What is an associate worth in today’s competitive market? You may be wrestling with how to pay your associate and what to pay your associate so you don’t lose a large portion of your yearly compensation. Paying an associate does not have to be a difficult decision, in fact, it can be very revealing in regards to the motivation your new associate has to grow the practice. When deciding what to pay your associate consider giving them 3 options to choose from. The numbers below are samples and should obviously be adjusted to fit your situation.
- Salary only – This will be the most that you will pay per year for the associate.
You may consider $65,000 as a starting point with no additional compensation for production above the break-even point. If $65,000 is the max amount that you have calculated you are able to afford, then include licensing, malpractice insurance, 401k benefits, etc. At a practice net of 35%, an associate would have to produce $185,714 gross collected dollars for the investment in the associate to be cost neutral. As any optometrist employer knows, this is a little skewed since the associate does not proportionally increase fixed costs such as rent and utilities. - High Salary + Low commission – This option affords the CEO to invest less committed dollars for an associate and give the associate some incentive to produce. You may consider a salary of $55,000 and a commission of 30% above the calculated amount the associate must gross collect to be cost neutral. For example, at 35% net the associate would need to have gross collected receipts of $157,143. If the associate gross collected was $207,143, then the difference would be $50,000 and 30% of that is $16,500. This would give the associate a compensation total of $66,500 and you as the CEO would enter the relationship at a lower risk.
- Low Salary + High commission – This option is similar to number two above except you, the CEO, take even less risk and reward the associate greater if production exceeds calculated salary. You may consider a salary of $45,000 and a commission of 50% above the calculated amount that the associate must gross collect to be cost neutral. For example, at 35% (office net) the associate would
need to have gross collected receipts of $128,571. If the associate gross collected was $208,571, then the difference would be $80,000 and 50% of that is $40,000. This would give the associate a compensation total of $85,000 and you as the CEO would enter relationship at a much lower risk of $45,000. Initially the $85,000 is a good amount of money to pay an associate for the first year, but remember you gave them this option to reduce your risk.
With the 3 options noted above, an employing optometrist can gauge the initiative that an associate has for growth. Most optometrists that are partner material and business minded will see option 2 and 3 as an opportunity and pass up option number one. An associate that really likes option 1 could be a great future associate but may not have the mindset of a small business owner.
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Thank you for the great information. What exactly is taken into account for the gross collections? Should compensation be based on the exams fees collected by the associate or do glasses/contact sales come into play?
Gross collections is figured on the money that comes in for the month based on the production of the doctor’s services and products. This would include the sales of glasses/contacts, all exam fees (full exams, acute care, contact lens fittings, etc.) and all testing fees (OCT,fields,etc.). Compensation should then be based on a percentage of the total dollar amount posted to the associate doctor for the month.
Thanks! This happens to be very timely for us. We are interviewing an Associate right now to staff a new Satellite that we purchased from an OD who started it about 6 years ago. It was only staffed (OD) one day per week, but we are looking to expand that to at least 3 – 4 days per week.
Time for number – crunching!
Great news! What a fun time for your practice. You may have one already, but there is an associate agreement available through OptometryCEO. There are 100s of ODs who have used it throughout the country and found it very helpful. Follow the link to the blog post and at the bottom it tells you how to receive one for free.
Excellent breakdown of options. A lot to consider before bringing on an associate.
If those numbers ($55k-65k) are the going rate for OD’s, no wonder so many turn to corporate.
I would like a sample of the Associate Agreement. Thanks for all the helpful information.
I’d like a sample of the Associate Agreement please. Thanks.
Nice article. How did you determine 35% as the practice net value?
In this example I used what a good practice net would be. The higher practice net will allow the owner OD to pay their associates better thus hopefully keeping associates for long-term. This will define how to calculate your practice net https://www.optometryceo.com/2012/10/24/do-you-calculate-your-practice-net-correctly/.
Could I receive a copy of your associate agreement? I will graduate this year from optometry school and am beginning my search for an associate position! Thanks in advance.
Good article thank you for sharing this information.
