Editor's Note

Is the Price Right?

Vendors and providers might want to revisit retail pricing policies.

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 retail businesses.

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.

About the Author

David Kopf is the Publisher and Executive Editor of HME Business and DME Pharmacy magazines. Follow him on Twitter at @postacutenews.

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