By Michael Stefanescu, 17 year optometrist and multi practice owner · Designed for Freedom
| Quick Answer (Featured Snippet target)What is a good profit margin for an Australian optometry practice? A good EBITDA margin for an independent Australian optometry practice in 2026 is 22% to 28%. The national average sits at 15% to 18% according to ProVision benchmarking and IBISWorld industry data. Practices in the top quartile consistently exceed 22%. Anything below 12% signals a structural cost or revenue problem that needs urgent attention. |
| Key Takeaways• Most Australian independent optometry practice owners believe they sit in the average 15% to 18% EBITDA band. Most actually sit in the bottom quartile once owner wages are correctly accounted for.• The four EBITDA bands are: bottom quartile 8% to 12%, average 15% to 18%, top quartile 22% to 28%, specialist or premium 30%+.• Five levers move margin from 12% to 25%+. Pricing and mix, COGS management, staff cost ratio, chair utilisation, dispensing conversion rate.• A five point margin lift on a $1M practice adds approximately $260,000 to enterprise value. Margin and valuation are inseparable. |
1. The number most owners cannot tell you
I have worked with many of optometry practice owners across Australia over the past seventeen years, and I will tell you straight; the most dangerous number in private practice is not your revenue. It’s your actual EBITDA margin, correctly calculated.
When I started my first practice in Canley Heights, NSW, during the GFC with under $25,000 in capital, I was obsessed with cash flow. Revenue was the number I watched. It took me a few years, and a few expensive mistakes, to understand that revenue is vanity, margin is sanity, and cash is reality. That shift in thinking is what eventually let me build, acquire and sell multiple practices for a multi seven figure exit in 2025 after 17 years.
Here’s the conversation I have had more times than I can count.
| Me. What is your margin running at?Owner. About 20%, maybe a bit more.Me. Is that before or after your clinical wage?Owner. Oh, I just take what is left over. |
That pause. That’s where the real number lives.
Revenue is what you tell people at dinner. Margin is the freedom number. It determines what your practice is actually worth, how many days a week you need to be in the chair, and whether you’re building a business or buying yourself a job. If you haven’t read the valuation article, start there, because margin and valuation are inseparable.
I became a Tony Robbins Platinum Partner. I have invested over $500,000 in coaching for myself. And every serious coach, CFO and operator I’ve ever worked with comes back to the same question. What is your margin doing? Not your top line. Your margin.
This article gives you the Australian benchmarks, the cost structure, the levers, and a practical diagnostic you can run in 90 days.
2. What ‘profit margin’ actually means for an optometry practice
Most owners use the word ‘profit’ loosely. And it’s worth being precise, because the number you report and the number that actually reflects the health of your practice are often very different things.
Here are the four terms you need to know, illustrated with a $1 million revenue practice.
Gross margin
Gross margin is revenue minus cost of goods sold (COGS). COGS in optometry means frames, lenses, contact lenses and lab costs.
Example. $1,000,000 revenue minus $310,000 COGS (31%) = $690,000 gross profit = 69% gross margin.
Gross margin tells you how much is left before you pay for any staff, rent or overhead. It’s the foundation. Most optometry practices run a gross margin between 65% and 72%, depending on their lens mix, frame sourcing and dispensing model.
EBITDA
EBITDA stands for earnings before interest, taxes, depreciation and amortisation. This is the number serious buyers and advisers use to assess a practice, and it’s the benchmark most relevant for operational health.
Example. After gross margin of $690,000, subtract staff costs $320,000 (32%), rent $80,000 (8%), marketing $30,000 (3%) and other overheads $90,000 (9%). EBITDA = $170,000 = 17% EBITDA margin.
This is what IBISWorld AU Optometry industry data and ProVision benchmarking commentary reference when they describe the ‘average’ AU practice at 15% to 18%.
Owner’s profit (normalised EBITDA)
This is EBITDA adjusted to reflect a fair market replacement wage for the owner’s clinical role. If you’re seeing patients four days per week and not paying yourself a market salary, your reported EBITDA is inflated. True normalised EBITDA adds back the real owner clinical wage at market rate (approximately $120,000 to $160,000 per year for a full time equivalent optometrist in Australia in 2026).
Example. The practice above shows $170,000 EBITDA. But the owner is doing 75% of the clinical work and taking $200,000 total, which includes $80,000 that should be classified as a clinical wage. Adjusted owner’s profit is $170,000 minus the $80,000 shortfall against market rate = $90,000. Suddenly 17% becomes 9%.
