This for That

Is This ‘Warby Parker for Hearing Aids’ Disruptive, or Too Good to Be True?

New York-based Audicus says it is trying to disrupt the hearing aid cartel with its chic little earpieces.
audicus Is This Warby Parker for Hearing Aids Disruptive, or Too Good to Be True?

(Image: audicus.com)

Audicus isn’t the first company to sell hearing aids over the Internet, but it’s aiming to be the most stylish. The New York-based startup launched a redesign last week with a mixed metaphor—”Audicus Brings a Fresh Breath to Hearing Aids”—and the ambitious goal of bringing cheap, attractive hearing aids to the masses.

According to Audicus, only 25 percent of Americans with hearing loss use hearing aids due to the fact that they’re embarrassing and expensive. “Audicus addresses both these issues. It makes hearing aids cool and discreet, while bringing down the price by up to 80% through its novel online model. As such, it aims to take on a dusty industry that has been slow in innovating, and in the process make hearing technology far more accessible,” says a press release.

Audicus offers its “designer hearing aids” in three price tiers, starting at $399 per ear. The offer includes free shipping, a free battery pack and a 45-day money-back guarantee. Customers upload their hearing test results and get the device in the mail, similar to Warby Parker (although there is no one-for-one charitable element).

Audicus, which buys its hearing aids from European suppliers, says its direct web-based sales model lets it reduce prices by 75 percent.

But bring on the haters. A hearing aid patient wrote a post on the science and climate blog Watts Up With That? after an excerpt from the Audicus marketing materials hit Slashdot.

“Over on Slashdot, there’s a post that caught my eye because it is so simplistic and so wrong,” WUWT editor Anthony Watts, who wears two hearing aids, writes before launching into a methodical breakdown of the complexity involved in properly fitting a hearing aid. He goes so far as to suggest basic hearing aids can further erode a patient’s hearing.

So for those who think mass production techniques used on iPods would work just fine for making a delicately balanced instrument that must fit in your ear, please think again. As a hearing aid user since 1969, do I think the price tag of the special hearing aids today are worth the price compared to the simple linear amplifiers I used to have to deal with? Absolutely.

A fair critique, or the whimperings of someone entrenched in an industry being “disrupted”?

Audicus was founded by Patrick Freuler, an MIT engineering grad who worked at McKinsey and Bain Capital and founded a startup in Brazil. The company did not immediately respond to a request for comment, but it had its own defenders in the WUWT comments: “If hearing aids were sold in a way that was competive, you would be surprised how quickly the price would decrease and the utility would increase,” wrote a user under the handle Wayne. “Competition is non-existant in the hearing aid field! It’s the difference between a Volkswagon and a Lexus. Both will get you where you’re going.”

UPDATE: Mr. Freuler responded to Mr. Watts in an email to Betabeat:

1. Manufacturing cost
The argument that hearing aids are expensive to manufacture (especially due to “the use of Germanium that only a handful of companies use”) is a weak one. With the evolution in digital technology over the last 3-5 years, we have seen devices that are far more complex than a hearing aid (such as for instance, an iPhone or iPad) – but cost up to 6x less. We recently explored this analysis (you can see it here: “Why Does a Hearing Aid Cost Six Times More Than an iPad?” ), where we quote official data (% production cost) from the German Competition Commission. You can also see similar data by looking at any annual report from the Big 5 hearing aid manufacturers (I am happy to point you to that, if you wish).

2. Cost due to custom-molding
It is true that traditionally in the canal hearing aids had to be custom molded, involving a laborious process. Audicus’ products makes this process obsolete, which is were part of our core innovation lies in. We provide replaceable silicone sleeves that come in different sizes and shapes, depending on the user’s ear canal, and are thus fully adjustable (see an example here: http://bit.ly/MmzdHL). This approach gives the user full control over the physical fit and drastically reduces the cost and time to get to a customized design (given the “replaceability”).

3. Cost due to high return rate
We ran a pilot test during a number of months before launching our new site and found that our return rates were 3x lower that the industry average.
Part of the reason why return rates in the industry tend to be so high, is indirectly driven by the high price tag of $1000s of dollars. Given that traditional retail is required by law to offer a return period of 30-45 days, many people who see a “great” improvement, but not a “perfect” improvement are more likely to return such a costly device (i.e. “my life is a lot better, but not “$7000s-dollars-worth” better”). This effect is far reduced in our case, since we reduce prices by an order of magnitude.

As for how Audicus keeps its prices low, he said the savings come from eliminating costs associated with middlemen such as audiologists, who demand a high markup. “At Audicus, we believe in “un-bundling”: many of the traditional services can be addressed in an efficient/non-clinical way (eg. programming) or through DYI (except the testing, for which we strongly encourage a first assessment at a clinic, similar to contact lenses/Warby Parker),” Mr. Freuler wrote. “We can offer such prices because our cost and operating structure is completely different from traditional clinics.”

Audicus’s core product is hearing aids but it does offer a PSA (Personal Sound Amplifier) as well.

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