The Price Is Right? An Economic Analysis of Factors Influencing Cosmetic Surgery Prices

Abstract

Background

Cosmetic surgery is a large portion of practice revenue for many plastic surgeons, and therefore understanding the economic principles of pricing is critical. Although national averages provide a starting point for price determination, they may not reflect specific economic factors. Over the last decade, publicly reported pricing for cosmetic surgery has increased in prevalence, improving price transparency for patients and surgeons alike.

Objectives

This study aims to compare publicly reported prices to national cosmetic surgery averages and identify variables that have the greatest impact on price determination.

Methods

An Internet search was performed with the term “cosmetic surgery, price” for practices that publicly reported cosmetic surgery prices. Publicly reported prices were compared to national averages generated from The Aesthetic Society's Aesthetic Society Plastic Surgery National Databank Statistics. The impact of regional prices, practice type, and surgeon accreditation were analyzed for the most popular cosmetic surgery procedures.

Results

Sixty-six practices were identified that reported cosmetic surgery pricing information. Publicly reported prices were significantly higher for all surgical procedures except nipple procedures, excision of (excess) skin, fat grafting, fat harvest, and lip enhancement. Facility/operating room fees (n = 38) and anesthesia fees (n = 34) were the most common components included in a price, after surgeons’ fees (n = 66). A significant price difference was appreciated when separating practices by region for all procedures except breast augmentation (P = .074) and liposuction (P = .088).

Conclusions

Publicly reported prices provide greater insight than national averages into specific pricing factors and strategies that can be employed when setting surgical prices.

See the Commentary on this article here.

Demand for cosmetic surgery procedures in the United States continues to increase dramatically, with a 54% increase in surgical procedures and a 44% increase in nonsurgical procedures between 2020 and 2021. This resulted in a 63% growth in revenue, totaling over 14 billion dollars.¹ A factor contributing to this growth is the ability of cosmetic surgery prices to parallel the consumer market and to be adjusted to meet the current economic climate.

Understanding the economic basics of pricing, including a price's components and influencing factors, are critical to maximizing revenue. Prices reflect an amount the customer is willing to pay for a product or service based on market conditions, particularly current supply and demand. However, to overcome the expense incurred from providing that service, a price must be ideally set.^2-4 Additionally, pricing strategies can be employed to improve the likelihood of producing a maximal net profit. Unfortunately, determining prices for cosmetic procedures is complex, and most plastic surgeons lack formal business training.⁵ As a result, new graduates and well-seasoned surgeons alike may struggle to set appropriate prices, risking lost revenue.

Over the last decade, the widespread use of social media has increased the visibility of cosmetic surgery procedures and, in turn, increased price transparency, with publicly reported prices being presented to patients through practice websites.^6,7 For surgeons, publicly reported prices can be a resource for determining how a price is set. Unlike national averages, publicly reported prices may provide unique insight into specific pricing factors or strategies that can be adopted.⁵ Therefore, in this study, our primary aim is to compare publicly reported prices to national averages and identify variables that have the greatest impact on price determination. By assessing these factors, our secondary aim is to provide plastic surgeons with an understanding of pricing strategies to maximize profitability.

METHODS

A list of cosmetic surgery practices with publicly reported pricing information was generated from an Internet search (Google LLC; Mountain View, CA) with the search phrase “cosmetic surgery, prices.” The search was performed and reviewed by E.C.S. in July 2022. The search was performed after clearing all browsing data, including cookies and cached files, to avoid location bias from previous Internet searches. This technique allowed for a randomly generated list of practices that publicly reported cosmetic surgery prices. Results from the first 10 pages of search results were included. Practices were excluded if they required the creation of an account, payment, or appointment to access information.

For each practice with publicly reported pricing information, data were collected on the geographic location of the practice (city, state), number of associated facilities, surgeon board certification, and type of practice (private, community, academic). Cosmetic providers were categorized according to their specialty training as specified by the American Board of Medical Specialties. Practices were then grouped by regional distribution to evaluate the impact of location on pricing.^1,8 Pricing information was reviewed for the average reported price and any inclusive pricing (eg, surgeon’s fees, anesthesia fees, facility fees). Additionally, websites were evaluated to determine whether accredited sources were referenced to generate prices and for financing information and discount offers.

We compared publicly reported prices to the values reported by The Aesthetic Society's National Databank Statistics for 2019 and 2020-2021.^1,8 Only publicly reported prices determined and set by the practice were included in statistical analysis. Public and national prices were compared employing 1-sample t tests. The impact of region, practice type, and surgeon board certification on the most popular cosmetic surgical and nonsurgical procedures (breast augmentation, mastopexy, breast reduction, abdominoplasty, liposuction, facelift, blepharoplasty, rhinoplasty, neurotoxin injection [Botox], and dermal filler) were analyzed with 1-way analysis of variance (ANOVA). Statistical analysis was performed with IBM SPSS Statistics Version 28 (IBM Corp.; Armonk, NY).

