Seven Rules for Thinking About Hearing Aid Pricing

It’s not about price; it’s about the overall patient experience with your business/practice

In the past year, I’ve had the opportunity to meet and speak with audiologists and hearing instrument specialists, as well as manufacturers in the hearing aid industry. The key trends that I’ve observed are that hearing aid technology is continually improving (eg, more channels, greater ability to take full advantage of the residual hearing area), the stigma around wearing a device is lessening (courtesy of Bluetooth headsets and other high-tech gadgetry), and the aesthetics have come to the point where some models are not noticeable except to the wearer.

The fourth trend, and focus of this article, involves price. While the inflation-adjusted cost of hearing aids has actually decreased during the past several years (in part due to the widespread introduction and acceptance of digital technology), many consumers—as well as hearing aid providers—would contend that hearing aids are expensive. I would certainly agree.

Shareef Mahdavi is an advisor to medical device manufacturers and providers who work in the medical retail environment. He helped make LASIK eye surgery the top elective surgical procedure performed in the United States, and helped create demand for technologies in ophthalmology, aesthetics, dentistry, and psychiatry. He wrote this article in cooperation with CareCredit, Costa Mesa, Calif

The key challenge that every dispenser faces is how best to respond when you’re in the business of selling something that the typical customer needs but doesn’t really want (often due to denial) and will say to you that they cannot really afford. While it is easy to succumb to this consumer mind-set, especially when it calls on your telephone and walks in your door every day, you must recognize one fundamental truth:

The purchase decision is not about price unless you make it about price.

Data from both inside the hearing industry, as well as from the other self-pay medical categories, support this truth. Survey data published in MarkeTrak¹ show that 85% of people want lower prices, and anywhere from 20% to 40% of those surveyed indicate that cost was a significant factor in their purchase decision. Similar surveys in other retail categories yield similar conclusions.

With Hearing Aids, Cheaper Prices ≠ Greater Units Sold

Across most retail categories, the majority of consumers want goods to be cheaper, and cost will always be a factor in the decision for a significant percentage of buyers. Low-cost options are available for virtually all manufactured goods, including hearing aids. Yet market penetration for hearing aids has not moved beyond the range of 17% to 24% for decades,² according to MarkeTrak data, as well as data published by Amyn Amlani, PhD, professor of hearing and science at the University of North Texas.³ In short, overall demand for hearing aids has not significantly increased—even with the availability of lower prices to consumers.

One of the explanations for this is the inelastic nature of demand that is seen in hearing aids, as well as other elective medical procedures. Inelasticity means that lower prices for particular goods do not translate to higher demand (Table 1). Other similarly priced elective medical purchases, such as LASIK eye surgery and some cosmetic surgery, exhibit like behavior. When average LASIK fees dropped by more than 20% around the year 2000, demand actually fell by 11%. Conversely, plastic surgeons have raised their fees 30% over the past decade and seen demand triple. The lesson here is clear: while discounting seems tempting as a promotion or at point of sale, the lack of elastic demand means consumers are not responsive to lower prices and discounting won’t work to grow your business or overall demand.

While you have probably seen the act of discounting “work” to help close a specific transaction, you lose much more than you gain from these sales. Beyond the profit erosion, you convey to the buyer two ideas: 1) price should be the major factor in their puchasing decision, and 2) the perception that hearing aids are overpriced. In effect, that short-term sale you gain causes long-term losses.

The solution: shift your entire focus away from price and discounting; move toward value and affordability. Your ability as a hearing care professional to increase perceived value with that consumer who walks in your door can be greatly enhanced by paying attention to the following seven principles:

1) Stress quality rather than price throughout the interaction

When your efforts are focused on price (“the deal”) rather than on quality (“the benefits and value”), you are essentially saying nothing else really matters and there is no additional value to the transaction. This turns your own product offering into a commodity and signals to the consumer that they should shop around for the best price—which can doubtlessly be matched or beaten locally or online. This also diminishes your role and expertise in the consumer’s mind. Is that how you wish to be perceived?

2) Don’t upsell, but don’t downsell either

Ask a typical consumer what they think about hearing aids, and you will likely hear perceptions that the goal of a dispensing professional is to have customers buy more expensive hearing aids than they need. As a professional, you have to work hard to battle this perception—but don’t go the other way either. The purpose of every customer transaction is to create satisfaction and loyalty so powerful it turns the customer into your unpaid sales force.

Downselling puts this scenario at great risk. If they are fit with a device that doesn’t meet any need except price, they will be dissatisfied with its performance and will be far less likely to recommend you (or hearing aids, for that matter) to anyone else. Ultimately, you both lose.

3) Recognize that your price is a cue for quality

The prices you charge send an immediate signal to the consumer as to the quality of your goods and your level of service. This phenomenon has been extensively proven, most recently in a study of wine tasting by consumers, where wines with more expensive price points were preferred and even caused greater brain stimulation in the subjects—in spite of the fact that the wines were from the same bottle. Most dispensing professionals don’t want to be thought of as the discount provider. But by promoting high cash or percentage discounts, you instantly get tagged as being of lower quality.

4) Understand what it means to “sell”

Selling comes from the Scandinavian word “selzig,” which means to serve. If you just are uncomfortable with that label, focus on educating—which is what the best salespeople do. The role of the salesperson is to uncover the needs and the concerns of their clients, and then recommend a solution and help them understand the benefits they will gain. This is a process that requires you to ask questions and listen carefully and sincerely, while not making any assumptions about someone’s willingness to spend.

5) Live up to your (real) competition

Who’s your competitor? It is not the audiology practice or hearing aid dispenser down the street. In truth, it is every other possible spend for the amount of money you are asking for your service to help improve your patient’s quality of life.

When we are talking over $1,000, there are a lot of discretionary goods, services, and experiences that that amount of money can buy. Most goods retailers and service providers are recognizing this and striving to improve the overall customer experience, which has become the new battleground.

6) Hearing aids will always be viewed as “expensive”

Consumers have a natural reflex to object to price and say, “That’s too expensive.” You should accept this as the value judgment of most everyone coming to you. Consumers judge value based on what they know. And if they don’t know much about differences in features, benefits, and quality in hearing aid products and services, it will be impossible for them to accept a higher-priced offering that you might recommend. However, as your value gets recognized, price becomes less and less an issue.

7) Create alternatives for how to purchase

Include with your recommendation a way to pay for the instrument that is manageable for the patient. Financing is a proven method in retail, and patient financing is an effective tool to help prevent a patient you just spent several hours with from walking away tested and not sold. Slicing a major purchase into digestible monthly payments is what creates affordability in the mind of your consumer. It creates a reason to say yes by addressing the “it’s too expensive” viewpoint that walked into your practice.

Summary

Your role is to create value for the products you offer and the services you provide. These seven principles are designed to help you think differently about how you approach each customer interaction. Price, while a factor, is not the most important one in the consumer’s mind. By placing price in its proper context—building value for your recommended hearing instrument and making it affordable through finance as opposed to discounting—you will go much further in terms of converting interest and need into purchases, while maintaining your value as a dispenser.

References

1. Kochkin S. MarkeTrak VIII: Consumer satisfaction with hearing aids is slowly improving. Hear Jour. 2010;63(1):19-32.
2. Kochkin S. MarkeTrak VIII: 25-year trends in the hearing health market. Hearing Review. 2009;16(11):12-31.
3. Amlani A. How patient demand impacts pricing and revenue. Hearing Review. 2008;16(3):16-19.

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Correspondence can be addressed to HR or Shareef Mahdavi at or call (925) 425-9900.