The real price of hearing aids

I read a lot around the web on forums and blogs that hearing aids are being sold at massive profit over the original manufacturer cost. Some people say that retailers are making as much as 100% profit on a unit.

But where is the profit going? Is the manufacturer selling to the retailer at massive markup? Is the retailer making the big profit? Are there really such huge profit margins or are aids genuinely expensive to produce?

Does anyone have any real-world numbers on how much a hearing aid costs to make? How much the different components are, etc?

Only 6.5 million aids are sold globally each year.

Spread these across say 10 manufacturers and say 5 models, you end up with small production runs of the chips.

Must wafer labs won’t consider orders under say 1 million chips … … unless you pay more!

Add in research costs, marketing costs, repair networks, plastic moulding costs, software development and the aids start becoming expensive.

Now add in the time the dispenser spends with you - and the office overheads … you can see where this leads!

Yes, high prices!

Of course you can get low cost aids in European supermarkets or on the Web - I have no objection to that … but please be aware that you get what you pay for.

If you want a top end aid, with lots of hand holding & a super warranty … but then start saying that ''I could make that on my kitchen table with $27 of parts from Radio Shack", don’t be surprised to get a cool reception from the dispenser!

There is way more to a product that the raw cost of the plastic case and the bits inside.

If price is a key factor to you, then maybe the self-programming approach could work for you : less hand holding so lower prices.

I agree that the costs can add up. My husband is a computer engineer and we were just discussing the fact that the nano technology involved is very expensive. I know that my new Agil Pro’s have 2 processors in each unit. That is impressive! Add in the unlimited adjustments, the free batteries for the life of the hearing aids, free domes and tubing for the life of the hearing aids, the time and knowledge of the professionals involved and I can see where the money goes. Unfortunately, the newer the technology, the higher the price. I am sensitive to the problems of the high prices and how they make the units unattainable to most of the population however. I just believe that this should be solved on the insurance end. Make them a mandatory coverage item.

Hmmm, A lot people in the industry post here. Being on the inside they know exactly what the markup is. No answers.

When I was in the industry years ago the markup for dispensers varied from 120% to almost 200 %. . Things generally stay the same I can assume those numbers are still good…

Generally speaking the price depends upon your volume. Wholesalers have a sliding scale.

Some suppliers like Starkey have a ban on mail order sales. I think I’m correct that they are the sole remaining US manufacture of significant size. Boycotts cut two ways. If they want to play this game OK with me. I won’t even consider doing biz with them and tell every one I know.

The Osmond Family who has a genetic streak of deafness in their family was going to set up a chain of hearing clinics a few years ago using Starkey. Didn’t happen as far as I know.

The VA is now one of the biggest dispensers. They have a huge amount of clout. Issued huge contracts last year on bid . Up for renewal this year. The way govt typically works is to do this but keep squeezing the suppliers… Gets to be a vicious cycle.

The VA will eventually do tests and under Freedom of Info act publish. Probably sometime in the next 5-10 years. .Things move very slow. Poor performing vendors will be dropped… This will have a huge impact on HA’s as most of the old guys are males, military and hearing challenged.

A comment was made about chip costs. A generic DSP for HA’s can be bought right now in low volume for less the $5.00. Same deal on the transducers. Most bucket shops buy what the industry calls faceplates or simply plates. That a complete unit with out the plastic mold or package. Also very cheap. Quality I don’t know.

Based on experience, mandatory insurance coverage would result in 1) increased insurance cost for everyone, 2) reduced choice of products and innovation, 3) fewer providers and manufacturers and a dramatic increase in the prescrption of unneeded hearing aids. Insurance runs counter to the free market which will in the end bring quality up and prices down. High prices now can be directly linked to government “protections” for the consumer which inhibit direct purchase and self programming. I’m not advocating the latter, but when freedom to choose is available in the market then manufacturers will more openly compete and the innovators will drive prices down. No one would predict that quality hearing aids will ever be “cheap” - there simply is not a large enough market. — just my two cents worth.

I don’t think free batteries for the life of the hearing aids should be factored. I don’t think it would cost an audi (or dispenser) $5-10 per year to provide free batteries, 'cause I can purchase a year’s worth of batteries for $15-20. Domes and tubing do not cost much, therefore, they aren’t a factor. As for unlimited adjustments, I don’t think 3-5 sessions of adjustments per year justify the exorbitant prices of hearing aids. The fact is, there are far more advanced small devices (example; iPhone), and they do not even cost half the cost of the most advanced hearing aids. It’s really baffling that the industry treats people who suffer from hearing loss as millionaires; they aren’t. Most people who suffer from the loss cannot afford to shell out upto $6000 every 3-5 years. It’s unfortunate millions of people have lost and continue to lose years/decades of quality life because the industry is making it impossible for them to purchase affordable hearing aids.

