The fundamental KPI’s every pharmacy owner needs to measure

In today’s highly competitive environment, effectively using data has never been more crucial. Key Performance Indicator (KPI) reporting allows pharmacy owners to gain deeper insights into their business performance, and ultimately gain a competitive advantage.

What is KPI Reporting?

KPI reporting is a business performance tool that effectively summarises and visualises KPI’s. By having a solid understanding of these performance indicators, you are in a stronger position to make better, more informed decisions and act quickly on potential opportunities or challenges within the pharmacy.

The value of KPI reporting really comes into effect when it is implemented and linked to all personnel within the pharmacy. By breaking down the Profit and Loss Statement and Balance sheet into KPIs that key personnel such as Store Manager, Pharmacy Manager, Retail Manager and Stock Controller etc have direct impact on, it will ensure there is increased awareness of their requirements and link to business goals and objectives.

KPI Format

When undertaking KPI reporting, we work with pharmacy owners to identify the relevant KPI’s for their pharmacy, extract the data, and then report the data in an easy-to-read dashboard format. This data can be viewed, weekly, monthly, or quarterly.


To ensure successful implementation of KPI reporting, all team members need to understand the impact KPIs have on the financial performance of the pharmacy. The top three areas of the pharmacy which are important to wrap KPI’s around are sales, wages and stock as per following:


Sales are the key metric that pharmacy performance is derived. Most of the performance metrics of the pharmacy hinge off of the sales performance i.e. wages% and rent%.

The basic formula for revenue is consistent amongst all customer centric businesses and can be simplified with the below principles.

Revenue Formula = No. of Customers X Average Sale X Transaction Frequency

  • No. of Customers – In a retail setting, gaining new customers comes as a result of marketing and branding. KPIs can include Customers per day, Scripts per day etc.
  • Average Sale – Customer education around products is vital to ensure the customers are appropriately serviced and so having a team that is highly knowledgeable has never been more important. Product pricing is also critical to ensure that you are competitive. KPI’s can include; average basket size, scripts per customer, Medschecks, gross profit% etc.
  • Transaction Frequency – Customer loyalty and creating a following from your customers is important to monitor. KPIs can include Scripts on File, DAA’s, etc.


Wages are the most important expense in the pharmacy and needs to be monitored carefully. Wages that are run too low will result in poor service and losing customers whereas wages that are too high will deteriorate profitability. Consider running wages as a percentage of retail sales and dispensary sales separately to give a better understanding of how well these areas of the pharmacy are performing. KPI’s include wages%, wages to retail, wages to dispensary.

Stock on hand

Stock on hand is often a major opportunity for a pharmacy to increase sales and improve cash flow. Measuring Stock on Hand in terms of Stock Turnover Days is much more meaningful than Stock Turn as the ability to have your Stock Turnover Days as close to your supplier terms will have a considerable impact on improving cash flow.

The right layout and stock mix of the pharmacy is another area which can improve sales and stock turnover days. By holding stock that is in line with your customer’s needs, this will assist in reducing your stock turnover days. KPIs can include: stock wastage, stock turnover days.

Get a better view of your Pharmacy

As we have outlined above, KPIs are useful at providing a more detailed insight into business performance. However, it is important to use them in the correct manner and link to your annual financial projections. Once set, these KPI’s should be managed as part of continual improvement through the senior pharmacy team on a regular basis. If you are looking to build on the success of your pharmacy, the value of KPI reporting should not be overlooked. Contact us today to start the process.

– Lachlan Ballinger, Managing Director, and Morgan Whiting, Head of Advisory, Yield Advisory.

Yield advisory is an Accounting and Advisory firm that specialises in the pharmacy industry with a nationwide client base. For more information, please contact Elisha Manning at 0405 661 262, email, or visit our website at

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