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Key performance indicators to monitor for a successful pharmacy business

KPI. It stands for key performance indicator. They are metrics that help pharmacy owners to gain important insight into how their business is performing. Keeping track of these indicators enables owners to make better business decisions and take prompt action to take advantage of opportunities or address problems.

KPIs need to address three areas of pharmacy operation: sales, pay, and inventory.


Sales are the most important indicator of a pharmacy’s performance. Other indicators are based on sales in one way or another.

There is a basic formula for sales or revenue for most businesses, and it can be expressed in the following way:

Revenue = number of customers x average sale x transaction frequency

The number of customers can be expressed in different ways – as a number per day, per week, or some other time period.

Average sale – this can be computed in different ways, such as average basket size, scripts per customer, or gross profits, for example.

Transaction frequency shows the average number of times a customer buys something within a certain time frame. This tells you what percentage of customers return, and how often they buy something within a given time period.


Wages are a KPI because they are the primary expense of a pharmacy, and for that reason, need to be monitored closely. If wages are too low, you will probably have problems retaining employees and will have difficulty attracting qualified people. If wages are too high, it will eat into your profits. Some pharmacy owners recommend tabulating wages as a percentage of retail sales and dispensary sales separately to understand better how these two areas are performing.


Tracking this KPI presents a key opportunity to boost sales and improve cash flow. Measuring your inventory on hand by stock turnover days enables you to keep these days as close to supplier terms as possible, which will significantly affect cash flow.

Having a proper layout and mix of inventory can also improve sales and inventory turnover days. By carrying items that more closely conform to your customer’s buying patterns, you can reduce stock turnover days.


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  1. Hassana Abdullahi

    Awesome piece, Thanks

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