I just believe that this should be solved on the insurance end. Make them a mandatory coverage item.

What I am scared of is if we make it a mandatory coverage item then the industry will disappear. And all you will have is a bunch of junk for aids that are more harmful than useful. I am old enough that I could retire but to heck with that I want to work for a lot longer. But without the use of the aids I have I would be forced to retire and be a hermit and I just soon be dead. I want to be a productive person until the day that I die. At some point I will retire from the business world but I want to then do what I am dreaming of and help others where ever I go to be better at what ever they do. There are children that need to learn to read, write and be part of the real world. There are older generations that need help in every way from meals to transportation.
I have to face it I do not want to slow down. And without my aids I would be forced too.

Profit margins are difficult to express since as mentioned before adjustment and reprogramming are typically free. So the amount of times an individual comes in for adjustments, your profit margin diminishes.

Some clinic sell you the hearing aids at cost; however, they have a hidden fees of charging adjustment fees, reprogramming fees, tubing, clean and check and etc…

Buying hearing aids on the web is a dangerous act. Many of them have been stolen at the product line level and when you approach a company to either program them or do repair - the manufacturer have advised the clinics to confiscate and return the hearing aid to them.

Thanks for the answer.

I totally agree with your points. I am not a disgruntled customer complaining about high prices and I am very, very aware of the need for quality fitting and after care.

Having said that, I do think that the current selling model of most retailers (of bundling the hearing aid with the service in one big fee) is outdated.

Really, my question was very general: just wondered how expensive a hearing aid is to produce. Yes, it changes depending on numbers bought and the cutting-edge quality of the tech but I have asked this question around many places and have never been given a single answer. Not one. Which makes me think that the markup is huge and that a hearing aid doesn’t really cost more than, say, an iPod to produce. of course, that’s my guess work, but I’ve got nothing else to go on!

Thanks for the answer. I wasn’t really interested in profit margins as such, more just a cold, hard, figure of how much a physical hearing aid costs to make.

I will tell you as an audi that i honestly don’t know how much it costs to make the aids. I know what the markup is to the customer, but unfortunately i would be talking in generalities. I’ve worked for practices where the markup is about 30% and some where it is 80%-100%. I have patients who had previous top-of-the-line aids that they purchased from a retail chain (Beltone for just an example) who paid more than double what our practice charges. So i’m assuming that difference equates profit, I can’t imagine that their aids cost the professional THAT much more than what we pay, right?

But I don’t actually know what it costs the manufacturer to produce aids??

dr. amy

About $50 for a high volume aid. Though to consider this figure in isolation without appreciating the other costs in getting the aid to you is irrelevant.

Similarly, you can buy a tank of Gasoline in Saudi for less than $10. It would cost you a whole pile more to drive there and back though.

Look at the markup on eyeglass frames. I mean come on now!

Where do you get your batteries? I’m a dispenser and I sure can’t find them that cheap.

Why do people have to pay $6000 for a set of aids? I sell top of line aids that don’t even cost that much. Most people that get aids at my practice spend between $1100 and $2100 per aid. Occasionally someone want the best aids out there and those are about $2800 each.

I get them from Ebay (example; bidbybid). The average price of 60 batteries is $15. Depending on the type of hearing aid, those batteries could last 1-2 years. Since dispensers get volume batteries from manufacturers, it would cost them less to provide free batteries.

I don’t think distributors, taxes, shipping, packaging, advertising, sales, marketing, etc comprise even a modest portion of the cost of hearing aids. Hearing aids are small and light devices whose distribution and shipping takes little space, packaging or shipping. As for advertising or marketing, I have never seen a hearing aid advertisement on TV. This isn’t not to imply there are no such advertisements, but to point out they aren’t common, and therefore wouldn’t cost much those advertising it. Also, such advertisements are less common on printed media (magazines, newspapers, etc). The other thing, we are in a different era where we are more interested in the reviews of those who bought a particular product, not the ads of the manufacturer. For example, I’m interested in the Bernafone Verite, a product I have only heard of on this forum, because of those who tested and reviewed it. If I saw a TV ad extolling the specs of Bernafone Verite, I doubt I would be interested. The point is, the reviews of those who test a product are more important than ads in this era.

This depends on the region. In Ohio for example, there are practices (audis and dispensers) would run commercials (the few that can afford it). But advertising in printed media is very common. In fact, I spend about 9 hours a week on such things.

dr. amy

What are the names of widely circulated magazines/newspapers that contain hearing aids ads?

I see adds for companies like Beltone all the time in widely circulated papers, but ads for audiologists are usually found in a more localized paper or flyer, which only makes sense.

How often and on how many pages?