Retail Pricing Strategies for Hearing Aids, Part 1

I’ve always been a bit of a salesman, as well as a computer geek. For me, they went hand-in-hand, one benefiting the other. I purchased my first computer at age 9 by selling stationery door-to-door, raising enough money to purchase a Commodore VIC 20. The 20 stood for 20k of memory, if you can imagine that.

I did fantastically with school fundraisers, always getting some kind of gimmicky prize for being the top seller, including a cheap basic calculator that I still use, even after 30 years! I was so proud. Those early days, of course, had a formative effect on my psyche, teaching me early on how you can purchase a product at one price and sell it for another, earning a profit to help you achieve your goals.  This psychological development also helped me significantly in my career as an audiologist. I grew up in the business, my father being a very successful audiologist, one of the first to enter private practice in Oregon back in 1982.

In my experience, most audiologists receive great training in being good clinicians, but when it comes to the business side, training has sometimes been lacking. While the creation of the AuD has significantly broadened the spectrum of business training, back then my father was lucky to have my mother. She had worked in the banking industry for nearly twenty years at that point, helping businesses with loans and business plans to such a degree that when my father decided to leave the employ of the State of Oregon as an educational audiologist, he had a great partner to run the business side.

So, literally, in every way, I grew up in the business, learning just about every aspect. When a business is smaller, the owners and employees always wear multiple hats. While my mother took care of paying the bills, bookkeeping, and front-desk duties, and my father provided the audiology services, I got to handle the marketing, insurance billing, and database management, while also providing basic repair services for our hearing aid patients. In order to perform some of these duties, I needed a good understanding of the economics of the business: How much do we budget for marketing? How much do we charge for diagnostic services? How much for hearing aids and supplies?


Early on, pricing hearing aids was simple. We followed the method that many dispensers had, tripling the invoice to set the retail. After all, since it was “unethical” according to ASHA standards prior to the late 1970s for audiologists to fit hearing aids, many audiologists learned from dispensers how to fit and sell and develop the retail aspect of their business.

This was easy when hearing aid choices were very limited—style, matrix, and brand were about all we had. In the late 1980s and early 90s, however, things started becoming more complicated. With the introduction of digitally programmable technology, we began to learn that the old pricing methods didn’t work quite as well; when we tripled our invoice on these instruments, the prices felt too high. I say “felt” because, conceptually, we just weren’t used to charging that much as compared to the $400-$600 we were used to charging for analogs. Over $1000 for a hearing aid? Unheard of!

So, we came up with a simple “add-on” strategy regarding pricing, where we added a flat dollar amount for analog aids, then a bit more for digitally programmable aids. When true digital signal processing (DSP) instruments came along a few years later, we continued to follow this method by adding on just a bit more.

Our system, however, started to fail when we found that programmable instruments with directional microphones seemed to be preferred over the digital aids that didn’t have them (and wouldn’t until a few years later). Some of these directional programmables also cost as much as the full digital instruments, but our formula had us charging less for them. Then, just a few years later, it failed altogether when mid-range and entry-level DSPs entered the market, and some of the latter cost less than some analog aids!

Our solution? We started basing retail price directly on invoice price, and then included the small add-ons like batteries, earmolds, and longer warranty for the higher-level aids. However, the “triple the invoice” pricing method of the old days didn’t fit in with today’s invoices, where our wholesale cost for the high-end instruments was significantly higher than it was back when we were retailing analog instruments. So, I came up with a hybrid method that combined a multiplier effect on the invoice with a flat amount based on length of the warranty. Batteries, earmolds, etc. were also accounted for.

This formula has worked quite well for us for many years in a variety of capacities, and it seems superior to other methods I’ve seen in the market. I worked for a time on the manufacturing side of the business, serving as a field representative and trainer for a major hearing aid company. One of the greatest benefits was exposure to how other people run their business. It gave me a great opportunity to pick up new ideas, both for what to do and what not to do.

In a guest post I did in November, I discussed other pricing strategies, and will review them in more detail in subsequent blogs. My goal is to help practitioners in a number of areas, including:

  • To assess the advantages and disadvantages of various methods of setting their prices;
  • To learn how to factor in value-added aspects that manufacturers offer in a way that does not raise ethical issues;
  • To develop methods of presenting the price to the patient;
  • To understand the benefits and pitfalls of unbundling;
  • And to generally feel more comfortable in explaining what they charge for what they do.

Considering the great value of supplying our patients with a solution to their hearing problems, I feel that what we charge is definitely fair and reasonable. And if you truly understand how you came up with that retail price, you’ll have no problem justifying it to the patient.

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