Matt,
The only retail business that comes close in markup margins to HA is probably the jewelry business. I’m not slamming Audiologist or HIS but the manufacturers markups. If I had a markup like they do for my business a china cabinet would cost $100,000, but my products aren’t listed as a medical device, which would give me a license to basically steal. But hey in the medical field everyone does it because they know they can get away with it and the sad thing is it affects peoples lives and the quality of their lives.
I have no problem engaging you in conversation, but only if you’ll do me the favor of at least listening to another point of view. Otherwise I am kind of wasting my time.
You say the HoH are being screwed, yet I have watched hearing aids evolve over the past couple of decades from crappy little amplifiers to state of the art computers that can perform incredible feats of hearing improvement. The hearing aid companies that you seek to vilify have driven that amazing innovation, and now the hard of hearing can benefit. Sure, poor people cannot afford cutting edge hearing aids, but even the most basic things the NHS might give away are light years away from where they were a decade or two.
If you had your way and hearing aids were sold for $800 each (I think you suggested that they were made for $200, could be sold to specialists for $400, and then presumably another similar mark up to the hearing professional?) under that business model (like the example I already gave) it would be necessary to sell 25 units a month just to keep the lights on in the clinic. That’s before paying the hearing professional. In my example I gave a budget of $4000 a month in advertising, which gets you maybe one full page ad in a local newspaper. So a hearing professional would need 30 phone calls from the ad, book say 20 appointments, and hope to sell 12 people just to break even, without paying himself a dime.
So what if he runs the ad, and no one calls? Or only 5 people? What then? Under your system the clinic will be bankrupt by the end of the year.
But since you think you know how all this can be done, show me some numbers as to how it should work. And lets even take your assertion that building a hearing aids costs $200. Show me what a fair price would be that keeps the factory/lab open, and the hearing professionals able to make even a basic living for themselves. I’d love to see your numbers.
In the example I gave you, the hearing professional in question opened his own practice. So he buys his hearing aids from a lab at cost price, and he can then sell for whatever he wants. I’ve only ever seen one hearing aid from Starkey where they have asked us to sell it for a certain price, and that’s the AMP. They don’t want all their stores cutting each other’s throat in silly advertising programs. Other than that, the other few dozen aids are entirely up to the practice in question. They could literally give them away as far as Starkey are concerned. They do not set the price, the business owner does.
Anyway, like I said, please show me a realistic business model, just as I showed you. Show me how you think it can all be done, rather than just ranting and making statements with no basis in fact or evidence.
Yeah, but see there is a huge difference between large margins, and obscene profits, which was the original charge.
It wouldn’t really matter if a hearing aid was produced for $10 and sold for $10,000. If no one individual or group is getting rich in a manner that is considered excessive, there is no issue here.
If you look at hearing aid companies, dispensing companies, or employees within said companies, they are not all driving Bentleys and jet setting around the world. That simply isn’t happening. So forget margin, since that argument is irrelevant, where’s all this obscene profit? Because I’ve been around the industry a couple of decades and I’ve yet to see it. So please, show me where it is. Maybe I need to get in on this action you allege is happening.
You know you’ve been on that soap box many times before ed, and clearly ignored all you heard while on it, because you were not listening.
First off, our friend from across the pond lives in a country where he can get basic hearing aid for free from the NHS. Yet there is still a thriving industry in the private sector.
Secondly, you’ve harped on about The Shack and your amplifiers before. THERE IS NOTHING to stop any company from Motorola to GE from making a personal amplifier and selling it at The Shack for $50 or $100. The only stipulation is they cannot call it a hearing aid.
So if it were as easy to make a self programming, self adjusting, fit it yourself hearing aid that could keep up with the kind of technology in a $6,000 set of hearing aids, why is no one doing it? Let’s face it, a bit of clever advertising, and a reputation for great results, and millions of people in the hard of hearing community would catch on. Consumers don’t REFUSE to buy a device because it isn’t called a hearing aid, and that’s the only FDA guideline.
Given how many millions of hard of hearing people live on this planet, why hasn’t one of these electronic giants made a great hearing aid, called it an ‘advanced personal amplifier’ and marketed it for $50 or $100 in Walmart? Probably because you are completely wrong about how easy it is to do.
Finally Ed, I’ve already given you my professional opinion on the topic of mild to moderate losses, and other hearing professionals have backed up my statements. Fitting a mild to moderate loss is often every bit as hard as fitting a moderate to severe loss. Fact is, people with milder losses are more likely to have issues such as occlusion, hearing circuit noise, noticing if the nuance of the sound isn’t what it should be. So your suggestion that the milder the loss the easier it is to fit, flies in the face of audiological science. It simply isn’t the case that because a person only has a low level of loss, that fixing them is a breeze. Heck six or seven years ago before open fit technology became so good, it was actually quite a nightmare trying to help those with that kind of loss.
