HEARING AIDS-BASICS OF ECONOMICS
The following is a hypothetical case.
There are 100,000 Seniors living in Alaska. The usual 10% use hearing aids. Those 10,000 People replace their hearing aids every 5 years. That means there are from 2,000 to 4,000 (one or two ears) hearing aids sold to residents of Alaska each year.
In order to obtain their hearing aids, the People had to fly to Seattle,Washington, as there was no hearing aid office in Alaska.
A resident of Alaska had a Brother who was a Hearing Aid Dispenser in Wagon Mound, New Mexico, outside of Santa Fe, who was having a hard time financially in his Hearing Aid Business. The Brother in Alaska suggested to his Brother that he move to Anchorage,and open a Hearing Aid Office there. They figured the Residents of Alaska would rather buy their Hearing Aids locally, rather than have to fly to Seattle.
The Brothers figured that it would cost about $100,000 per year to cover the expenses of operating a Hearing Aid Office in Anchorage. The Brother who was a Hearing Aid Dispenser, figured it would cost him $100,000 per year to live and support his family in Anchorage.
That meant his total profit from his Hearing Aid Business in Anchorage, had to produce $200,000 profit.
If he could make $1,000 profit per hearing aid, he figured he would have to sell 200 hearing aids per year. That would mean he would have to capture 10% of the hearing aid business potential. And that was if his clients only bought 1 hearing aid instead of 2.
From his past Dispensing experience, having worked for a large Dispensing Organization in New Mexico, before opening his own business, he knew it would be very difficult to provide the service necessary to his Clients, if he sold 200 hearing aids per year.
If he did, he knew he would have to have a Staff of Employees, thereby dramatically increasing his expenses.
In checking the prices of the Hearing Aids being sold in Seattle, to the Residents in Alaska, he discovered that he could easily make a $1,000 profit per hearing aid, selling them locally in Anchorage. The Residents could save the Flight Expense of $500 and a lot of their time, and sometimes over-night Hotel and Meal Expenses. The convenience alone would enable the Anchorage Dispenser to make more than $1,000 profit per hearing aid.
The Brother living in Alaska loaned his Brother $50,000 to open a Hearing Aid Office in Anchorage.
The above thought process is basically the procedure for opening any business. Estimate the potential revenue, evaluate the market and competition, estimate the operating expenses, and the net income.
If there were not enough Hearing Aids to be sold in Alaska, then other factors would have to be considered.
In a free market, it is not the Consumers Responsibility to guarantee an income to a Business Person.
When a Hearing Aid Dispenser opens his own Business one of the most important factors he has to consider is the Market and the Competition. Can he be Competitive?
What will he do different than those already in the Business?
Find a need and fill it.
Provide Services others are either unwilling, or unable, to offer the Marketplace.
Above all, provide Integrity,Ethics,and Competence.
You can compromise profits,prices,and perhaps even service, but never,ever comprise Integrity.
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