This is the owner wage trap. More on it later.
Net profit
Net profit sits below EBITDA. It accounts for interest on any practice loans, depreciation of fit out and equipment, and taxes. For a $1M practice with $150,000 in fit out depreciation and $40,000 in loan interest, net profit might be $0 to $30,000 even with a healthy EBITDA.
| The number to manage is normalised EBITDA. That’s your performance number. Net profit is a tax and accounting outcome, not an operational signal. |
3. The four bands of Australian optometry profitability
Drawing on Optometry Australia workforce data, ProVision benchmarking commentary and IBISWorld AU Optometry industry data, here’s what each band looks like in practice.
Bottom quartile: 8% to 12% EBITDA
On a $1M revenue practice, this is $80,000 to $120,000 EBITDA.
Cost structure in this band.
- COGS 33% to 38%. Frame sourcing is reactive, no volume agreements, little lens rebate capture.
- Staff 36% to 42%. Overstaffed relative to patient volume, no performance linked wage structures.
- Rent 9% to 12%. Often in locations chosen for foot traffic without rent per patient analysis.
- Marketing 1% to 2%. Minimal, reactive, mostly word of mouth.
- Other overheads 10% to 15%. Technology costs not reviewed, lab contracts not renegotiated.
What life looks like here. The owner is working five days clinically, is the best and most available person in the building, and takes home roughly what a senior employed optometrist earns at a corporate chain. There’s no time to work on the business because there’s no margin to hire anyone who could. Every staff problem, every equipment failure, every supplier dispute lands on the owner’s desk. This practice is not an asset. It’s a self employed job.
Who lives here. Practices in the first three to five years with no mentor, practices that grew revenue without ever reviewing their cost structure, and practices where the owner has never run a proper financial review. Also, acquired practices where the buyer overpaid and is now servicing debt that eats margin.
Average band: 15% to 18% EBITDA
On a $1M revenue practice, this is $150,000 to $180,000 EBITDA.
Cost structure.
- COGS 30% to 33%. Some alliance purchasing leverage, but lens mix not optimised.
- Staff 32% to 36%. Reasonable team size, some performance structures in place.
- Rent 7% to 9%. Negotiated but not creatively structured.
- Marketing 2% to 4%. Basic digital presence, some Google Ads, inconsistent.
- Other overheads 8% to 11%.
What life looks like here. The owner has a practice that generates reasonable income but hasn’t escaped clinical dependence. They take a week or two of leave per year but feel it every time they return to a backlog. They’re thinking about growth but not yet confident in what’s driving the numbers. Valuation will be modest because EBITDA is too thin to attract premium multiples. The practice is sellable, but not on the owner’s terms.
Who lives here. The majority of independent single site Australian optometry practices. According to IBISWorld and ProVision data, the average independent practice sits in this band. It’s comfortable enough to feel safe, but not profitable enough to be truly free.
Top quartile: 22% to 28% EBITDA
On a $1M revenue practice, this is $220,000 to $280,000 EBITDA.
Cost structure.
- COGS 28% to 31%. Active lens negotiation, frame range discipline, dispensing conversion tracked.
- Staff 30% to 33%. Right headcount, clear KPIs, clinical and dispensing performance tied to pay.
- Rent 6% to 8%. Lease reviewed, per chair per hour metrics used.
- Marketing 3% to 5%. Consistent digital investment with tracked return.
- Other overheads 7% to 9%.
What life looks like here. The owner works three to four clinical days, has an operational manager or senior team lead running the day to day, and has begun the shift from operator to owner. When they take a two week holiday, the practice hums without them. Valuation multiples are meaningfully higher because EBITDA consistency signals reduced key person risk. This practice can be sold on competitive terms, or kept as a cash generating asset while the owner builds the next one.
Specialist or premium: 30%+ EBITDA
On a $1M revenue practice, this is $300,000+ EBITDA.
This band is achievable but requires deliberate positioning. Practices here have typically done two or more of the following. Developed a genuine clinical niche (dry eye, myopia control, specialty contact lenses, behavioural optometry), built a premium dispensing experience where average transaction values are consistently above $800 per pair, reduced dependence on health fund rebate anchoring, and built a referral network that brings in higher complexity cases with higher associated revenue.
Cost structure in this band often looks counterintuitive. Marketing spend may be higher (4% to 6%) because the owner invests in education led content and community positioning. But COGS is low (26% to 30%) because premium lens categories carry better margins than commodity rebate driven fills.