Of course, 50 doctors of Audiology could come around your house with case studies and real life patient examples, and you still wouldn’t believe me, because you’ve already decided that the answer is deregulation of everything, and your trusty Radio Shack idea.
But this is so speculative and will vary radically as to be irrelevant. I’m a self programmer, but still use a reputable audie who fits instruments. I have never, ever seen an ad from her. There another gent, a fitter only who runs his own operation. At least twice a month, he has full page ads in the front section of the local paper. “Latest computerized technology”, “nearly invisible”, “$2000 off to the next xxx patients”. I am sure I am not alone as a BTE wearer that with some regularity we get approached by someone with a loss who asks about a hearing aid, what it’s like, etc.
If the person asks for a recommendation on where to go, I will recommend the former - ad free audie and specifically say to be skeptical of the latter fitter. Once the practice is up and running, you’re advertising budget will be near zero in a reputable practice, referrals will be enough to keep clients coming in.
And to HIP_Matt
>Comparing hearing aids and the services that are included with them to cell phones (which are an enormous rip off when you look at the services include) and ipods and other electronics is point less. 90% - 95% of the patients coming into my clinic could not or would never want a “do it yourself” option. So what do we do ?
While I’ll agree that the services included with a hearing aid are a major cost of the price, and the fitter should be paid a fair fee, the 24,000 cell phone towers Verizon owns did’nt come cheap!
Can you convince my bank manager about this.
Marketing activity is never ‘free’, it either costs in time, sponsorship, support or getting your logo put on sports-kits etc. You also have to grease the wheels of other business, remind them and reward them for business…
Newspaper advertising is quite ‘old-hat’ in terms of returns, especially if people aren’t spending.
Year on year you’ll lose over 20% of your database, from a zero start-up, that makes the curve even harder.
QUOTE=ZCT;66922]I have no problem engaging you in conversation, but only if you’ll do me the favor of at least listening to another point of view. Otherwise I am kind of wasting my time.
You say the HoH are being screwed, yet I have watched hearing aids evolve over the past couple of decades from crappy little amplifiers to state of the art computers that can perform incredible feats of hearing improvement. The hearing aid companies that you seek to vilify have driven that amazing innovation, and now the hard of hearing can benefit. Sure, poor people cannot afford cutting edge hearing aids, but even the most basic things the NHS might give away are light years away from where they were a decade or two.
If you had your way and hearing aids were sold for $800 each (I think you suggested that they were made for $200, could be sold to specialists for $400, and then presumably another similar mark up to the hearing professional?) under that business model (like the example I already gave) it would be necessary to sell 25 units a month just to keep the lights on in the clinic. That’s before paying the hearing professional. In my example I gave a budget of $4000 a month in advertising, which gets you maybe one full page ad in a local newspaper. So a hearing professional would need 30 phone calls from the ad, book say 20 appointments, and hope to sell 12 people just to break even, without paying himself a dime.
So what if he runs the ad, and no one calls? Or only 5 people? What then? Under your system the clinic will be bankrupt by the end of the year.
But since you think you know how all this can be done, show me some numbers as to how it should work. And lets even take your assertion that building a hearing aids costs $200. Show me what a fair price would be that keeps the factory/lab open, and the hearing professionals able to make even a basic living for themselves. I’d love to see your numbers.
In the example I gave you, the hearing professional in question opened his own practice. So he buys his hearing aids from a lab at cost price, and he can then sell for whatever he wants. I’ve only ever seen one hearing aid from Starkey where they have asked us to sell it for a certain price, and that’s the AMP. They don’t want all their stores cutting each other’s throat in silly advertising programs. Other than that, the other few dozen aids are entirely up to the practice in question. They could literally give them away as far as Starkey are concerned. They do not set the price, the business owner does.
Anyway, like I said, please show me a realistic business model, just as I showed you. Show me how you think it can all be done, rather than just ranting and making statements with no basis in fact or evidence.