RESULTS

Sixty-six practices were identified that publicly reported cosmetic surgery pricing information. Practices were distributed across North America, with the greatest concentration of practices in the South Atlantic (37.9%) (Figure 1). The majority of practices were single-location private practices (69.7%), followed by multiple-location private practices (22.7%) and academic practices (7.6%). Fifty-six practices (84.8%) were led by surgeons board certified by the American Board of Plastic Surgery, 5 practices (7.6%) were led by surgeons certified by the American Board of Otolaryngology-Head and Neck Surgery, 4 (6.1%) were led by surgeons certified by the American Board of Surgery, and 1 (1.5%) was led by a physician certified by the American Board of Dermatology.

Sixty-one practices (92.4%) provided a self-determined list of prices for cosmetic surgery procedures, whereas 5 (7.6%) referenced averages from an accredited source. Thirty-five practices (53.0%) provided financing information on their pricing website. Only 6 practices (9.1%) advertised surgery discounts, primarily for multiple procedures (Table 1).

A comparison of publicly reported prices with The Aesthetic Society's Aesthetic Plastic Surgery National Databank national price averages demonstrated that publicly reported prices were significantly higher for all breast, body, and facial surgical procedures except nipple procedures (P = .088) in breast surgery; excision of (excess) skin (P = .115) and fat grafting (P = .530) in body surgery; and fat harvest (P = .423) and lip enhancement (P = .126) in face and neck surgery. Only labiaplasty pricing demonstrated a statistically significant difference from national averages in genitourinary surgical procedures (P = .010) (Table 2).

For nonsurgical procedures, only neurotoxin injection ($346.12 ± 131.77 vs $409, P = .025) and dermal filler ($588.24 ± 111.71 vs $766, P < .001) demonstrated significantly lower publicly reported prices, whereas laser skin resurfacing ($2290.57 ± $1683.29 vs $1199, P = .031) and chemical skin resurfacing ($1064.67 ± 1288.91 vs $196, P = .011) demonstrated significantly higher publicly reported prices compared to the national averages (Table 2).

Regarding publicly reported pricing components, surgeons’ fees were the most commonly reported pricing component (n = 66). A majority of practices also included facility and operating room (OR) costs (n = 38) and anesthesia costs (n = 34). Twenty-two practices included implant and device costs, and 21 practices specified that all postoperative follow-up was covered within their reported price (Figure 2). Thirty-eight practices (57.6%) presented a bundled price with all components of surgery included in their final price. For the most popular cosmetic surgical procedures, all procedures except breast reduction and facelift that were presented as a bundled fee demonstrated statistically higher prices compared to unbundled prices (Figure 3).

For the most popular cosmetic procedures, a significant price difference was appreciated when separating practices by region for all procedures except breast augmentation (P = .074) and liposuction (P = .088). No significant difference was appreciated across regions for Botox or dermal filler (P = .55 and P = .65, respectively) (Figure 4A, B). Furthermore, no significant difference in pricing was appreciated for either surgical or nonsurgical procedures when stratifying prices by practice type or surgeon accreditation (Figure 5A, B and Figure 6A, B).

DISCUSSION

Unlike traditional health-care pricing, which is set based on third-party payers, cosmetic surgery pricing is influenced by local economic factors.^9,10 As we demonstrate in this study, these factors result in wide variations of publicly reported prices that are not reflected by national averages. What components are included within a price and the location of a practice are the most important factors in what price is presented to patients.

Surgeons’ fees were the most commonly reported pricing component and were included by all practices. When considering surgeons’ fees alone, these fees parallel the market consumer price index, as demonstrated in Table 3. Although medical care service prices doubled (+118%) and hospital-related service prices tripled (+204%) between 2001 and 2021, overall consumer prices increased only 44% over the same period. Cosmetic surgery surgeons’ fees demonstrated similar price trends to overall market consumer prices, with only the price of a collagen injection procedure doubling (+118%). A greater degree of market competition, price transparency, and out-of-pocket payments resulted in more contained cosmetic surgery price increases.^11,12

However, surgeons’ fees are not the only component in a cosmetic surgery price, as demonstrated by this study. As a result, the average publicly reported prices for the majority of cosmetic surgery procedures are significantly higher than the national averages. Most commonly, facility and OR fees and anesthetic costs are bundled into the total price. Less frequently, practices may also include components that improve the “luxury experience” of the procedure, such as home health visits or postoperative massages. This highlights 2 common pricing strategies: bundling and value-based pricing.

Although we were unable to collect any data regarding the frequency of consumers accepting a bundled vs unbundled price for surgery, we did find that bundled surgical fees were statistically higher for most popular surgical procedures. This may be explained given that bundling, or package pricing, builds off the principles of behavioral economics, which indicate that consumers are happier if gains are individualized, but losses are combined, because consumers tend to overvalue losses compared to gains.^13,14 Instead of presenting multiple individual prices to the patient, components are grouped into a single value that invokes a less uncomfortable response in consumers. Bundling also benefits the practice, because a single fee increases the simplicity of marketing a procedure. Furthermore, unbundling risks negotiation due to itemization and closer line-by-line scrutiny.^15,16

Similarly, value-based pricing, or pricing based on a consumer's perceived value of a product or service, takes advantage of consumers’ psychology and emotional cues.^17,18 For luxury goods, certain brands have such a strong reputation and history of quality that the name alone allows for considerable price inflation and consumer tolerance of that higher price. In cosmetic surgery, this may be reflected by the surgeon's reputation, including multiple board accreditations, time in practice, or academic prowess. However, a subset of potential patients may not accept this trade-off, ultimately narrowing the potential consumer pool. This is reflected in our findings, in which luxury items such as recovery kits (n = 3), home health and RN visits (n = 2), and postoperative massage (n = 1) were the least frequently added components to a surgical price.