Who lives here. Practices in regional areas with effective monopoly positioning, practices that have built genuine clinical authority, and any practice that has done the deliberate work of moving from volume driven to value driven.
4. The 5 levers that move margin from 12% to 25%+
I have sat inside the financials of enough practices to know that margin movement is not a mystery. It’s a lever pulling exercise. And here are the five that matter most, based on my direct experience building and scaling practices.
Lever 1: Pricing and mix
This is the most underused lever in Australian optometry. Most owners haven’t reviewed their professional fee schedule in two or three years. Meanwhile, inflation has been running at 4% to 7% per year. That’s cumulative margin erosion that compounds quietly.
But pricing is only half the story. Mix is the other half. Are you actively recommending premium lens categories? Is your dispensing team trained to present choice rather than default to the cheapest option? A single percentage point shift in your premium lens capture rate on a $1M practice can move EBITDA by 2% to 3%.
When I ran benchmarking across my own practices, I found that the highest margin locations were not the highest revenue locations. They were the ones where the average transaction value was highest and the staff were consistently presenting premium options with confidence.
Lever 2: COGS management
COGS is the silent margin leak for most practices. Owners know their frame cost. They often don’t know their effective lens rebate position, their lab turnaround penalties, or how their contact lens pricing compares to benchmark.
The discipline is simple. Review your COGS quarterly, not annually. Renegotiate your alliance purchasing tier every 12 months. Audit your frame range for dead stock. If 30% of your frames are turning over fewer than 1.5 times per year, you have capital tied up in inventory that’s costing you margin.
The benchmark target is 28% to 32% COGS for a well run independent practice.
Lever 3: Staff cost ratio
Staff costs are the largest controllable expense in most practices, typically 30% to 38% of revenue. The error most owners make is managing headcount by feel rather than by ratio.
The right question is not ‘do I have enough people?’ It’s ‘what is my revenue per full time equivalent team member, and what should it be?’ A well run independent practice in Australia should be generating $175,000 to $200,000 in revenue per FTE. If you’re below that number, you either have excess headcount or insufficient revenue for the team you have.
Staff cost ratio also responds to structure. Are you paying base wages with no performance component? That’s a fixed cost with no variable upside. Introducing a modest dispensing incentive, properly structured, can align staff behaviour with the margin outcomes you need without increasing your fixed cost base.
Lever 4: Chair utilisation
Idle chair time is the most expensive real estate in your practice. Every appointment slot that runs empty has already cost you the fixed overhead of that time, staff wages, rent, technology and utilities, with zero revenue to offset it.
Measure your chair utilisation as a percentage of available slots filled per week. A well run practice targets 80% to 90% utilisation across all clinical days. If you’re below 75%, you have a capacity problem that no amount of COGS management will fix.
The two fastest paths to improving utilisation are a systematic recall programme and a proactive appointment confirmation process. I have seen practices lift revenue by $80,000 to $120,000 per year simply by implementing a structured two stage confirmation protocol and a recall system that wasn’t dependent on a single staff member remembering to make calls.
Lever 5: Dispensing conversion rate
In most independent optometry practices, 50% to 60% of patients who receive a prescription actually purchase eyewear in practice. The industry benchmark for a well run dispensing operation is 65% to 75%.
That gap, say 55% actual versus 70% benchmark, on a practice seeing 2,000 patients per year with a $450 average transaction, is 300 missed conversions at $450 each. That’s $135,000 in revenue that walked out the door because the handoff from consult room to dispensary was weak, the frame selection wasn’t curated for that patient, or the staff weren’t trained to have the conversation.
Conversion rate is a skill. It’s coachable. And it’s one of the fastest margin levers you can pull because every incremental conversion has near zero additional cost.
5. Cost benchmarks line by line as a percentage of revenue
Use this table as a first pass diagnostic for your own practice. Pull your last 12 months of profit and loss, calculate each line as a percentage of revenue, and compare.
| Cost category | Benchmark range | What drives it high | What good looks like |
|---|---|---|---|
| Cost of goods sold (frames, lenses, CLs) | 28% to 35% | Poor lens negotiation, dead frame stock, rebate not captured | 28% to 31% with active alliance management |
| Staff costs including owner clinical | 30% to 38% | Overstaffing, flat wage structures, clinical over dependence | 30% to 34% with clear role to revenue ratios |
| Rent and occupancy | 6% to 10% | Lease not reviewed, underutilised space, fit out amortised | 6% to 8% with per chair revenue analysis at renegotiation |
| Marketing | 2% to 5% | Inconsistent spend, no tracking, no recall investment | 3% to 4% with clear attribution and recall ROI measured |
| Other overheads (technology, insurance, admin) | 8% to 12% | Tech stack not reviewed, subscriptions not audited | 8% to 9% with annual overhead audit |
Reading your own numbers. If any single line sits above the upper benchmark, investigate before you cut. High staff costs might mean overstaffing, or they might mean your revenue per patient is too low. High COGS might mean poor negotiation, or it might mean you’re selling high volume, low margin products. Context matters. The benchmarks are the starting point for the question, not the answer.