Hi ZCT
As stated and I reiterate, I have little or no gripe with most of the Audi’s or the HIS, they are governed by the manufacturers price and it is this initial price that has the knock on effect… You have not countered my claim what these high end aids cost to produce, so I take you agree? So are you saying that a single hearing aid that costs $200 max to produce and ends up at $3500+ each, is that a fair price for the end user? Would you buy something at that price knowing how much it actually cost to make? Now, if its not the Audi’s or the HIS whom are making a killing, then it must be the manufacturers? Either you are being liberal with the truth or the said manufacturers are making gross and obscene profits, so which is it ZCT? No, the HOH ain’t being screwed, we are being,SH#FTED. You can use all the subterfuge you like, deny, deflect and treat us with duplicity, but the mathematics speak for themselves!!! My apologies for my colorful language;)
I have no business plan for you or facts and figures to show you, I’m just a simple Joe Blogs with a severe/profound loss and all I would ask of the hearing aid industry is; If you make and produce high end aids, then as I have no choice but to buy, after production costs, R&D, returns, warranties, advertising and a fair profit margin, then please sell it to me at a reasonable price… Although IMO, if it were an ideal world, then I would say around $1500 for a high end aid would be a fair price to take into account the above outlay, I’m almost certain your actual sales would double, but it all depends on how much the manufacturers are willing to part with them for? Say they sold them at $600 each, that’s 200% markup for them and at $1500 each is 150% for you and 750% to me…Or do you need more than that? Every other electronics company that sells on the high street has all your type of outlays, but they do not sell me an HD TV they bought in at $400 for $6000! They will sell around $800 and shift a few each day as I’m sure the likes of Costco does much the same, they are looking for volume HA’s sales as you should be or is that too much like hard work?
The hearing industry has made some advances in the last few years, but I would never term it as light years, even in the NHS!!! LOL, they are still running 5 years behind the times, which is reflected in the aids they dispense:D There has been no quantum leaps in comparison to say, cell phones or PC’s! As we still face the same old enemies of feedback and background noise we had in the old analog days, yes we now have programmable aids with compression and Bluetooth via third party devices like the iCom, but as yet no direct pairing with the HA’s, but I’m sure that will come! I have yet to see or indeed hear these incredible feats of the past 20 years of using HA’s, both private and NHS, in fact in some situations I hear far better and more clearer with my old analogs, the problem is I hear everything!!!
I have no axe to grind with you ZCT, you are employed by one of the leading manufacturers (Starkeys) I would expect you to defend them and the other producers with vigor, I do enjoy a constructive argument though…
I can afford to buy a set of new aids every couple of years or so, my Ambra’s cost me around £3.2k = $5000 via the internet, on the UK high street they would have been about $7000+ so I made some savings… my argument is not about me or for me, its for the guys and girls out there whom would benefit immensely in most situations with a vast improvement of quality of life if these high end aids were more realistically priced and came within their price range!
Take care, Cheers Kev:D
That’s an awfully simplistic view of business.
First off, it could take several years to get that kind of reputation that can keep your business afloat by referrals alone. And what do you do if you happen not to have any referrals for a few months? Maybe your patients have already sent all their HoH friends to you, and the remaining ones are still in denial.
To think you can as a general rule open a business, and even within two years drop the advertising budget to zero is unrealistic of just about any business.
Rolex have a brand name recognition that is almost universal. Have you ever seen a glossy Rolex ad? Have you ever heard anyone say they bought a Rolex and it was crap and fell apart? No. Yet they still pour millions of dollars into advertising.
McDonalds advertise all the time. Why? They are everywhere, every American knows what they look like, what they sell, and how cheap they are for a meal. So why advertise.
I see what you are saying, but it’s a tiny percentage of businesses that can truly operate just on word of mouth alone, and doesn’t help my hypothetical scenario where some dude wants to open a new clinic so he can help the HoH community, and participate in all these lavish riches we keep reading about.
No one is arguing that the “little guys” in the hearing aid business are making it big. The complaint was about the high cost, which is set (largely) by the manufacturers. Ever been to Bill Austin’s house? I don’t begrudge him his lifestyle, but to suggest no one is getting rich off hearing aids is ignorance, pure and simple.
Any tax expert can show that giving away hearing aids is more cost-effective. It’s tax deductible and wonderful PR. I’m not saying Bill Austin of Starkey is doing it for the money, but I promise you he’s not “giving away” tons of money or otherwise suffering monetarily for his altruism. It’s either 1. be altruistic and give to the needy OR 2. pay it to Uncle Sam.
Actually, the assertion that decreasing cost of hearing aids would significantly increase sales is untrue. See the article below:
I’m not going to get into the fray of what they cost to make, what it costs to run a business…etc. It’s all been hashed out over and over and I honestly don’t have anything additional to add that hasn’t already been said.
I would love to be able to give away hearing aids (6 months at the VA were wonderful when I did a traineeship!) or sell high-end tech for half of what I do but I can’t. I know what the hearing aids cost me and what we have to sell them at to run a business and that ends up putting the costs pretty high for those uber-fancy devices. We try to make it as low as we can (this is where being in an ENT office pays off a little) but they are still expensive and far beyond what many people can afford. I do what I can though and at the end of the day, feel better know I helped as many people as I could.
