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I don't buy that argument. When I went to an audiologist and ENT before getting my hearing aid, I had to pay a copay and my insurance company payed thousands (

I don't buy that argument. When I went to an audiologist and ENT before getting my hearing aid, I had to pay a copay and my insurance company payed thousands (ENT ordered an MRI). A hearing aid from that audiologist would have been at least $3000. I went to Costco and got an equivalent test with mostly the same audiogram for free. The hearing aid there was $800. I have gone back for free adjustments. Let's compare this to getting an eye exam and glasses (for both eyes!) https://www.google.com/search?q=audiologist+salary https://www.google.com/search?q=audiologist+salary $74,890 https://www.google.com/search?q=optometrist+salary https://www.google.com/search?q=optometrist+salary $103,900 My most recent eye exam plus glasses (after insurance) was way less than $100. The no-insurance no-coupon price on the same would have been about $300. I spent about as much time with the optometrist as I did with the audiologist for the exams. The key difference is the fitting of the hearing aid was done by the audiologist but the fitting of the glasses was done by an optician (salary about a third of an optometrist's salary). The optometrist also has lots of specialized equipment. The optometrist also has lots of inventory (maybe 1000 frames?) because glasses are a fashion thing too. Audiologists just need to have samples and perhaps a week's worth of inventory. The audiologist's inventory seems more likely to be sold before payment to the supplier is due.

dogruck 9y ago
Although this is interesting, there are some logical weak points. A few that came to mind: * CostCo has a proud reputation for using their annual membership fees to provide door-buster prices. * Salary is a coarse and incomplete proxy for the cost of an audiologist visit. * I see no justification for comparing ear exams to eye exams. Why not proctology? * You seem to imply that doctors pay cash out of pocket for their medical inventory, instead of operating more like a car dealership, where inventory is held on credit
- dragonwriter 9y ago
  > CostCo has a proud reputation for using their annual membership fees to provide door-buster prices. No, they limit margins and costs (e.g., by limiting SKUs) to keep prices down; paid memberships build psychological attachment, but the $55/yr membership isn't paying for much in terms of lower prices.
  - thaeli 9y ago
    Those membership fees provide the majority of Costco's profit, though.
    - dogruck 9y ago
      Correct. They do indeed work hard to minimize markup margins. They also sell some items at a definitive loss. And they attribute their revenue to the membership fees.
      - dragonwriter 9y ago
        > And they attribute their revenue to the membership fees. No, their profit is largely attributes to membership fees; their revenue is almost entirely sales (for the 53-week “year” in their most recent 10-K, $126+ billion in net sales, less than $3 billion in membership fees.) Basically, Costco uses a giant near-zero-profit sales operation as a the key benefit to sell memberships, which are its profit-making business.
- mgerdts 9y ago
  I bought my Costco membership so I could buy a hearing aid, so call the cost of the hearing aid $855 if you must. That's still more than $2000 in savings. The free hearing test was performed before paying for the membership. Sure, salary is an incomplete proxy. Each also requires a bit of real estate, support staff, and equipment. Both my optometrist and the Costco vision center have a larger space than the Costco hearing center. The Costco hearing aid area typically has one assistant (not an audiologist) working. The optometrist also has at least one assistant (optician). I chose eye exams and glasses because it is probably an experience that more people can relate to. Proctologists are MDs ($389,700/yr), have more complex facilities and equipment, need more support staff (reception, nurses, aenesthesiologist), have more complex sanitary needs (proctologists perform surgery), and tend not to send patients home with custom-fit devices. As for inventory - it very well could be that an optometrist does not pay for it up front.

dogruck 9y ago

Although this is interesting, there are some logical weak points. A few that came to mind: * CostCo has a proud reputation for using their annual membership fees to provide door-buster prices. * Salary is a coarse and incomplete proxy for the cost of an audiologist visit. * I see no justification for comparing ear exams to eye exams. Why not proctology? * You seem to imply that doctors pay cash out of pocket for their medical inventory, instead of operating more like a car dealership, where inventory is held on credit

dragonwriter 9y ago
> CostCo has a proud reputation for using their annual membership fees to provide door-buster prices. No, they limit margins and costs (e.g., by limiting SKUs) to keep prices down; paid memberships build psychological attachment, but the $55/yr membership isn't paying for much in terms of lower prices.
- thaeli 9y ago
  Those membership fees provide the majority of Costco's profit, though.
  - dogruck 9y ago
    Correct. They do indeed work hard to minimize markup margins. They also sell some items at a definitive loss. And they attribute their revenue to the membership fees.
    - dragonwriter 9y ago
      > And they attribute their revenue to the membership fees. No, their profit is largely attributes to membership fees; their revenue is almost entirely sales (for the 53-week “year” in their most recent 10-K, $126+ billion in net sales, less than $3 billion in membership fees.) Basically, Costco uses a giant near-zero-profit sales operation as a the key benefit to sell memberships, which are its profit-making business.
mgerdts 9y ago
I bought my Costco membership so I could buy a hearing aid, so call the cost of the hearing aid $855 if you must. That's still more than $2000 in savings. The free hearing test was performed before paying for the membership. Sure, salary is an incomplete proxy. Each also requires a bit of real estate, support staff, and equipment. Both my optometrist and the Costco vision center have a larger space than the Costco hearing center. The Costco hearing aid area typically has one assistant (not an audiologist) working. The optometrist also has at least one assistant (optician). I chose eye exams and glasses because it is probably an experience that more people can relate to. Proctologists are MDs ($389,700/yr), have more complex facilities and equipment, need more support staff (reception, nurses, aenesthesiologist), have more complex sanitary needs (proctologists perform surgery), and tend not to send patients home with custom-fit devices. As for inventory - it very well could be that an optometrist does not pay for it up front.