Earlier this fall, readers were provided a commentary on wholesale nominal pricing in the US market. In our continuation of pricing in the US hearing aid market, we compare unadjusted and inflation-adjusted, wholesale cost of a single unit device over time.
Consumer Price Index (CPI)
The Consumer Price Index (CPI) was used to assess historical changes in US inflation. CPI data, available through the US Bureau of Labor Statistics, allows for the assessment of whether a good or service has increased or decreased in price compared to the same good service at another point in time.
Average Hearing Aid Wholesale Price
Figure 1. Comparison between unadjusted, average, single-unit wholesale hearing aid prices (blue filled circles), in US dollars, and a 2004 average-priced, single unit wholesale hearing aid adjusted for inflation (blue asterisks) across all technology tiers.
- In 2004, the average wholesale cost for a single unit hearing aid was $457. In 2019, the average wholesale cost for a single unit hearing aid was $774, unadjusted for inflation. Over time, the average wholesale cost per unit has increased by $317, or an annual average increase of $19.81.
- When CPI data are applied to the 2004 wholesale single unit cost (i.e., $457), the average cost of a single unit hearing aid in 2019 is calculated to be $608. This finding indicates that the 2004 unit increased in inflationary cost by $151 in 2019, or at an annual rate of $9.42.
- In comparison, the unadjusted average wholesale price of a single unit hearing aid, in 2019, exceeds the rate of inflation by 47.5%.
- This trend of the unadjusted wholesale cost exceeding inflation-adjusted wholesale cost rooted itself in 2007.
Premium-Tiered Wholesale Pricing
Figure 2. Comparison between unadjusted, average, single-unit wholesale hearing aid prices (red filled diamonds), in US dollars, and a 2004 average-priced, single unit wholesale hearing aid adjusted for inflation (red asterisks) for the premium-technology tier.
- In 2004, the average wholesale cost for a single unit, premium-tiered hearing aid was $1259. In 2019, the average wholesale cost for a similar technology-tier hearing aid was $1356, unadjusted for inflation. Over this span, the average wholesale cost per unit increased by $97, or by an annual average of $6.06.
- When CPI is applied for inflation, the average cost of a single unit hearing aid in 2019 was $1706. This finding indicates that the 2004 unit was $447 more expensive in 2019, yielding an annual average increase in wholesale price of $27.94.
- For this technology tier, manufacturers are providing premium-tier hearing aids below the rate at which inflation has increased over time. In fact, manufacturer pricing is 4.61 times less than the rate at which inflation has grown.
- The data in Figure 2 show that wholesale hearing aid pricing was rather consistent with inflation from 2004 to 2011. Starting in 2012, the wholesale price of this technology was reduced markedly and has stayed well below inflationary levels since.
Economy-Tiered Wholesale Pricing
Figure 3. Comparison between unadjusted, average, single-unit wholesale hearing aid prices (orange filled squares), in US dollars, and a 2004 average-priced, single unit wholesale hearing aid adjusted for inflation (orange asterisks) for the economy-technology tier.
- In 2004, the average wholesale cost for a single unit, economy-tiered hearing aid was $280. In 2019, the average wholesale cost for a similar technology-tier hearing aid was $326, unadjusted for inflation. Over this span, the average wholesale cost per unit has increased by $46, or by an annual average of $2.88.
- When CPI is applied for inflation, the average cost of a single unit hearing aid in 2019 was $380. This finding indicates that the 2004 unit is $100 more expensive in 2019, yielding an annual average increase in wholesale price of $6.25.
- Over the years, the unadjusted wholesale pricing for economy-tier technology has vacillated, with pricing well-below inflation between 2006 and 2010, and well-above inflation between 2012-2016. The current trend indicates that wholesale pricing is, again, below the rate of inflation. It will be interesting to see whether wholesale pricing continues to stay low as direct-to-consumer products begin to penetrate the market in the future.
Summary
In Part 1, the reader was provided a glimpse of nominal hearing aid wholesale pricing trends for premium- and economy-tiered products, as well as for the average hearing aid. In Part 2, wholesale prices were compared, this time adjusted for inflation.
In early 2021, Parts 3 and 4, respectively, will shed light on the retail pricing trends of hearing aids, both nominally and adjusted for inflation.
