The debate over bundling versus unbundling in hearing aid pricing rages on. Although the unbundled method of pricing is seen in only a minority of practices, the issue has come front and center lately. Many believe that bundled pricing keeps the focus on the product itself instead of on the provider’s expertise.
“Our services, and our time have value associated with them,” said Ian Windmill, PhD, current President of AAA. “How are we showing patients that value?”I agree with Ian that in a bundled pricing structure, it is critical to show patients that the prices they are paying are not JUST for the hearing aids but rather include professional services but I am not convinced that unbundling is the way to go. I have offered an unbundled pricing structure as an option in my practice and what I found is that the patients that had to pay for services did not come in as often, which is the most common opposition to the unbundled model of pricing.
In discussions with professionals at several meetings I have attended recently, it seems that many that say they are unbundling are actually ITEMIZING – assigning a price for hearing devices and then itemizing the value of the services provided in conjunction with those devices during the course of the manufacturer’s warranty. This means that the money for the devices and the services provided during that period are collected up front at the time of purchase of the devices. I think there is something to be said for this pricing structure.
What about a new approach to the bundled model? Rather than saying to a patient who has purchased under the bundled model, “No charge today,” what about saying, “the charge today is $95 but you don’t owe that because you purchased our Comprehensive Care Package when you purchased your hearing aids?” I believe that we have to start educating our patients that a bundled price is not for the hearing aids but rather for the devices and professional care during the warranty period.
According to a recent article in the Harvard Business Review, “There is a simple and pretty consistent rule of thumb on this question: unbundling or a la carte pricing benefits the buyer and packaged or bundled deals give the advantage to the seller. If you are the customer, unbundled pricing creates transparency and allows you to pick exactly the options you want. However, there is the simplicity of a single priced product. If you can sell the same bundle to everyone, it makes life easier, which usually means lower marketing and selling costs.”
So how does a provider balance transparency with profit goals? The bottom line is the pricing strategy has to cover the cost of the devices and the cost of our time to work with the patients. You have to know what works for your particular business and the costs involved because as we all know, nothing is really FREE.
One thing is certain. This controversy will rage on. Start today by determining what every minute of your time costs the business and what you must charge and how many patients you must see to make a profit.
I will have more to say about Bundling Versus Unbundling and specific examples of each model in my next blog. Thanks for following!