Consumers may also reject a price that is too low or “discounted,” because a lower price may be interpreted as lower quality service, which is a valid concern in cosmetic surgery. There are, however, situations in which price reductions can be utilized to increase total revenue, as described in the article by Krieger et al.¹⁹ Utilizing a demand curve to assess price elasticity, on which the volume of procedures is plotted at different price levels to reflect the price sensitivity of customers, they demonstrated that a reduction of resident cosmetic clinic surgical fees by 40% resulted in a 250% increase in procedures performed and 52% increase in net profit. Nevertheless, an economic analysis should be employed for each practice before price adjustments to confirm the revenue benefit.

Our data demonstrate that the geographic location of a practice has a significant impact on pricing for nearly every popular cosmetic surgical procedure, with the highest publicly reported prices in the West South, Mountain, and Pacific regions. This parallels the high average cost of living in many of the states within these regions.²⁰ The finding is consistent with the results of Richardson et al, who found that the average prices for cosmetic surgery procedures across 15 US cities varied considerably but correlated with other local financial metrics such as cost of living and real estate prices.²¹ Additional reasons for this regional influence include differences in population density, cultural acceptance and social perceptions of cosmetic surgery, and access to services.²² Of note, we did not identify any cosmetic surgery practices in New England (CT, ME, MA, NH, RI, VT) that publicly reported pricing information. This may be due to the smaller distribution of practices in this region, because they only account for 4% of United States practices based on the The Aesthetic Society’s 2019 Cosmetic Surgery National Data Bank Statistics.⁸ Overall, when establishing a surgical price, regional variations and their impact on patient affordability should weigh more heavily than national averages to optimize profit.

Although we do not demonstrate a direct impact on cosmetic surgery prices related to surgeon board certification, this is likely due to the low number of non–plastic surgeons identified in our search. In reality, it is likely that non–plastic surgeons who perform cosmetic procedures may influence pricing indirectly through an increased supply of available surgeons and, therefore, increased surgical competition. Given that the number of graduating plastic surgery residents has plateaued, an opportunity has been created for specialty creep, which has led to more non–plastic surgery specialties offering and performing cosmetic surgery.²³ As predicted by Liu et al, the larger growth rate of non–plastic surgeons providing cosmetic surgery will ultimately drive increased competition for plastic surgeons to retain the market share of cosmetic surgery.²⁴ The danger with this competition is the fact that, as stated in an article by Krieger, cosmetic surgery patients are price sensitive and are willing to shop for a different surgeon with price as a criterion.²⁵ Unfortunately, the financial benefit for non–plastic surgeons performing cosmetic surgery and its negative impact on plastic surgery profits has yet to be described in the literature. Furthermore, because more non–plastic surgeons perform cosmetic surgery without appropriate board certification, a parallel increase in the incidence of surgeons practicing outside their scope of practice could occur.²⁶ Although this can have important implications for patient safety, its discussion is outside the purview of this article.

We found no difference in publicly reported prices when stratifying by practice type. This could be explained by the fact that, regardless of the setting, surgeons are performing elective, fee-for-service procedures with prices that are flexible depending on the economic market status.²⁷ Unfortunately, there is a lack of reported literature that provides any additional explanation.

Our study was limited by the fact that we could not identify all factors that can influence a price. Nevertheless, this article has aimed to highlight the most common factors that impact pricing and provide plastic surgeons with a better understanding of economics. Additionally, we recognize that the small sample size obtained by an Internet search may not be representative of every practice setting or geographic location. However, as previously mentioned, online price transparency is employed by a large percentage of cosmetic surgery practices, and therefore our search method was representative of most practices.

CONCLUSIONS

Based on our analysis of publicly reported prices for cosmetic surgery procedures, we propose that the following economic principles be recognized. First, create a bundled, comprehensive price, including surgeon fees, facility/OR costs, and anesthetic fees. A single bundled fee is easier for patients to understand than components presented separately. Furthermore, bundling benefits the practice, because a single fee increases the simplicity of marketing a procedure. Second, acknowledge regional patient affordability factors and competition, because these have the most significant impact on pricing variability. And third, appreciate that patients are indifferent to practice setting or surgeon specialty when evaluating the price for a cosmetic surgery procedure.

Disclosures

The authors declared no potential conflicts of interest with respect to the research, authorship, and publication of this article.

Funding

The authors received no financial support for the research, authorship, and publication of this article.

REFERENCES

Author notes