I know the Health Care industry is pretty far removed from clothing design and manufacturing. I think there is some relation to retailers and certainly with customer service. Have you ever tried to get an estimate for a medical proceedure? Tried calling more than one hospital, or perhaps your insurance company? All you will get is the run around. The CSR will dodge the question or severely underestimate the cost. I have had more than one doctor shrug their shoulders and walk out of the room leaving me clueless. And yet, the medical proceedure "must" be done. Insurance companies will not guarantee anything over the phone, let alone on paper.
Once you receive an estimate - you should double, or triple it. I received an estimate for a medical proceedure of about $1,000. The real cost, without insurance payments, $10,000. Why the disparity? You are charged for every thing. A nurse comes and looks at your bandage and you will be charged. That bag you put your clothes in, the hospital gown, laying down on a bed, expect to pay a "rental" or "facility" fee. When you ask for an estimate, it is usually just for the doctor's fee who performs the proceedure and nothing else. You will not get an accurate estimate of the actual charges.
So let's apply the pricing schemes of the medical industry to the clothing retail trade. You go shopping and find an article of clothing to buy. The price is listed as $5.99 for a t-shirt. When you go to checkout, your receipt reads:
fitting room fee $10.00
cash register fee $5.00
sales commission $0.60
parking space $5.00
shopping bag $2.00
credit processing $0.50
franchise fee $2.00
Now let's pretend you have clothing insurance - just in case you spill your coffee. The insurance pays the retailer 20%, but only if you buy from specific retailers. Otherwise you would be out of luck. Plus, according to insurance rules, the insurance company has to pre-approve your purchase, and only after you pay $1,000 deductible. If everything is hunky-dory and you met your deductible, your receipt would read:
Let's not forget sales tax (applied to original sub-total):
sales tax (8%) $2.56
Our original price has inflated from $5.99 to $28.42! I know I am being a bit sarcastic and extreme, but do you think anyone would sign-up for such a pricing scheme? Why do we do it for medical care? Lauren Young of Business Week published an article titled What the Patient Pays, Nov 27, 2006. Young details a few examples of how difficult it is to track down pricing information. Even trying to get a list of the medical billing codes can take hours. I have to ask why? WHY? Why can't a price be agreed upon and payment be arranged BEFORE you receive medical care? What about good, old-fashioned customer service? Why can't some services be considered a part of the normal care of a patient (a part of the overhead of doing business)?
As a retailer I figure out my costs, overhead, and hoped for profit. Included in my price are hidden customer services that I do not charge for - those are included in my overhead. My formula is rather simple and straight forward. If it wasn't, people would look eslewhere.