The Eye Test Barely Pays For The Optometrist

Last year one American optical chain sold about $1.6 billion of glasses and contact lenses. Buying those products cost it $461 million. The eye tests brought in $383 million and cost $358 million to deliver. One of those two businesses is not really a business. Two products go out through the same door, to the same person, on the same afternoon. The glasses and contacts carry a gross margin of about 71%. The eye tests and plans carry about 6%. The one that barely pays for itself is the one everybody thinks they came in for — and the company's own filing explains why it got thinner last year: optometrist costs grew faster than exam revenue. Using National Vision Holdings' fiscal 2025 results — the company behind America's Best and Eyeglass World — this video follows $100 of optical revenue through the accounts: why a 71% product margin leaves only about three cents of operating profit, why the exam is the one part of the shop that cannot be scaled, what a prescription actually is as a commercial document, and why the widest margins in eyewear sit upstream with the company that makes the lenses and owns the frame brands. Where $100 of optical shop revenue goes, 2025: The glasses and contacts: $23.21 Delivering the eye tests: $18.03 Running the stores: $51.12 Depreciation: $4.59 Impairment and other: $0.09 Operating profit: $2.96 Chapters: 0:00 Intro 0:22 71% against 6% 0:37 The markup is real 2:14 The chair and the wall 5:39 Where the margin lives 8:03 Cheap diagnosis 9:58 The sign in the window Sources: National Vision Holdings Q4 and fiscal 2025 results (SEC): https://www.sec.gov/Archives/edgar/da... National Vision Holdings Form 10-K, fiscal 2025 (SEC): https://www.sec.gov/Archives/edgar/da... EssilorLuxottica Q4 and full year 2025 results: https://www.essilorluxottica.com/en/n... 0:00 Intro 0:22 71% against 6% 0:37 The markup is real 2:14 The chair and the wall 5:39 Where the margin lives 8:03 Cheap diagnosis 9:58 The sign in the window Music: "Soft Ambient" by alex_makemusic, via Pixabay (Pixabay Content License, no attribution required).