Actually the article you reference is referring ONLY to hearing aids for people with a mild loss. If I had only a mild loss I wouldn’t care what hearing aids cost because I wouldn’t buy them or use them. I can say this with certainty because in my early 20’s my loss was considered mild and it wasn’t until I hit 30 that it became moderate, and I could no longer function comfortably. Most people with hearing aids MUST wear them to function, which means it’s not really a choice any longer. Yes, some elderly folks choose not to wear them, but if you’re relatively young and in the job force, you simply have NO CHOICE. If you consider ALL hearing losses, it’s silly to say cost doesn’t matter.
But like you also say, this has all been hashed out before.
Thanks so much for your thoughts. That’s all anyone can ask.
I have not had a chance to read the article and hope to soon. I cannot believe that more affordable HA would not allow more HOH people to wear hearing aids though. Maybe the article will shed some light that I fail to see.
I too know what it’s like to give away free hearing aids. Despite being an evil hearing professional working for an evil corporation making obscene profits.
When I worked for Audibel I spent about five years or so as part of the Hear Now program, a part of Starkey’s charity program from the Starkey Hearing Foundation. I would do the hearing test for the person who could not afford the aids, for free. Then the evil corporation would send me hearing aids with a street price of $1,000 - $4,000 each for free, and I would fit them for free. The patient paid an admin fee of about $200 to cover shipping, paperwork, processing etc.
I’ve given away tens of thousands of dollars of hearing aids over the years, and it certainly does feel good to help people who otherwise could not get the help.
But I guess the cynical will just call it a stunt or a tax write off, and find an excuse for why Bill Austin still travels the world giving away hearing aids and tireless raising money for charity when he could be living on a tropical island with all those obscene profits.
Actually, Bill Austin lives in a multi-multi million dollar home…and I don’t begrudge him that. He’s amazing and innovative and deserves his wealth…just as Bill Gates does. Or Warren Buffet, or whomever…But again, saying that no one in the hearing aid business is rich is blatantly false. And he could certainly live on a tropical island if that is his wish…he can afford it. It’s not a conspiracy theory, it’s a fact.
Um, no actually it is not limited to individuals with Mild hearing loss. The picture below (see link) shows the average thresholds at each frequency. If you look at all the tables in this section in the original artical, it’s interesting that the severity of loss and age that the person was at the time when they received their hearing aids is lower.
The losses represented are typical of a majority of individuals with hearing loss, ranging from mild sloping to severe losses. While the average age is representative of a different population (in the 70’s I believe) than what you are in, it is more in-line with the age of the majority of hearing aid candidates.
The article showed that there wasn’t a tipping point until the hearing aids were provded at no cost.
The study doesn’t say that cost doesn’t matter at all…it says that cost is only a small portion of motivation behind whether someone does or does not get hearing aids. It’s just frustrating when it’s implied that if hearing aids were significantly cheaper everyone that needs them would rush out and get them because it simply isn’t true. Is it a factor? Yes. It is the main factor? Probably not.
And I want to say again, for people who are in the work force or trying to return to the work force PLEASE check out to see if your state has an office of vocational rehabilitation. I refer a lot of patients who need hearing aids and are working or trying to find work to my OVR who are able to get hearing aids at no charge. Ones I would be selling for $4600, free. At most, they might pay $1000 and I’ve only had 2 people, out of probably 20-30, have to contribute towards their cost.
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The thing is though, on my travels I have seen some local companies who make their own. They buy the parts from china and throw them together. They are not shackled by the big players or by manufacturers and their evil ‘cartel.’
But try as they might the one thing I’ve noticed in common with all of them is they suck completely. And I’ve come across quite a few of these companies. Without the proper research and development they are clearly 5-8 years behind the big players.
My argument is that based on all the evidence I’ve seen, the only way the big players can continue to innovate the way they do is by charging what they do. And like I’ve also said, if they are making obscene profits, prove it. Because I see no evidence of any more bottom line profit in this industry than in any other.
There really is no point in my countering what you are saying. It would be your assumption versus my intelligent guess. With no evidence on either side.
It doesn’t matter what something costs to make, you pay what you think something is worth. Also you are kind of making a straw man arguement anyway, because even if we pretend for a moment that a RIC hearing aid costs $200 to build, you are not considering how many millions of dollars it cost to figure out how to make them at that price.
