretched too thin is their day-to-day, that the idea of reviewing retail pricing feels like a mammoth task, and that there simply aren’t enough hours in the day. But, as an organisation that regularly conducts valuations, we’ve seen first-hand how re-evaluating one’s retail structure can be a game-changer in order to foster long-term, sustainable growth. Even small, well-informed pricing adjustments particularly across OTC and front-of-shop (FOS) categories can deliver a meaningful impact on profitability without increasing footfall.
Given that the time in which we now live has been marred with economic uncertainty, increased labour costs and a deteriorating geopolitical situation, it’s imperative that business owners become comfortable with adaptation to survive, with pricing strategies, and as such, profitability among the top of that list. Whether that’s value-based pricing, dynamic or competitive is entirely up to you, but what’s not debatable is that this strategy should be regularly reviewed. Here’s why.
Why should I review my retail pricing?
As we are all too aware, Ireland and the UK are currently experiencing a rapidly changing economic environment with high inflation, low unemployment, increasing interest rates and one that is particularly prevalent in the Pharmacy sector, fluctuating supply chain issues. Amongst all of these uncertainties, it’s critical that you remain certain of the things you can control for your business. In this case, pricing.
Irish pharmacies are operating in a uniquely constrained environment:
- Dispensing income is largely controlled through HSE reimbursement structures.
- Wage costs continue to rise in a tight labour market.
- Supplier pricing and margins are under pressure.
- Retail competition, particularly from large chains and online is intensifying.
This means that your controllable margin is increasingly driven by OTC and front-of-shop performance. Yet, this is often the area that receives the least structured pricing attention. If retail pricing is not reviewed regularly, pharmacies risk:
- Eroding margins on high-volume OTC lines.
- Missing opportunities to optimise premium or specialist products.
- Falling out of line with local competitors.
- Undervaluing convenience, service and expertise.
Where Should You Focus? (OTC & Front of Shop)
Unlike prescription items, where pricing is often fixed or restricted, OTC and FOS categories give you real commercial control.
These include:
- Vitamins & supplements.
- Skincare & beauty.
- Pain relief & seasonal products.
- Baby care.
- Wellness products.
- Gifts and discretionary retail.
This is where pricing strategy can and should be actively managed. Some key considerations when you are reviewing are:
- Are you pricing premium brands appropriately, or undercharging?
- Are known-value items (e.g. paracetamol) aligned with local competitors?
- Are you protecting margin on convenience purchases?
- Are slow-moving lines priced correctly to clear?
Many pharmacies default to supplier RRP but this often leaves margin on the table or creates inconsistencies across categories.
How often should I review?
Prices should be reviewed regularly, particularly in light of changing OTC / FOC cost prices which impact the retail price and the retail margin. We would suggest:
- Quarterly reviews of key OTC/FOS categories.
- More frequent reviews (monthly) on high-volume or seasonal lines.
Immediate review where:
- Supplier costs change.
- A competitor opens or adjusts pricing.
- Sales patterns shift significantly.
Staying informed about economic trends, as well as the needs of your consumers will also allow you to make informed decisions when price reviewing. Moreover, you can minimise risks and maintain a competitive advantage by proactively managing pricing in response to economic shifts.
How Do You Decide What to Charge?
Effective pricing isn’t guesswork it’s a combination of data, positioning and local knowledge.
Start with:
- Know Your Numbers
- Understand your gross margin by category, not just overall.
- Identify your top 50–100 selling OTC products.
- Analyse what’s driving profit, not just volume.
- Benchmark Locally
- What are nearby pharmacies charging?
- Where are you positioned — value, mid-market or premium?
Fitzgerald Power can help you here as we provide a benchmarking service.
- Segment Your Products
- Not all products should be priced the same way.
- Known-value items → stay competitive.
- Specialist / premium products → price for value, not cost.
- Impulse / convenience items → protect margin.
- Understand Your Customer
Your customers aren’t just buying products — they’re buying:
- Trust.
- Advice.
- Convenience.
- Accessibility.
That gives you more pricing power than you might think, particularly in community pharmacy.
How Do You Communicate Price Changes?
Price sensitivity is real but so is customer understanding.
The key is clear and confident communication:
- Be transparent where appropriate (especially for services).
- Ensure pricing is consistent and logical across categories.
- Avoid frequent erratic changes, aim for structured adjustments.
Customers are far more accepting of pricing when it feels considered and fair.
How Fitzgerald Power Can Help
Pharmacy is at the core of what we do. We work with pharmacy owners across Ireland to:
- Review and optimise retail pricing structures.
- Analyse margins across OTC and front-of-shop categories.
- Support financial strategy and profitability planning.
- Prepare businesses for growth, succession or sale.
As Ireland’s leading advisor to the community pharmacy sector, we combine deep sector knowledge with practical, commercial insight. Learn more and get in touch HERE.
