Is the Price Right?
Vendors and providers might want to revisit retail pricing policies.
- By David Kopf
- Dec 01, 2021
I’m writing this column as Black Friday, Cyber Monday and umpteen other
holiday retail sale events have been hitting their fever pitch, and all that retail mania reminded
me of a very important point made in last issue’s annual Editorial Advisory Board Roundtable. Our Editorial Advisory Board is made up of various industry thought leaders — providers, vendors, advocates and other experts — who help keep HME Business on the correct
editorial path. As industry advocates, providers and vendors, they all help share their perspectives
throughout the year and also come together once a year for our roundtable article to
highlight strategic trends poised to impact HME providers’ businesses in the coming year.
One of those trends had to do with retail pricing. As we all know, retail sales represent an
essential element in HME providers’ revenue mix. While at one time (and not too long ago),
cash sales might have been the exception, now they are the rule. In fact, they are so lucrative,
and patients are so willing to buy items on a cash basis, that some providers are exclusively
One of those retail providers is Faisal “RJ” Poonawala, the president of Spring Branch
Medical Supply, who sits on our board. In our September/October issue’s roundtable “What’s
on Your Radar?” he argued that brick-and-mortar retail providers don’t have sufficient protection
with today’s vendor pricing policies. I think he has a point.
Retail items have traditionally been priced by vendors using two different methods: manufacturer’s
suggested retail price (MSRP) and minimum advertised price (MAP). MSRP represents
the maximum a manufacturer wants an item to be priced. MAP represents the lowest
price it wants to see an item priced.
That’s problematic because online retailers are able to carry items at low MAP prices a lot
easier than brick-and-mortar dealers who contend with much higher overhead. Plus, neither
pricing policy has done much to stem the trend of providers’ physical retail locations getting
“showroomed.” That means a prospective buyer comes into the retail location, inspects the
goods, asks staff questions, and then, instead of purchasing the item, leaves to find an online
seller offering the same item for cheaper, Poonawala explains.
But a new pricing policy has developed in the retail world: unilateral pricing policy (UPP).
UPP is a hard-and-fast sales price the manufacturer sets for all sellers and is typically one that
accommodates overhead inequities so that in-store sellers aren’t undercut.
If I had an industry holiday wish list, one of the items I’d like to see on it is vendors and
retailers coming together in 2022 to develop pricing policies that reflect the retail realities of
in-store sellers so that we preserve a healthy and vibrant retail HME sales environment.
Poonawala joined HMEB’s advisory board about a year or so ago, and in that time, we’ve
had three other industry representatives pitch in as well: Trish Nettleship, vice president of
marketing for Brightree, stepped in to replace our good friend Rob Baumhover from Brightree.
Many thanks to Trish for hitting the ground running and to Rob for all the help he’s provided
over the years. Josh Marx, the managing director of sleep and vice president of business development
for Medical Service Company, has joined in to share his expertise as a provider and
industry advocate. Lastly, Rose Schafhauser, the executive director of the Midwest Association
for Medical Equipment Suppliers, has come on board to add her state-level advocacy expertise.
Thanks to all the members of the HMEB Editorial Advisory Board. From column writing, to
advice, to expert commentary, they’re one of the key parts of this little editorial machine, and
we couldn’t produce the magazine without them. My thanks to all of you.
This article originally appeared in the Nov/Dec 2021 issue of HME Business.
David Kopf is the Publisher and Executive Editor of HME Business and DME Pharmacy magazines. Follow him on Twitter at @postacutenews.