Just to review, in part 1 of this series I reviewed my own personal history in the development of sound retail pricing strategies that would best serve my practice and my patients. In part 2, I discussed finding the right “magic formula” and the various formulas I had seen other practices use, including the possible pitfalls of each of them. In part 3, I looked at the actual factors that should be considered when developing a pricing strategy–the invoice, warranty terms, necessary parts like T-coils and earmolds, batteries, accessories and maintenance devices, and cost-of-living adjustments to your overall margin. So, now I must embark into dangerous territory that is sure to raise some eyebrows: manufacturer loyalty programs and ethics. Because of the complexity of the topic, I am splitting it into three separate posts.
A Bonus for the Patient
As you may have read in a guest post I wrote last fall for the Hearing Economics blog at Hearing Health Matters, I strongly believe that Manufacturer loyalty programs not only can be utilized ethically in a private audiology practice, but they should be exploited for the benefit of the patient.
My own retail strategy is pretty straightforward. The invoice is key. If the invoice is lower, the retail price should be lower. It is our responsibility as practitioners to negotiate the best possible discount on the products we routinely work with. From there, however, we should pass this discount on to the patient. To me, this is the best ethical way to use these loyalty programs to provide the best technology at the lowest possible retail price for our patients.
In addition, there may be other aspects of these loyalty programs that further benefit the consumer. One manufacturer I routinely work with has a loyalty program that provides us with a high discount, free shipping, an additional year’s warranty, and–depending on the product ordered–some free accessories and batteries. My policy is that if I get something for free, the patient gets it for free. While some practitioners may wonder why I would give a tangible good away for nothing (why not make a profit?), I feel that if doing so enhances the patient’s success rate at no additional expense to me, then why not? If the patient is more successful and tells others, then I will be more successful as well.
My personal experience is that, while each product varies slightly from manufacturer to manufacturer, there is a significant enough overlap that 80% of the time I could go with any one of them. Basically, if I can get products from three different manufacturers that will serve the patient equally, my choices are wide open. There are some slight nuances, of course, that in some cases ultimately lead me one way or the other. Some products are better for high-frequency amplification, others are more water-resistant, and still others seemed to be preferred by musicians. But for most patients, you can use just about anything.
Price, however, can make the difference. Let’s say we have two 16-channel products from different manufacturers that share so many features that either product will do. Both have remote control and BlueTooth options, but with one manufacturer, because of its loyalty program, the patient gets these options for free. Isn’t this a better deal for the patient?
In the second part of this topic (coming out in two weeks), I’ll discuss how loyalty programs can be utilized ethically to benefit the patient directly.