4.3. To meet the needs of lower-income market segments, approaches exist in the private sector that can deliver quality hearing aids in more affordable ways to the end-user.

Commercially viable enterprises exist that are seeking to work with or around the Big 5 in order to provide a lower cost but high-quality product and service, both in H.I.C.s and L.M.I.C.s:

• DIRECT-TO-CONSUMER. IntriCon (U.S.), the largest manufacturer outside of the Big 5, is developing a “direct-to-consumer” distribution channel as they believe that the conventional retail model is inefficient and costly. This model sells a hearing aid to the user similar to those from Big 5 at a price between U.S.$350-500.

• WHITE LABEL BUNDLED PRODUCT AND SERVICE. Costco (U.S.) is the second-largest provider of hearing aids in the U.S. after the U.S. Veteran Affairs. The retailer's bundled price is U.S.$1,499 for a pair of hearing aids,51 offering significant costs savings to users compared to traditional retail channels. It does so by:

  • LEVERAGING PREVIOUS GENERATION TECHNOLOGY AND WHITE-LABEL PRODUCT. Costco procures its hearing aid from leading hearing aid manufacturers, selling some with name brands and some under the ‘Kirkland’ private label. They often buy products that are one generation behind, thereby accessing discounted prices.
  • VOLUME PURCHASING. Costco has an 11% market share, which enables them to bulk purchase from manufacturers and transfer these savings to its customers. They retender on an 18-month cycle.
  • LOWER OVERHEADS. Costco utilises its current brick and mortar infrastructure to reduce overhead costs by building a hearing aid centre within its existing shops.
  • LOWER-SKILLED PERSONNEL. Costco employs hearing aid specialists who require minimal training. Individuals with a high-school diploma are required to pass a licensing exam, administered by Costco, and then be engaged in a brief apprenticeship. This allows them to pay lower wages compared to an audiologist. The compensation model does not rely on sales commissions, further reducing cost to users.
• SELLING ENTRY-LEVEL PRODUCTS VIA LOCAL PHARMACY CHAINS. earAccess, a Canadian social enterprise, also utilises white labelling. In 2018, the company launched two entry-level products (ACCESS 1 B.T.E.: U.S.$250-300; ACCESS 2 B.T.E. Power: U.S.$750-1,300) in collaboration with a local pharmacy chain in the Philippines52 that has placed audiologists in select stores for the provision of hearing aids.53, 54 They are targeting a 70% reduction in price for consumers compared to currently available hearing aids through volume-based purchasing from a contract manufacturer, reduced product margins, and leveraging this alternate distribution channel.55
• SUBSCRIPTION-BASED MODEL. One of the key challenges with increasing access to low-income customers is the high upfront cost of device acquisition in the retail sector. New concepts are emerging whereby a company partners with mobile money operators, local N.G.O.s, and basic health service providers to screen patients and then provide hearing aids on the spot. The hearing aids are financed via a subscription model in which the user pays an affordable rate per week for a fully serviced hearing aid plan, including earmoulds and batteries, over a period of 36 months, via mobile money transfers.

The above suggests that innovation in sales models may be able to expand the reach of the private sector to new consumers. Direct-to-consumer approaches may be challenging due to the fact that many potential users have low technological savvy to engage with the self-fitting technologies, or are limited in ability to access online ordering. However, principles of using white labelling and volume purchasing to provide an affordable option to consumers, or lowering delivery costs by leveraging existing pharmacy chains both show promise. Subscription-based models, if able to demonstrate profitability and sustainability, could also change the way that end-users are able to sustainably afford hearing aids.