Could you please send a copy of your associate agreement.
Best Regards
Sent through email. Thank you for your interest.
Interested in entering into the field. Can you please provide some clarity on what exactly an “associate optometrist” is. I am also very curious, if a new grad student in the field has spent 4 years and over 200K for optometry school wouldnt the salary be much higher than the 65K example. Even if they are entering into a private practice, all that schooling and time spent to master skills should net a higher salary, correct? Trying to gauge a realistic salary I could expect for an average private practice associate optometrist.
Thank you for your help!
The 65k is low end of beginning and would most likely include a production incentive that would be based on how busy an associate OD would be. The private practice associate OD could expect to make 80-120k after the first year of graduation. This does depend highly on practice setting and available new patients for associate OD. It would also depend on number of days worked during the week. Many new graduates are requesting 3 days of the week to balance home and family. As an ROI for the 200k that is invested. Optometry is continuing to grow due to the population and demand for preventative medicine. No guarantee, but I would expect a graduate to make 75-90k for the first 3 years and then upwards of 120k thereafter. If an associate was invited to be a partnership in the optometric practice, then they would have compensation based on being a doctor and then additional compensation as owner/investor of the business. I hope that helps.
Thank you Dr. Fleming! That was very helpful. I was also wondering how a specialty in the field would impact the salary or parameters as an associate optometrist in private practice. After speaking with several of my local optometrist they highly recommend “specialty contact lenses”. The informed me that many experienced optometrists are looking for new grads to have such experience. If you could please provide how a specialty such as this would impact the overall scoop I can bring to the practice and also how it would possibly improve salary I would greatly appreciate it.
Specialty contact lenses would market a new OD better for a practice looking to add specialty contacts. Would it increase the net compensation? Depending on the compensation structure. Specialty contacts should be a higher netting piece of the practice but most owners do not compensate based on the practice net of one individual doctor. So would it increase salary? Maybe – maybe not. It would most likely build a practice that is more loyal and would make the associate OD more valuable in some owner’s mind.
Great article, very informative. Can you please send me an associate agreement? Thank you!
Sent via email.
Well thought out and written – Thank you!
Could you also send me a copy of the Associates Agreement also please ?
Thanks Dr. Gubman! Followed up with you via email.
This was a great article and very timely. We are currently considering hiring our first associate. Would you please send a copy of your Associates Agreement? Thank you so much for your help and great advice.
So glad you found the article helpful! I’ve followed up via email regarding the Associate Agreement.
Best article I’ve seen so far on this topic! Could I get a copy of the associate agreement? Thanks a lot!
My apologies, our support team must of overlooked this request. I have asked to send to you immediately. Again, I sincerely apologize this was not addressed.
Hi Chad,
I haven’t receive the email yet. Could you follow up on this for me? Appreciate it.
Wonderful article. Can I also get a copy of the associate agreement? Thank you!
Thanks! We followed up via email regarding the Associate Agreement.
Hello Daniel, could you send it to me as well? Thank you.
High Salary + Low commission – This option affords the CEO to invest less committed dollars for an associate and give the associate some incentive to produce. You may consider a salary of $55,000 and a commission of 30% above the calculated amount the associate must gross collect to be cost neutral. For example, at 35% net the associate would need to have gross collected receipts of $157,143. If the associate gross collected was $207,143, then the difference would be $50,000 and 30% of that is $16,500. This would give the associate a compensation total of $66,500 and you as the CEO would enter the relationship at a lower risk.
I was wondering what the calculated amount is in “30% above the calculated amount the associate must gross collect to be cost neutral”. Thanks so much
Great comment, thank you. I lean towards taking more of the risk b/c I can usually keep the OD and have better luck hiring when I take more risk up front. I don’t mind b/c it is a good payoff over the years and people generally are loyal and “pay back” when you pay forward. – Dr. Chad Fleming
Thanks for the useful information! May I please have a copy of the Associate Agreement?
Hello Dr. Fairchild. We’ve updated the post so you can download the agreement, please see the link at the bottom of this post.