Google, Apple, Printers and Vaccines

Google offers free services like Gmail, Google Calendar and Google Maps. So how do

googleappsthey make money if they offer these things for free? They know their business isn’t about these products; it is about advertising. Thus, by creating all these cool services, they get eyeballs; and eyeballs drive advertising dollars.

Apple sells songs via their iTunes store at 99 cents. Apple gets to keep just 29 (30%) cents from every MP3 they sell. Do they make money on these songs at 30 cents a pop? Maybe. When you consider Apple’s cost to manage the iTunes store (i.e. software development, support) and the cost to deliver each song (bandwidth), I’m sure they are not left with much.

So why would they continue selling MP3’s if they don’t make much money? Because Apple knows their business… apple_itunes_7_store_home_screenshotand it is not selling MP3’s; Apple’s core business is hardware. They sell very expensive shiny hardware that store all these MP3’s. And the margins for those shiny objects are huge.  By creating a music store that integrates beautifully with their devices, they are driving people to buy more of their high margin products.

Same goes with printer manufactures like Epson or HP. Printer manufactures sell printers at or near cost. Why? Because once you’ve bought a cheap printer, you have to buy their cartridges; which have a much higher margin. If you think about it, they are not in the printer business, but rather in the ink business. They use the printers to get you in the door, so to speak.

Does a medical practice have a low margin product or service offering that can be used to get patients in the door and potentially increase revenue?

Yes! And we call them vaccines.

ShotKidWe hardly make any money from vaccines right? But that doesn’t mean we can’t use vaccines to drive patients towards our core business like Google, Apple and Epson does.

How? Allow me to explain.

Flu season is upon us. Consequently, parents and patients are going to be calling our pediatric offices asking us about the flu shots, when are we going to start to give them out, is it safe, do they have thimerosal in them etc.

Now, what if when answering these questions, we take a peak at little Timmy’s chart and find out when was the last time Timmy had a well visit. And during the conversation with little Timmy’s mom we say, “Mrs. Smith, I noticed little Timmy has not been in for his well child in a couple of years. Would you like for us to schedule his well child and then we can do the flu shot during the visit?” Or something like that…

With that, we’ve turned a low margin visit, into a higher margin visit. Not only is it good for patients (prevention reduces long-term health care cost), but it is also good for the bottom line.

Just like Epson uses printers to drive their cartritge business and just like Apple uses the iTunes to store to drive iPod sales and just like Google uses Google Doc’s to drive their advertising revenue, we can use the Flu season (thus flu vaccines) to drive our core business; prevention.

What do you think? Am I off here or do I make sense?

6 thoughts on “Google, Apple, Printers and Vaccines”

  1. I am pro-vaccine, and I agree that more practices need to do it. We’re a pedi office in a town where many other doctor’s are giving up well visits altogether.

    I do have a picky comment. There is, at least to the Editor of WIRED Magazine, who wrote the book on free, a HUGE difference between low-cost loss-leader products and “free.”

    1. Kevin,

      I remember reading a while back in WIRED mag about the “economy of free.”

      I don’t remember the details of the article exactly, but I do vaguely remember the article talking about how in the tech industry, many companies have done remarkably well as a result of offering many of their products for free.

      I agree there is a difference between a lost leader and a product offered entirely for free. A good example of this difference is Wal-Mart. Mal-Mart often times advertises their milk gallons at or below cost. Why? Because the cheap milk draws people to the store. And Wal-Mart knows patrons are not going to walk-in a Wal-Mart just to buy milk. Patrons will most likely buy other things and Wal-Mart bets on this notions.

      Thank you for stopping by and taking the time to comment.

  2. Spot on, and nuthin’ wrong widdit.

    The best Good Things are good all the way around: for the patient, for the community, and the office.

    Business-wise, it’s one of the classic income generating techniques, which is why Target et al have $4 generic meds. They may lose their shirts on that bottle of 30 pills, but once you’re *in the store* you’ll likely walk out with a lot more than that prescription.

    The trick is to make the additional services as appealing as the US magazine, the 12-pack of soda, and latest Friday night guilty pleasure Blu-Ray. But even if not, you’re still much more likely to get a buy-in by presenting your case in person, persuasively, and with your cred as a healthcare provider.

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