I was at the lab recently and they were showing us the inside of a Starkey Wi hearing aid. Over 80 components, a four layer flex circuit with over 300 connections, world class multi layer water and oil proof nano technology coating, one of the smallest antennas of its kind in the world. Patented and industry leading speech in noise capabilities along with binaural spacial mapping. A technology that I put in a patients’ ear and has a wow factor like I’ve never seen in 20 years.
No matter what you say, the know how to execute this technology does not cost $200. It cost tens of millions and years of research. Even if they could make and sell these for $200, there would be nowhere near enough money to keep the company going or develop anything new.
You have not showed me any math that speaks for itself. You have shown me some assumptions. Show me these obscene profits. Find me a hearing aid company, and show me their profit margins. Demonstrate how they are any greater than the profits of any other similar sized corporation in any field, medical or otherwise.
As I’ve said before, it doesn’t matter if the hearing aids cost $1 to make, they were not designed by some dude in a room in an afternoon. They have evolved over decades at a cost of hundreds of millions of dollars. That’s why today’s hearing aids make hearing aids of the 70s look like a joke.
Well based on my understanding of this industry from various viewpoints, I can tell you that I’ve not seen any obscene profits. It’s no use claiming they exist without evidence. And since you are the one making this assertion, you kind of have to prove it. It’s not my job to disprove a baseless claim.
You cannot compare hearing aids to HD TVs. Just about every household has a TV or three, the number of hearing aid users is vastly smaller. Also I can open a TV shop and hire some minimum wage idiots to sell them. But that isn’t going to work with a hearing aid is it?
There’s little point in talking about those numbers again, because they are based on made up stuff from your head. So there’s little more I can say on that. I’ve already provided examples based on your made up numbers.
I completely disagree. The hearing aids I fitted in 1994, compared to today are light years apart.
I don’t actually work directly for Starkey, although I do dispense their products. And I don’t just defend them because I work closely with them. I am anonymous on here, and I could just as easily tell you they suck if I believed it.
Equally, I have no issues with you personally Kev, we are just having a chat.
It’s kind of like the argument about medicine though Kev. While I am from the UK and have enjoyed the NHS for years, I live in America, where literally the poor can end up dying because they cannot afford life saving medications.
It’s not right, and in the ideal world all medicine and medical devices would be free to all. But life isn’t like that is it.
Do understand you are arguing here with a liberal. I believe in heavily taxing obscene profits, and I believe in socialized medicine. I get what you are saying about mark up, and mass production costs etc. But equally I’ve seen some of the technology that goes into these things, and know enough to get why the labs have to charge what they do. When all is said and done, I am satisfied that no one is being ripped off. If they were I would seriously second guess my career choice. But in honesty I have found the people I work with at Starkey nothing if not dedicated to helping the HoH community, and are not scamming a group of people nor exploiting them. That’s the best I can tell you.
I can’t wait until everyone is equal. Equally poor and equally stupid while the fat cats at the top of the banking system eat gold flakes for breakfast.
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Many audiologists insist that consumers would do themselves harm if the FDA declassified hearing aids as medical devices and allowed them to be sold over the counter. Optometrists made basically the same argument to block the sale of over-the-counter reading glasses, insisting that consumers could harm themselves unless their eyeglasses were prescribed and fabricated by a professional. But today, you can buy reading glasses in almost every large drug store, and I haven’t seen any reports of patients suffering any deleterious effects from buying their own reading glasses at a fraction of the cost of what an optometrist or optician would charge. The consumer is always the best judge of what’s best, contrary to what many audiologists would like to believe. Gerald
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If your ears worked in the same way that your eyes did then I’d be inclined to agree with you, however, they aren’t even close to the same. Also, what if you have someone with a mild hearing loss in one ear that decides that it’s not a big deal to just go and get an OTC hearing aid without any kind of medical exam? Here…listen to these sounds and if you are at X level buy Y hearing aid. Only problem is that unlateral hearing loss could be an indicator of something far more serious. But hey, the consumer always knows best right? I’m sure it’s nothing to worry about…I’m sure it’s not a cholesteatoma or middle ear infection or acoustic neuroma or foreign object or anything because hey, it’s just a little hearing loss right? No big deal…just make stuff a little louder and it’ll all be fine…
I think it’s a little naive to just say “the consumer is always right” when it comes to a medical issue.
What’s missing in this thread? The assumption that the present business model is sacroscant (sp?) cast in stone.
There are other business models that could result in $500 aids or less.
Suppose aids could be self programming (the technology exists). Suppose there were no FDA regs…etc. I guarantee that the majority of aids would retail under $500 and that the market would overnight divide into two tiers. For the majority they would buy aids at the drug store. And those with severe/profound or unusual loss would seek skilled practioners as do now. Ed IMO
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