6. Why most owners think they are at 20% and are actually at 12%
This is one of the most important conversations I have in my coaching work, so I’m going to be direct about it.
The owner wage trap
If you’re working clinically in your own practice and not paying yourself a market rate salary, your EBITDA is artificially inflated. A fair market wage for a full time optometrist in an independent Australian practice in 2026 is approximately $120,000 to $160,000 per year.
If you’re taking $220,000 total from the practice but $100,000 of that is your clinical contribution worth at least $130,000 at market rate, the true business return is negative $10,000. You’re subsidising your practice with your labour and calling it profit.
Normalised EBITDA requires you to back out what the business would cost to replace you. Once you do that calculation honestly, many practices that look like 18% to 20% EBITDA reveal themselves as 10% to 12%.
Hidden depreciation
Every practice has equipment, fit out and technology that’s aging. Many owners stop running depreciation through their P&L once loans are repaid, or treat it as a paper adjustment to minimise rather than a real cost signal.
Fit out has a real life of seven to ten years. Equipment needs capital refresh every five to eight years. If you’re not accounting for that cost in your margin calculation, you’re reporting a number that assumes the business requires zero capital reinvestment. It does not.
Deferred maintenance
Related to depreciation but more insidious. The optometry chair that’s slightly broken. The instrument that requires recalibration every six months. The signage that hasn’t been updated since 2018. These costs are real and they accumulate. A practice that looks profitable on the P&L but has $80,000 in deferred capital expenditure is not a 20% margin business. It’s a 12% margin business with a future cash bill.
For any owner preparing for sale, buyers will haircut your valuation for deferred maintenance dollar for dollar. Fix it now, or price it correctly.
7. The 90 day margin diagnostic
Here’s a practical five step process you can run right now, without an accountant, to get a true read on your margin.
- Pull a normalised P&L for the last 12 months. Take your most recent annual P&L. Add back any personal expenses run through the business. Then subtract a fair market clinical wage for every owner working in the practice. This is your baseline normalised EBITDA.
- Calculate each cost line as a percentage of revenue. Go through COGS, staff, rent, marketing and other overheads. Express each as a percentage. Compare against the benchmarks in the table above. Circle every line sitting above the upper benchmark. These are your starting points.
- Audit your dispensing conversion rate. For the last 90 days, calculate how many patients received a prescription and how many purchased in practice. If your PMS doesn’t track this, estimate from appointment type and invoice data. If you’re below 65%, that’s your highest return lever.
- Measure chair utilisation. Look at the last four weeks of your appointment book. Count total available appointment slots versus total filled. Calculate the percentage. If below 80%, identify the top three reasons slots are going unfilled (late cancellations, recall failure, scheduling gaps) and build a response for each.
- Run a COGS deep dive. Ask your supplier or alliance for your last 12 months of purchasing data. Calculate your effective COGS percentage including all lab costs, contact lens stock and accessories. Compare to your P&L COGS line. If they don’t match, you have a reclassification problem or a data capture problem. Fix it before you set any margin targets.
| Once you have these five numbers, you have a margin map. You know what’s real, where the leaks are, and which lever to pull first. This is exactly what I work through with owners in the first 90 days of my coaching programme. |
8. Margin and practice valuation, the multiplier effect
Every point of EBITDA margin you add to your practice doesn’t just improve your income this year. It multiplies into your enterprise value.
Here’s the maths on a $1M revenue practice.
| EBITDA margin | EBITDA $ | Multiple applied | Enterprise value |
|---|---|---|---|
| 12% | $120,000 | 2.5× | $300,000 |
| 17% | $170,000 | 3.0× | $510,000 |
| 22% | $220,000 | 3.5× | $770,000 |
| 27% | $270,000 | 4.0× | $1,080,000 |
Moving from 12% to 27% margin, a 15 percentage point improvement, turns a $300,000 practice into one worth over $1 million. The multiple expands too, because a higher margin practice signals lower operational risk, lower key person dependence and stronger systems, all of which buyers pay for.
