Why Are Hearing Aids So Expensive? A Breakdown of Contributing Cost Factors

April 7, 2017

Thirty-seven million Americans are plagued with the same health problem — hearing loss. And of that group, over 28 million could benefit from a hearing aid. In fact, the number of people who use hearing aids is projected to increase over the next decade, with the global market growing from $4.5 billion in 2015 to $6.5 billion in 2024, Grand View Research reports.

Demand for hearing aids is high despite the high cost of devices, which can often range from $1,000 to $4,000, Healthy Hearing states. If you’re wondering why the cost of hearing aids is so high, here’s a breakdown of what goes into developing, manufacturing and selling them.

Research and Development

For manufacturers, research and development is the biggest cost involved in producing hearing aids, AARP says. For a pair of digital hearing aids that retails for $3,600, the manufacturer typically pays about $1,440, most of which goes into research.

This research-heavy manufacturing cost is due to the fact that a huge amount of research is required to ensure the quality, convenience and comfort of hearing aids. For example, research has helped equip hearing aids with directional microphones to let users tune into what they want to hear instead of picking up noise. It has also helped to make hearing aids more resistant to water. Today’s cutting-edge hearing aids also include features such as noise cancellation, speech recognition and multiple-channel capability. Researchers are currently working to make hearing aids more sensitive to sound depth perception, bringing them a step closer to how the human ear naturally perceives sound.

Materials

Materials that go into making a hearing aid include vinyl impressions of the wearer’s outer ear and ear canals, silicone casts of the impressions, acrylic shells colored the desired pigment, silicone wires, face plates, microminiature circuits, microphones, amplifiers, battery compartments, batteries and volume controls, MadeHow.com says. Most of these parts must be fine-tuned with miniature precision using magnifying glasses and microscopes. For instance, tiny customized o-rings must be used to keep parts in place and consolidate cords.

Any accessories can contribute to additional materials costs. Today’s hearing aids may be used with accessories such as battery rechargers, amplifiers, microphone connections, multi-device connections for classrooms, smartphone connections and smart-home connections.

Retailer Costs and Markups

Other costs that get passed on the consumer are retail costs. For a $3,600 pair of hearing aids, retailers must pay approximately $1,440. This includes costs for staff salary, audiologist licensing, employee continuing training and education, testing and diagnostic equipment, rent and marketing.

To cover their costs and earn a profit, the retailer must then add on a markup fee. For a $3,600 pair of hearing aids, markup may average about $2,160.

Professional Fees and Services

Approximately two-thirds of the price for hearing aids goes toward covering professional fees and services. Whether or not a hearing aid is effective depends significantly on the skill of the professional working with the patient, not just on technology or materials. Professionals must perform diagnostic tests to match hearing aid prescriptions to the needs of the individual. They must be trained how to use diagnostic and testing equipment. End-user costs must cover both this training and billing for appointment time.

Customization

Hearing devices are highly customized for the individual user. Products that are mass produced can be produced more cheaply because a single mold can be used to produce a given part for all products. In contrast, each hearing aid requires its own custom-fitted mold of the individual who will be using it. An individual’s type of hearing loss, depth and range of hearing loss and lifestyle must all be factored in.

In addition, once a hearing aid is produced, it must still be tested for the individual user to ensure proper functioning. This high degree of customization contributes to the price of hearing aids. Fortunately, 3-D printing advances may soon help lower the cost of customized molds, which will help offset this factor. But for now, customization remains a significant expense contributor.

Maintenance

Hearing aids are often sold with free cleanings, adjustments and check-ups. While providers do not charge per visit for these free services, the costs are ultimately factored into the initial cost of hearing aids. Users must also purchase new batteries regularly.

Market Factors

Finally, economic factors have an impact on the cost of hearing aids. In addition to the markup from manufacturers to retailers to consumers, there is the fact that six hearing aid manufacturers control approximately 90 percent of the global market. Most local suppliers only work with two or three of these manufacturers, further limiting selection. This limited competition tends to push prices up.

However, the Internet is increasingly helping remove this competitive barrier. More hearing aid sales are now made direct to consumers. When hearing aids are sold this way, manufacturer sites typically offer hearing aid testing and the opportunity to purchase online and then go to a local professional for a fitting.

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For millions of Americans, hearing aids are a costly but necessary healthcare expense. But because so many people rely on them to hear, why are they still so expensive? Here’s a look at what goes in to manufacturing hearing devices.

 

Author Bio

Roy Rasmussen, coauthor of Publishing for Publicity, is a freelance writer who helps select clients write quality content to reach business and technology audiences. His clients have included Fortune 500 companies and bestselling authors. His most recent projects include books on cloud computing, small business management, sales, business coaching, social media marketing, and career planning.

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