The economics of Lasik

As I was in the waiting room awaiting my eye surgery, I was not panicked or scared. As usual, I was thinking of the one thing I usually think about: business.\nI was contemplating the laser eye-surgery industry. I was thinking about the erroneous marketing of laser eye surgery and the misinformation for consumers. I was contemplating the change that was necessary in the industry and what I would do as the next CEO.\nWhen new technology comes out, such as high-definition TVs, only a limited number of units are sold to a small segment of the market. When HDTVs came out, few could pay $4,000-plus for a fancy television. While companies make money with luxury products, the real money comes when they are able to democratize the product. Historically, trailblazers such as Herb Kelleher and Henry Ford have shown us just this. Kelleher, the founder of Southwest Airlines, was responsible for democratizing the air by making airplane tickets affordable to middle- and lower-class Americans. Ford did the same with his Model-T automobile.\nThe biggest mistake that laser eye clinics have made is marketing their product as a luxury good. The centers have emphasized improved vision, cosmetic improvements and time saved by getting Lasik surgery. While all of these are benefits, they are secondary ones. The true benefit comes with the economics of the procedure.\nLasik or radio frequency keratoplasty eye surgery costs roughly $2,500. What eye clinics have failed to see is that the average person who wears contacts spends $300 a year on contacts or glasses. This means that the $2,500 is bringing in a $300 return per year, or about a 12 percent return on investment. This return stands alongside the cosmetic effect Lasik or RFK surgery provides. Not impressed? Go ahead and ask assistant professor of finance Daniel Greiner at the Kelley School of Business if you could get a risk-free return like that in the stock market (not everyone at once, please).\nThis is not theoretical mumbo jumbo; it can be applied in practice. For those of you who aren't ballers, rest assured that the $2,500 doesn't have to be paid in cash. The amount can be loaned at approximately 6 percent interest from the eye clinics. The 6 percent difference (6 percent subtracted from 12 percent) is what the financial world calls leverage. Basically, you put that money in your pocket. Best yet, those of you who are self-employed or entrepreneurs are able to write off the procedure from your taxes, earning about a 16 percent return.\nLasik/RFK centers are losing billions -- with a "b" -- of dollars by not mass-marketing the procedure. Worse yet, while there are some risks, the general public is not aware of the new technological advances and has a negatively skewed perception of the risks of Lasik or RFK surgery.\nAs you go through your business career, you can save yourself much time and effort by learning from the mistakes of others. For now, I highly recommend that those of you who are visually impaired look into Lasik and RFK eye surgery and see if it can work for you.