A five point move in margin, say from 17% to 22%, adds approximately $260,000 in enterprise value on a $1M practice. That’s the multiplier effect in action.
I sold my practices in 2025 at multiple seven figures. The single biggest driver of that outcome was not revenue growth. It was disciplined margin management over 17 years, and a deliberate push in the final three years to ensure normalised EBITDA was clean, well documented and defensible. Buyers do not pay for potential. They pay for proof.
If you want to understand how margin converts directly into sale price using Australian specific multiples, the How to Value an Optometry Practice in Australia, 2026 Guide walks through the full methodology.
9. Frequently asked questions
What is a good profit margin for an Australian optometry practice?
A good EBITDA margin for an independent Australian optometry practice is 22% to 28%. The national average sits at approximately 15% to 18% according to ProVision benchmarking commentary and IBISWorld AU Optometry industry data. Practices in the top quartile consistently exceed 22%. Anything below 12% signals a structural cost or revenue problem that needs urgent attention.
How is EBITDA calculated for an optometry practice?
EBITDA is revenue minus COGS, staff costs, rent, marketing and other operating overheads, before interest, taxes, depreciation and amortisation are deducted. For an owner operated practice, normalised EBITDA also backs out a fair market clinical wage for the working owner, so the business return is separated from the labour return.
What is the average EBITDA margin for Australian optometry?
Based on available benchmarking data from IBISWorld and ProVision, the average independent Australian optometry practice runs at 15% to 18% EBITDA, before owner wage normalisation. After normalisation, the effective return for many average practices is closer to 10% to 14%.
What are the main costs in an optometry practice as a percentage of revenue?
The primary cost categories and their AU benchmarks are. COGS 28% to 35%, staff costs including owner clinical 30% to 38%, rent 6% to 10%, marketing 2% to 5%, other overheads 8% to 12%. Total controllable costs should sit between 74% and 90% of revenue, leaving an EBITDA margin of 10% to 26% before owner wage adjustments.
How does profit margin affect the sale price of an optometry practice?
Margin is the most direct driver of practice value. A higher EBITDA margin attracts a higher multiple from buyers, and also expands the absolute EBITDA number. A five point improvement in margin can increase enterprise value by 50% or more. On a $1M revenue practice, moving from 17% to 22% EBITDA adds approximately $260,000 in sale value using typical AU optometry multiples of 3.0× to 4.0×.
What is the owner wage trap in optometry practice financials?
The owner wage trap occurs when a working owner optometrist doesn’t pay themselves a market rate clinical salary through the business, inflating reported EBITDA. The true business return must account for the cost of replacing the owner’s clinical contribution at fair market rates, typically $120,000 to $160,000 per year for a full time optometrist. Failing to normalise for this leads owners to believe their practice is more profitable than it actually is.
How can I improve my optometry practice profit margin in 90 days?
The five fastest acting levers are. Reviewing and updating your professional fee and lens mix pricing, auditing COGS and renegotiating your lens supplier terms, benchmarking your staff cost ratio against the 30% to 34% target, measuring and improving dispensing conversion rate, and implementing a proactive recall and appointment confirmation system to lift chair utilisation above 80%. All five can be measured and acted on within a quarter.
What EBITDA multiple should I expect when selling my Australian optometry practice?
Australian independent optometry practices typically transact at 2.5× to 4.5× normalised EBITDA. The multiple applied depends on margin consistency, key person risk, lease quality, patient retention rates and whether the owner remains clinically dependent. Top quartile practices with clean financials and strong systems can achieve multiples at the upper end of this range or beyond.
10. Ready to know your real number?
If you read this article and felt the quiet discomfort of not being certain what your actual margin is, that’s the right feeling to act on.
Most optometry practice owners are running on assumed margins. The 90 day diagnostic above will give you the real number. And once you have the real number, you have the roadmap.
I work with a small group of practice owners inside the $1M Optometry Business Accelerator, a 12 month, high touch coaching programme built specifically for independent Australian optometrists who are ready to move from operator to owner. We go through every number in your business, build your margin improvement plan, and work through it together.
About the author
Michael Stefanescu is an Australian optometry business coach and former multi practice owner. He spent 17 years as a practising optometrist and built, scaled and sold his own practices in Sydney. He now coaches independent Australian optometry owners through the systems, marketing, financial and operational frameworks that build profitable, sellable practices. Read more about Michael or apply for the $1M Optometry Business Accelerator.
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